More and more department stores are closing their doors entirely or at a few select locations to cut on costs. Just last week, JC Penny announced that they would be closing multiple locations throughout the United States to lower debt obligations and help the company create higher cash flow. The number of jobs lost with those closures alone totaled in the thousands.
Amazon has long been a threat to the standard department store. After all, shopping with Amazon is quick and easy. Shoppers can easily use a mobile phone, smart pad, or quickly browse and buy with one click (literally) on the website.
Brick-and-mortar stores used to assume they had the advantage of offering a personal relationship, but today’s consumer has proven that a relationship is not that important. Instead, it is about saving time and money—something Amazon promises every customer.
Buying clothes on Amazon has become a popular option, especially among Millennials. In fact, it was found that 18 to 34-year old shoppers prefer purchasing online, and Amazon now holds the largest market share among that group for apparel. Because Millennials are essentially the future of workforce and consumerism, this news does not bode well for department stores and local clothing boutiques looking to thrive.
Is It Entirely Amazon’s Fault?
Amazon has notoriously kept a firm hold on the e-commerce market, but some believe that Amazon is not totally to blame for the demise of some of the largest department store chains in the country. When one looks at the entire spectrum, online shopping still only takes up a tenth of the total retail sales in the United States, says Mashable.
While online sales are doubling year-after-year and are on a consistent five-year streak of improvement, the United States commerce market still sees more sales in-store than online. However, the studies that examined this data did note that the “retail” sector included gas stations, which do not have an online equivalent and have a high number of in-person sales. Also, grocery stores and auto parts stores, two places where people typically shop in person, were factored into that rate.
Even with those factors, online shopping still is relatively small in comparison to in-person purchases, and Amazon does not make up the entire percentage of online purchases. However, they do take up a considerable amount.
Why are Department Stores Failing?
If Amazon is not to blame, then experts feel there must be a reason by department stores are slowly going downhill. One issue brought to light is that department stores do not set themselves apart from one another. Without a logo in the background, they all look relatively similar, offer the same products, and even have similar price points. This general feel to department stores makes the shopping experience pedestrian and could be a big turn off for the modern-day shopper.
Also, without much variety and too many stores in each city, it makes it difficult for consumers to pick which store to go to, and they will often favor those that offer more conveniences, like shopping online and picking up at the store.