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Experts say Macy’s, JCPenney, and Nordstrom can survive mass store closures by reimagining the department store experience


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Experts say Macy’s, JCPenney, and Nordstrom can survive mass store closures by reimagining the department store experience

Nordstrom confirmed at least 19 store closures this year. Reuters / John Gress This story is available exclusively on Business Insider Prime. Join BI Prime and start reading now. Department stores like JCPenney, Nordstrom, and Macy’s have been pummeled with low foot traffic and stores closures amid the pandemic.But even as these chains announce mass store…

Experts say Macy’s, JCPenney, and Nordstrom can survive mass store closures by reimagining the department store experience

nordstrom store frontnordstrom store front

Nordstrom confirmed at least 19 store closures this year.

Reuters / John Gress


This story is available exclusively on Business Insider Prime.
Join BI Prime and start reading now.

  • Department stores like JCPenney, Nordstrom, and Macy’s have been pummeled with low foot traffic and stores closures amid the pandemic.
  • But even as these chains announce mass store closures, experts say not to expect a complete end to brick-and-mortar department stores.
  • Revitalizing and reimagining stores to focus on experience and convenience are some of the ways struggling department stores can make it through the pandemic. 
  • Visit Business Insider’s homepage for more stories.

The pandemic has pummeled many players in the brick-and-mortar space. But, the department store as we know it is far from dead. 

While once-celebrated mall “anchor” stores like JCPenney and Nordstrom have been struggling amid the pandemic, experts say it is unlikely that these physical stores will be done away with entirely. And while the rate of US store closures has accelerated from changing consumer habits and shutdown orders in the pandemic, physical stores can still survive if they can adapt to a new reality.

Read more: Here’s why department stores like Nordstrom and Macy’s are banking on deep discount models as TJ Maxx and Marshalls emerge as winners in the pandemic

“I don’t believe bricks-and-mortar is going away by any means,” said Kathy Gersch, a former Nordstrom executive and founder and executive vice president at strategy and change management firm Kotter in an interview with the National Retail Federation. “There will still be a place for it, but that place has long needed to evolve.”

Downsizing store fleets can be a good move

To Gersch, a big factor involved in the department store evolution is the large-scale reduction of physical locations. 

“This has provided an opportunity to step back and evaluate and accelerate work that probably would have happened under due course anyway,” Gersch said. “You’ll see the rightsizing of portfolios as we come out of this.”

In general, analysts and experts agree that the pandemic accelerated the rate of store closures and mall closings that might have happened anyway at some later date. While this trend is clear, Morningstar equities analyst David Swartz said there is still value to be found in the physical space, even in a post-pandemic, e-commerce focused world.

Read more: TJ Maxx, Walmart, Target, and other big-box and deep-discount retailers will likely boom, experts say, thanks to a focus on value, safety, and efficiency

“Most clothes shopping is still done in stores and I don’t expect that will change,” Swartz said, noting that the experience of trying on clothes before purchasing is still relevant to consumers today. Swartz added that department stores have the added benefit of being a place of “discovery” for different brands and styles and that credit card sign-ups, a major income source for these chains, mostly happen in physical stores.

These are the features that imbue the in-store experience with an intrinsic value that can be difficult to replicate online, experts say. A shopper cannot easily understand the “depth and range of quality” of a product or collection from a landing page for a chain online, explained Burt Flickinger III, the managing director at Strategic Resource Group, a consulting firm for consumer products and retail chains. 

“People like to go to the stores to see the color palette, to see — in apparel — that it’s comfortable,” Flickinger said, adding that in a time where delays in e-commerce deliveries are widespread, stopping by a department store for a quick and easy return is another draw to brick-and-mortar.

macys store interior

The interior of a Macy’s store.

REUTERS/Eduardo Munoz


“I think Macy’s and the others can still have value even with fewer stores,” Swartz echoed. “Not everybody has an Amazon Prime membership. There are still people who exclusively shop in stores.”

However, despite the benefit these department store centers offer, Swartz said the size of their fleets, which were too large even by pre-pandemic standards, could stand to be reduced or repurposed. For example, Swartz said that Macy’s, which he believes operates an “unnecessary” amount of stores across the US, could benefit from converting some of its real estate to online fulfillment centers or stores solely devoted to Last Act, Macy’s deep-discount division.

Department stores as an experience

Still, with the massive shift to online shopping and a general focus on value, safety, and efficiency, department stores need to be able to offer something more than just merchandise. Namely, an experience beyond transaction that can only occur in real life.

“I think the whole thing of ‘physical retail is dying’ is something that’s been way overplayed and sensationalized,” B8ta president Phillip Raub told Business Insider in a previous interview. B8ta, a tech-powered startup focused on creating experiential retail concepts, uses software and analytics to revamp the in-store experience for chains like Toys R Us, Macy’s, and Lowe’s.

For B8ta and similar models, the idea of brick-and-mortar needing to offer something more than shopping has existed long before the pandemic. However, with the pandemic’s emphasis on social distancing and safety, it has become difficult for some of these concepts to fully come to life. Macy’s closed nearly half the locations of its experiential in-store Macy’s Story concepts in February and recently announced that Rachel Shechtman, the founder of Macy’s Story, would be departing from the company. 

macys story

Macy’s Story, includes a rotating selection of products arranged around a theme.

Bethany Biron/Business Insider


According to the experts, department stores will look to other ways to draw in crowds in the future.

“They will have special events, trunk shows, special promotions, and other events to draw people,” Swartz said. “This is how they will stand out in a crowded field.”

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Gersch suggested that stores will likely have to take on a role akin to an entertainment complex or “showroom” to keep guests interested in showing up and browsing in person.

“No retailer will be successful if they see it only as a physical location for store inventory,” she said. “It has to have a more relevant role for the consumer.”

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