J.C.Penney, Nordstrom, and Kohls showed disappointing first quarter in profits. In fact, all of them did worse than expected. On the flip side, Walmart and Target showed stronger earnings. Nordstrom pulled back on promotions to increase earnings and it back-fired. Sales dropped and profit expectations were slashed for the full year
Each store has its own set of obstacles, but the one thing in common is they all have a large store base and this has brought about a burden as foot traffic shoppers has fallen. The in store brands have fallen somewhat out of favor as buys are going for name brands. There have been improvements but non have evolved like Target and Walmart.
Walmart paid $3 billion to acquire on line retailers, Jet.com, Bonobos, and ModCloth. None of which I have ever heard of except reading through reading an article in Forbes business section that this purchase was not what it appears to be. In fact it suggested that Walmart is a wannabe. So it is up to the consumer to prove them right or wrong. Supposedly it is getting out of the UK and going to India which appears to the writer as a positive. Walmart is still walmart. That is my opinion. Have not seen any positive changes except in the grocery sections.
Target, on the other hand, has become a one-stop shop. Target has remodeled its stores and the apparel section looks like a boutique and the makeup section is similar to a Sephora set-up. It is still Target, but apparently, there have been enough changes for earnings to increase.
The truth is department stores look like they did 10 years ago.
In all fairness, there are constraints where geography is concerned for department stores. So you are now able to order online and go pick up your item in a designated location at Walmart and Target. And because of this curbside service e-commerce sales have increased by 42% at Target.
Current attempts to draw shoppers back is not working and at the same time, the fear of having to borrow or use what capital there is to make drastic changes puts the stores who are doing badly between a rock and a hard place. There are still shoppers willing to go to the mall and fight the traffic to get whatever items they are looking for. There are also enough popular stores like Home Goods, TJ Maxx, and Marshalls who are in strip centers and there is always traffic there. The department stores resort to closing down stores. JCrew is closing 20 flagship and outlet stores, and they did have online sales for years and years, but having been an online shopper with them, your things came in stages, or it was discovered two weeks later they no longer had the item in your size, and after several times of trying to show patience, I ran out. Macy’s has already closed 40 or more and need to continue closing more. JC Penney stays open through sheer will power, I suppose. Their jewelry department keeps them from drowning completely. They quickly abandoned the appliance business when it was discovered no one bothered to research where the Sears customers were going to purchase appliances after the closing of Sears stores. Should have been obvious, but apparently not. Lowes and Home Depot cornered that market and JC Penney must have overlooked them as the store the X Sears customers would frequent, so they were in and out of the appliance business in record time. You can’t help a store who functions in this manner.
Well, we will just have to wait and see, but there are so many store closings, it’s hard to keep up with who is surviving and who is drowning. It’s a bit sad, as going “shopping” and doing lunch is a thing of the past I guess, so many other things have fallen by the wayside and this has as well.
Courtesy CNBC Retail News