By Natalie Daniels
Even before COVID-19, department and retail stores have struggled keeping themselves afloat. Forever 21 is the most recent big retail store to go bankrupt. While the brand has steadied their sales since their bankruptcy in September, that hasn’t stopped the decline of big retail and department stores. For instance, JCPenny filed for bankruptcy in May and department stores like Neiman Marcus and Macy’s will also close down some of their stores.
What are the root causes of such big losses for these stores? With the rise of technology, online stores have become a popular market, decreasing the need for physical ones. Statistics from USA Facts show that in 2018, online sales made up 9.9% of the $5.3 trillion in retail sales. Reports from CNBC show that in 2019, non store (online) retailers take up about 11% of retails tying with general merchandise stores.
Online retail is often easier and less of a hassle than in-person. Buying clothes online prevents consumers from having to take trips to stores and potentially deal with lackluster customer service or busy lines. Although it can be difficult to find clothes online that will fit you without trying them on first, it doesn’t stop people from using an online platform.
The digital agency Bluefoot provides five factors that online shopping continues to affect in the retail world.
1. Decrease in Brand Loyalty
The advancement of technology helped create endless online platforms for retail. Before this, consumers would continue to buy clothing from a store they liked. Now, consumers can easily buy from multiple outlets and compare and contrast prices, fits and styles. This lessens loyalty to one specific brand or store.
2. Online Reviews
With online reviews, a consumer now knows how a product looks before even trying it on at the store. This can lessen traction to a certain store.
Consumers can now use their smartphones to compare between the store’s online clothing and physical store clothing. They can make the decision whether they would purchase from online or in store.
4. Company Websites
If a company website is not organized or enticing, it won’t engage a consumer. Websites can also help bring consumers to a store through coupons—ones that you can only use for in store purchases.
If a store doesn’t have a real presence on social media, they lose a personal connection to their followers. Because so many people use social media platforms like Instagram and Facebook, they rely on stores to interact with them and show them how their business stands out from others. Without interaction, you lose the interest and lose the potential customer to visit a physical store.
Department stores and popular retail brands also seem to miss out on large demographics: Millennials and Generation Z. After the Great Recession in 2008, these two generations are more financially aware than generations before them. They are less likely to spend money on expensive clothing at a store like Neiman Marcus and would rather find cheaper and more sustainable options. While stores like Forever 21 do provide cheap prices and attract a young demographic, they have issues in offering sustainability along with a lack of an attractive online presence.
How can these stores save themselves? Harvard Business Review argues that after COVID, there won’t be a “back to normal” regarding retail. Department stores will have to work in a COVID world, meaning enforcing safety precautions within their stores like face masks and social distancing. They will also have to make the in-person experience much more extraordinary, giving a reason to purchase clothing physically in a store rather than online. Artificial intelligence will need to become a popular tool for departments and smaller retail stores to use everywhere in order to keep up with supply and demand, trends and consumer behavior.
As we approach the future, department stores need to embrace an online presence. Without it, they may fall behind and never recover.
Natalie Daniels is an editorial intern for Dreamlette. She is a journalism major at Emerson College with a love of storytelling. Her favorite topics include entertainment, fashion, lifestyle, social issues, and music.