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Are We Witnessing the Demise of Department Stores?

January 28, 2016 2 min read

Are We Witnessing the Demise of Department Stores?

The Demise of Department Stores: A Downward Trend

Low and mid-priced American department stores have been on a steady decline for over a decade. Decreasing department store profits have long been a topic of media coverage. There are a number of factors in this equation, including a shrinking middle class and the popularity of bargain hunting. It begs the question: what does this say about our economy and our changing shopping habits?

The Buying Power of the Shrinking Middle Class 

The buying power of the middle class has famously shrunk and better bargains can easily be found outside of department stores. By catering to a largely middle class clientele, low and mid-priced department stores have long maintained positions as one-stop shops for the average American, but they are now being undersold by cheaper options. Fast fashion retailers and discount megastores have become popular shopping destinations. People are looking for lower prices, and retailers are now competing on a tough playing field where customers want great looking items at a great price. Low and mid-priced department stores have not adapted quickly enough to these changing trends. Their prices have tended to stay higher than their competitors, and their merchandise has not evolved quickly enough to meet shopping trends.

Another Factor: Department Store Overheads 

Department stores sell everything from housewares to coats in huge retail spaces that are costly to staff and maintain. They tend to operate in high-rent spaces that require a lot of build-out. Online retailers and discount megastores on the other hand, operate in vast warehouses and large open buildings that are much mess costly to build and run. Given their competitors' lower overheads it is easy to see why department stores are struggling.

An Overall Trend in American Shopping Habits

Overall, the consensus seems to be that average middle-class consumers are more wary of parting with money than they were before the recession. Even though people are shopping again, they are buying more carefully and they are consistently searching for a better price.

Where Do Designer Resellers Fit into This Picture?

 Designer resale boutiques have seen an upturn in popularity in recent years. These retailers cater to a variety of clientele who are purchasing more carefully and who want to avoid paying full price. These customers are also more cognizant of sellingtheir used designer goods rather than let them sit unused in their closets. Due to these factors the designer resale industry is projected to remain steady.

   Tell Us What You Think What do you think is causing the change in American shopping habits? How do you think retailers can better serve these changing needs?

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