Why department stores are going out of fashion

BHS has bowed out and Macy's is shutting 100 stores. Is the age of the department store drawing to a close?

by Jack Torrance
Last Updated: 15 Aug 2016

That Macy’s has announced today it is shutting 100 stores should come as no real surprise. They used to be the kings of the high street (or ‘Main Street’ in language of our American cousins) but department stores have come unstuck of late, especially those in the middle of the road.

Today’s news follows the equally predictable revelation that the last branch of BHS, a similarly uninspiring chain of department stores, will close its doors next week. The likes of House of Fraser and Debenhams aren’t looking quite so bleak but they’ve certainly struggled to cope with the rise of ecommerce. To borrow a particularly nasty piece of jargon from the CFO of Macy’s, the US – and the UK – is ‘overstored.’

All retailers face the threat of online disruption but it’s a uniquely big problem for department stores because they struggle to offer something the internet can’t. The reason people liked them is that they could buy everything from a massive range under one roof. But no department store can compete with the range of Amazon.

Other retailers have an edge on the internet. By focusing on certain products they can get really good at selling them. Think of Lush, the promised land of soap lovers, which entices people in with its smelly aromas and cloyingly friendly staff. Or IKEA, where families will happily spend a day picking out flatpacks before chowing down on meatballs.

These are places where people can get specialist advice in person, and destinations that people want to spend time in. Even HMV, which was forced onto life support by the rise Amazon, managed to bounce back by tapping into a growing interest in vinyl and improving its shops. 

Of course there are some exceptions to the department store death-throes. The likes of Selfridge’s, Harrods and Fortnum & Mason are looking in pretty rude health. But that’s because they are so few in number and tourist attractions in their own right. Harvey Nichols has carved out a strong niche in the upper end of the market. And John Lewis has been doing well since displacing Marks & Spencer as the darling of British high street.

But be in no doubt that middling department store chains are seriously under threat. It’s certainly hard to imagine those 100 Macy’s stores, let alone those of BHS, ever opening their doors again.

Image: Albert Bridge/Flickr


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