Is there a crisis in American chains?

The American department stores are not going through their best time; they have become victims of the online commerce and of the demographical changes.  Is there a crisis in the US department stores? This is our version.

Last August the multinational company Macy’s announced the closure of 100 stores, of which three had already been closed in the middle of 2016; another 63 will close throughout spring of 2017 and two more mid-2017.

According to the company, the loss is due to the unstoppable growth of the internet commerce and that consumers have changed their behavior in the way they shop.

Macy’s indicates that the closure of 68 stores will reduce their work force in about 6,200 workers. The company expects to save 550 million per year with these measures in cuts, which will be invested in the digital business and marketing to strengthen internet sales.

‘This is not the only commercial group to which the online commerce has affected’

The big department stores blame Amazon, who is gaining consumers from the United States leading with a big difference online shopping. According to the Bain & Company report, the company of Jeff Bezos will keep on growing until the 50% of the American business in 2028.

According to government data, online shopping is growing a 15% annually.

The profits and the sales are reducing increasingly in the first trimester of 2017 for the US department stores. The big companies only see solution investing in new technologies and new selling strategies, to fight against the new style of consumers.

A lot of the retailers of the US have realizes that they have too many stores in this difficult times, and are reducing the spaces.

Examples of chain stores such as American Apparel, The Limited and Sello húmedo closed all their stores at the beginning of 2017. Others, such as BCBG Max Azria, JCPenney, Walmart, Sports Authority, Target, Kohl’s, Kmart, Sears… informed of the closure of stores in the United States this year, as a result more than 50,000 people will lose their jobs.

The department stores need to reinvent themselves and to invest much more in online marketing if they want to survive in the commerce of the 21^st century and not lose the place they had in traditional commerce. A clear example are the renovations of Nike and Adidas transforming their stores in specials, to reflect what their clients want, a more convincing shopping experience with differentiated products.

It has become a necessity for the fashion and luxury firms to turn the purchase into a unique and unforgettable experience, getting the consumer to go to the store and not buy through the internet.

Elements such as a personalized attention from the workers of the firm, the knowledge of the products, technological intelligence tools with interactive screens, such as the ones applied by Adidas or a coffee shop in the Armani store.

The main brands establish strategies to impact the consumer through esthetics, architecture and sensorial elements. Some examples are Bershka, recognized for the volume and the type of music played in their stores or the new opening of New Balance that we advised from Cat Real Estate in the past, with a new identity and difference, this being the target of the brand.

Foreign chain stores such as Zara, Forever 21 and H&M, lead the US market by selling 30% through the online store. The local chain stores such as Abercrombie, GAP and Guess are actually incapable of fighting against the ever-expanding European chain stores in that sell at a low cost to the younger clients.

Currently in the digital age, brands have to give the consumers compelling reasons to buy and visit their stores, if not they can fall into irrelevance.

To reinvent themselves and fight the online shopping, brands will have to offer differentiating elements that bring value to the selling point and offer something different, so that consumers want to go to the physical store.

Is there crisis in the US department stores? It seems as if there is. Traditional commerce is affected by giants of the online sector such as Amazon, and the department stores that made the mistake of not having a sales strategy are now investing all their resources innovating in internet commerce and searching strategies not to sink and be displaced of the sector.

Reinvent or die that is the complicated goal that stores have to develop to get into an ultra-competitive market.

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