COVER
Why US department stores may be singing their swan songs
As a powerful new player enters the market , legacy retailers like Nordstrom , Macy ’ s , and Neiman Marcus continue to struggle with changing customer behavior . By Hitha Herzog
R isa Goldberg is a self-proclaimed Nordstrom department store loyalist . Visiting the flagship Nordstrom in New York City is as essential to her as speaking to her niece and nephew . “ There is a real sense of magic apart from the incredible decorations and general holiday vibe . You really get a sense that something seasonally magical is about to happen ,” she says .
When Goldberg is asked how much she spends at the retailer , however , her answer is zero . “ I don ’ t actually purchase anything . There isn ’ t anything to buy ,” Goldberg says with a spritely laugh . “ If I ’ m going to spend money , I will head online to look for discounts and customer service . The shopping experience is much better there .” The mass exodus of foot traffic out of stores and onto digital platforms over the past decade is not specific to Nordstrom . Macy ’ s has also seen its share of wallet diminish , and in December , it received a $ 5.8 billion takeover offer from an investor group composed of Arkhouse Management , a real-estate focused investing firm , and Brigade Capital Management , a global asset manager . Macy ’ s declined to comment on the potential acquisition , which is notably less than the estimated $ 6 billion value of the retailer ’ s real-estate portfolio alone .
In the US , department stores in general have seemingly lost their luster . The Advance Monthly Retail Trade Report for October states that revenue for US department store sales was at $ 10.9 billion that month , down from $ 11.04 billion in September and $ 11.37 billion a year ago – an almost 4.14 percent decrease .
While a shift in spending trends has challenged the retail sector post-pandemic , retail executives have given apocalyptic scenarios on earnings calls citing terrible weather and shrinkage as reasons for revenue misses and underperformance . During the Q3 earnings call , Nordstrom CEO Erik Nordstrom warned retail sales and credit-card revenues would drop by between four percent and six percent . He also noted theft was eating into the bottom line so much it would serve as the reason for more store closures . For Q4 , the company reported a 6.8 percent decline in sales .
“ Losing almost 10 percent in sales in one quarter is brutal ,” says Michael Zakour , founder and chief strategist of retail consultant 5 New Digital . “ But I disagree with the [ general ] idea that retail is dead . Legacy retailers and investing in retail might be dead for now , but e-commerce is set to change the retail landscape in ways we haven ’ t seen since 2005 .”
Across the nation , mid-sized department and specialty stores are also feeling the squeeze . In 2023 , retailers Bed Bath & Beyond ( now acquired by Wayfair ), David ’ s Bridal , Tuesday Morning , Serta Simmons , and Party City all filed for Chapter 11 . In ►
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