COVER
Printemps has 20 department stores in France and is set to make its US debut in 2024 .
We plan to pioneer a new format of experiential retail .
the past decade , iconic department store companies such as Neiman Marcus Group ( NMG ), JC Penney and Lord & Taylor also filed . Many have dug themselves out and returned to solvency ; however , the biggest issue all of these retailers have in common is access to capital markets .
The ticket to accessing big-time funds is coming to the table with a portfolio of assets , including real-estate holdings , that could be used to secure funding . This was the case for Saks Fifth Avenue when Hudson ’ s Bay recently sold several pieces of real estate , including family heirlooms , to raise $ 335 million for the store to pay its vendors .
“ At the height of lending , in 2021 , retailers saw almost $ 5 billion in investments ,” Zakour said . “ Year to date is around $ 31 million – an almost 96 percent decrease in two years . Unless there is a clear road to profitability , including numbers that indicate CAC [ customer acquisition cost ] is low and margins are high , companies must have something to put up in case something goes wrong . And not many have those collateral assets .”
The coming year doesn ’ t look much better for mid-sized retailers . With interest rates continuously rising , inflation still at high levels , and general consumer sentiment slowing , mid-sized retailers will still be in a precarious position in 2024 . A survey by consulting group BBDO found that difficulty accessing capital is forcing 91 percent of mid-sized businesses to curb their growth plans . Among the same businesses , 24 percent are being forced to scale back , and 20 percent are struggling to invest in new technology or software to improve their businesses .
As if the uncertainty of access to capital wasn ’ t enough of a challenge for the next year , department stores are also faced with rapidly changing consumer behavior . The shift wasn ’ t sudden . It began as the 2008 recession was taking hold of the American consumer . Shoppers felt the pinch and pulled back on their discretionary purchases immediately , which threw the department-store sector into turmoil .
16 www . insideretail . us December 2023