Sunday, January 27, 2013

It is the death of the department store and you knew it was dying especially when you chose to buy stuff from other places this holiday season. Some of you chose not to even leave the house to shop and now you know the local UPS delivery guy in his shorts on a first name basis. You know who you are. You and your very smart phone that even allowed you to compare prices to that very lonely cavernous quiet department store.
So, now one type of store is struggling to still exist. The holiday season is the season for buying and this past holiday season saw $600 Billion dollars in sales. But this time shoppers flooded on line sites like Amazon and discount big box stores like Costco and Wal-Mart. Lost in the shopping maze was the department stores like Macy’s and Bloomingdale's. Now it is nothing like the crowds pushing and shoving to get a sales item like in the old movie A Miracle on 34th Street where most of the magic happened in the department store.
Ok, it doesn’t help that nowadays you will probably get your credit card numbers stolen during a transaction, or your car stolen in the parking lot or some nut shooting up the mall where the department stores are now or if you do successfully buy something you have to carry it a mile away because that is how far away you parked the car. Yes, memories. Now I don’t even care if she knows the UPS delivery guy that well, just leave me alone.
The department store was a place that carried everything and anything and was the social center of the city. Now you can go to the mall and meet someone have a quick lunch and never venture into the department stores there. I bought stocking stuffers from vendors on carts in the aisles of the halls never even going into the smaller shops around the department stores. They are called Kiosks taken from the original style of the street vendors that used to roam the streets of inner cities. Now for about a $1,500 rental fee, they block your way and sell you stuff you really don’t need while trying to walk back to your car.
In the past 50 years there are more department stores that have closed than are even open anymore forget about the idea of thriving. Face it, the era of the department store has past. Some are still struggling to hold on to their jobs somehow. Let’s look at the 110 year old JcPenny department store. It is struggling to stay alive. They have a new CEO, Ron Johnson who came from Apple. His dream for the stores is to bring them back as a shopping mecca. It was started in Wyoming back in 1902 by James Cash Penny.
So, the past year the new CEO has been working to transform all 1,100 stores in 50 states into a 21st century state of the art store he calls Jcp. He built a prototype store in Dallas where there are shops within the stores like a Izod section so it looks like a mini mall within the store. While she is shopping you can be playing around at the IPad table opposite the women’s clothes and the kids could be playing at the Lego station making something within sight or visit the in store candy store for treats. Most of all he has lowered the prices and banished the coupons that trained his customers to collect for years.
Ok, it is the typical scenario that there is a new big shot in town that wants to change too many things too soon. So, you have built a customer base built up from people that have the patience to collect and save coupons and show up on the dates the coupons are redeemable for and then you take that work force out of your shops. Guess what happens. The sales of the new Jcp stores dropped 20% in the first three months and have continued to decline. Also, Jcp’s stock price has dropped by half this year alone.
The few department stores that are successful are places like Nordstrom established in 1901. A family member Eric Nordstrom is still in charge. Last year’s sales here totaled $10.5 Billion dollars. He believes that his success comes from great customer service. There is a grand piano with a live player, a concierge at the front door helping you with every request and at times assigning you with your own sales person to get you anything you want. Yes, service with a smile and no return policy so you can bring back anything at any time if you wish. Each sales person has a device that can track an item in your size anywhere in their inventory at any store and they will get it to you if you want. Who does that anymore?
Nordstrom began as a Seattle shoe store in 1901 with first day receipts totaling $12.50 and now has become a specialty department store chain with stores in 31 states across the country. Both guys in charge are still optimistic that they will survive and thrive. The bottom line is finally up to you the consumer who still has choices as to where you want to spend your money.

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