The Department Store Isn't Really Dead

Sheridan Hessing 11/04/2016

The department store is something that's seen somewhat of an American-built classic retail category. The kind of store that you can walk into and buy everything - from crockery to car seat covers to BMX bikes, it’s possible to purchase something for every room of the house without leaving the store. Here in Australia, we’ve also embraced the idea of one stop shops that cater to our every whim amongst their various sections.

Despite capitalism being alive and well, the struggle of department stores to remain profitable in this day and age has been well documented across the media. Sales have been dropping considerably since 2001, at the total cost of about 5 billion per month over the past 15 years .Major chains are reporting losses, store closures and company reconfigurations as they attempt to stem the flow of customers upping and leaving their services behind.

But where are these customers going exactly? The answer is obvious, and is where most conversations about commerce and retail end up in 2016 - online. Online shopping in Australia is booming, as it is across the rest of the world, and it’s making it consistently easier for new retailers to set up shop all the time. Specialised stores are easier for customers to reach, making getting exclusive products much simpler than in days past. But whilst stores aimed at niche audiences are on the rise, so are all encompassing retailers, that offer a wide range of products for a wide range of purposes.

They may not be be coined as such, but e-retailers such as MyDeal Australia are the online equivalent of the department store. Offering both mattresses and garden sheds, there seems no better way to define these ecommerce retailers, who have taken off where conventional brick and mortar stores seem to be failing.

The question begs to be asked in this case - what's the difference between the two? Why is that that MyDeal and the like are growing rapidly, and the Macys of the world are flailing?

The lack of overheads allows for money to be spent elsewhere, improving the customer's experience beyond what it possible in a mall. Money that isn’t spent on store space and display racks can be focused on customer service, delivery services and product range. Much less gain can provide much more improvement when your costs are less to begin with.

Our shrinking attention spans, spare time and patience also plays a big role. A trip to a shopping centre not only takes up precious time in your day, but requires much more manual searching through items to find something you like. It can crowded and noisy, and at the end of the trip you may not have even found the item you were looking for. Why would you bother when you can find exactly what you need, in minutes, from the comfort of your own desk?

One of larger drawbacks of online stores in the past has been immediacy. When you walk into a department store and purchase a shirt, you can take it home and wear it that night. As technology, organisation and competition grows though, overnight and same day shipping is becoming increasingly common and excessively cheaper. Taking to the stores is no longer the only way to have an outfit in your hands by the weekend.

In many ways, online stores with multiple sections are the twin of the department stores that have ruled the retail sphere in the past. But it’s these key differences, and many more, that are allowing them to grow at an incredible pace.

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