John Wanamaker, where are you now that we really need you?
As we sit here in the summer of discontent for the future of the great American department store, one can only pine wistfully for those pioneers of the genre, Wanamaker and R.H. Macy and Stanley Marcus and all the others who made this channel the pinnacle of the retailing world.
Except now we talk about it in the past tense.
Virtually every remaining American department store company is in turmoil, trying desperately to find the right formula to tomorrow’s success. And it’s safe to say not a single one has figured it out yet.
Ponder all the different approaches being taken:
Nordstrom is considering taking itself private to escape the quarterly glare of Wall Street, which rarely rewards and commonly punishes any public corporation that doesn’t live up to expectations. In the meantime it continues to find its growth not in its core department store business but instead in its outlet and, to a lesser extent, online operations.
Neiman Marcus continues to play its coquettish game of touch-me-don’t-touch-me, a process that has left it with massive debt and no clear path to profitability. Maybe somebody will buy them … but then again, maybe they won’t.
Hudson Bay Company , along with its Saks, Lord & Taylor and other assorted nameplates, is treading dangerously close to a Campeau-esque game of smoke and mirrors, continuously adding on pieces to disguise the fact that its core businesses remain as lost in coming up with a merchandising strategy as its mall brethren. It’s monetized its real estate through the REIT process but when it comes to retailing it’s looking increasingly like a house of cards.
Belk is now in the hands of the private equity boys, the family being smart enough to cash out when the cashing out was good. But without an outlet or robust online business to drive growth, one wonders how it will service the big debt that comes with big deal payouts.
Dillard’s is, well, Dillard’s. Frankly, it’s hard to figure out what its end game is. Will the family sell, will it buy, will it plod along endlessly until it eventually runs out of money, heirs, patience … or all three?
And finally there’s the big boy, Macy’s , which has both the most to lose and potentially the most to gain. Surely, it has too many stores for today’s retailing environment. And its Backstage outlet start-up has yet to prove it has the model to be successful in an increasingly competitive marketplace. Bloomingdale’s remains an outlier that may become an expendable rounding error … though it shouldn’t be.
But one can make a case that Macy’s is the only retailer in the department store world that is actively addressing the core problem facing the entire channel: a broken merchandising model.
Not everything Macy’s is doing is working to change that. In fact, a lot of it hasn’t made much of a difference at all. But there are signs of hope. Its online operation is a good one. And it has the big flagship stores that are going to present the best physical environments for the success of in-store retailing. It just needs to get there … and it needs to do that much quicker than it currently is.
Another of the founding fathers of department store retailing, Marshall Field, had a famous saying: “Give the lady what she wants.”
That still holds true, today’s department stores just have to figure that out … and fast.