Another round of department store closures kicked off the new year with the closing of 200 stores by Macy’s and Sears, which also owns Kmart stores. Fortunately, the list of closings didn’t include the Sears or Kmart stores located here in Highlands County.
For many, the closings are just another sign of the inevitable future without department stores. Many people and news organizations speculate that the retail world is shifting to the likes of Amazon, Wayfair, Overstock and many other websites, so we won’t need department stores. Others speculate that retailers over-built during good economic times and closings are a correction and adaptation to consumer behavioral shifts.
Most industries face a transformation of their product or services, but as the process evolves, many love to predict the demise. Most businesses have been victims of obsolete predictors. Nobody really knows the future of any business’s product or services. Businesses are always changing and adapting to technology as well as the wants and needs of consumers.
The Dallas Morning News reported recently that JCPenney CEO Marvin Ellison said at a Dallas real estate conference on Wednesday that the company is planning to close some of its 1,014 stores soon. But he didn’t say how many stores would close this year. Last year, JCPenney closed seven stores, mostly in smaller markets.
Store closings that result in job losses, Ellison said, are the hardest decisions and the only ones that give him “sleepless nights.”
“But there are some smaller market locations where we have to decide, does the mall or our store meet our brand standards?” he was quoted to have said. “If I wouldn’t want my children to work there or my wife to shop there, then we need to create standards with our mall partners to spend capital.”
However, he said, JCPenney’s store fleet remains a key part of its online business largely because shipping costs continue to rise. “Only two companies make money from e-commerce, UPS and FedEx,” Ellison said. “There is not a pure play making money including Amazon on the retail side.”
Buy-online-and-pick-up-in-store transactions and merchandise returns in stores help alleviate shipping costs for retailers. Penney’s added those capabilities to its stores last year. Ellison forecast Penney’s online sales will increase to more than 20 percent of its total sales over the next five years as consumers increase their use of mobile technology.
“Brick and mortar continues to be the future,” Ellison said at the conference. “That’s why five years ago the same people who were saying stores will be extinct are now looking at how fast they can open brick and mortar stores.”
Higher shipping costs are behind that, he was quoted as saying in the article. About 40 percent of Penney’s customers who come in for their online pick-ups and returns, buy something during the store visit, he said. Return customers spend twice as much as the price of what they were returning and about 92 percent of customer returns are made in stores.
So, I guess the future of our traditional department stores is not as dark and gloomy as some say. I still enjoy walking up and down the aisles of a store to shop different brands, models and styles.
There’s always that designer that just doesn’t seem to follow the sizes, or maybe I’ve expanded, and my clothes joined the expansion. You just can’t test the quality by touching or feeling with a mouse or your finger on your smartphone. An in-store display gives consumers the chance to compare the quality of brands up-close.
I hear many talk about the importance of shopping local, but they’re usually referring to the small mom-and-pop businesses in town. We forget that our national retailers employ our local residents and play an important role in our community’s economy. So, let’s shop local Highlands County (small, medium and large businesses).
Glen Nickerson is the publisher of the Highlands News-Sun and Highlands Sun. You can reach him at firstname.lastname@example.org.