2. The Robust Economy Is Barely Helping Department Stores
The US economy continues to perform very well, with more job openings than people to fill them, auto sales increasing 1.9% for the first half of 2018 and May retail sales increasing 5.9 from May 2017, but department stores aren’t part of the parade.
According to data from Deloitte, during the past 5 years, the stores where the middle-class shopped traditionally increased sales by only 2% while high-end retailers’ sales increased 81% and budget retailers 37%.
Although some stores (Macy’s and Kohl’s) have reported better-than-expected sales and profits recently, one of the major trends affecting department stores is the shrinking of the middle class and its shift to shopping at discounters and dollar stores.

3. Closing Stores and Decreasing Revenues
According to Coresight Research’s 2018 Midyear Wrap-Up Report, major US retailers had closed 4,136 stores, which included 632 department stores and mass merchandisers and 918 specialty apparel stores.
According to the 2018 Fortune 1000 list, Macy’s, revenues decreased at Sears, JC Penney and Neiman Marcus while they increased at Kohl’s, Nordstrom and Burlington stores.
Sears Holdings announced at the end of May it was closing an additional 72 stores and 100 of its Sears Hometown and Outlet Stores will also be closing.

4. Macy’s Decline Is Road Sign for Entire Sector
As America’s largest department store, Macy’s serves as an excellent barometer for the sector’s condition. For the 2012–2017 period, its annual revenues decreased $3 billion (from $27.69 to $24.69 billion) and its sector share from 22.3% to 18.2%.
In an attempt to compete with the significant discounts at T.J. Maxx and Nordstrom Rack, Macy’s announced during February 2018 it was adding Backstage, its off-price concept to 100 more of its stores, thus becoming more of a discount retailer.
Although Amazon is responsible for some of this decrease, less than 50% of respondents to a January 2018 survey from Coresight Research said they switched their apparel purchases from Macy’s to Amazon.

5. Beauty and Apparel Are Two of Few Bright Points
Although many consumers are switching from Macy’s to other stores to shop for apparel, its shoppers tend to be more or less equally from all age groups compared to its competitors, according to a January 2018 Coresight Research survey.
Department stores have responded to the success of beauty retailers, such as Ulta and Sephora, by offering them space in their stores. Bluemercury and Sephora now have a presence in some Macy’s and JCPenney locations.
Another positive for department stores is their average shopper is a bit older and more affluent than the average apparel shopper. T.J. Maxx attracts more shoppers 18–29 than all other age groups and is its largest age group compared to its competitors.

6. 2018 Department Store Shopping Snapshot: Buffalo and Seattle-Tacoma
According to data from The Media Audit’s spring survey of the Buffalo, NY GMA, the largest percentages of adults 18+ with incomes less than $50K shopped at K-Mart and Kohl’s, at 17.4% each, and JC Penney, at 16.5%.
By comparison, JC Penney was first at 15.7% among adults 18+ with incomes less than $50K in the Seattle-Tacoma GMA winter 2018 survey while Macy’s was first at 30.5% among adults 18+ with incomes more than $50K.
For adults 18+ with incomes more than $50K, Kohl’s was first, at 37.1%, followed by JC Penney, 30.7%; K-Mart, 16.6%; and Sears, 15.4%.

7. 2018 Department Store Shopping Snapshot: Minneapolis-St
2018 Department Store Shopping Snapshot: Minneapolis-St. Paul and Las Vegas
In Minneapolis-St. Paul, Kohl’s had the largest percentage in two education categories: 24.0% (high school) and 43.3% (college degree); however, Kohl’s index was 67 among high school graduates and 122 among those with at least one college degree.
Among all working women 18+ and those from affluent households ($75K+ income) in Minneapolis- St. Paul and Las Vegas, the largest percentages shopped at Kohl’s during the past 6 months.
Similar results occurred in Las Vegas, with Kohl’s having the largest percentages: 14.9% (high school) and 31.8% (college degree), but the index among high school graduates was just 60, compared to 129 among those with at least one college degree.

8. Advertising Strategies
Although just two GMAs, The Media Audit data at the top of page 3 of the Profiler indicates JC Penney and Macy’s do quite well, having the highest percentages of adults 18+ who view TV during an average week from 5am–7am.
Local/Regional department stores may be able to attract more working women from affluent households by creating special discount days and featuring discounted merchandise.
To compete with the major department store chains, local/regional department stores should emphasize their beauty and apparel offerings in their advertising and take advantage of local TV’s large share of older viewers with specials targeting them.

9. New Media Strategies
Local/Regional department stores may be able to create a competitive edge by asking customers in different age groups to serve as “brand ambassadors” and post images of their shopping experiences/purchases on social media in exchange for a special coupon/discount. 
Local/Regional department stores may be able to appeal to more working women with regular social media posts with special offers/discounts for apparel and other merchandise to make their working day easier and more convenient.
Department stores can attract more shoppers’ attention by scheduling a quarterly live streaming video feed, featuring interviews with sales associates explaining special deals and discounts and customers showing what they purchased and the money they saved.