By Tonya Garcia, MarketWatch
The Neiman Marcus location at The Shops & Restaurants at Hudson Yards offers a performance space that can accommodate up to 100 people, space for cooking classes, beauty services including eyelash extensions, and museum-quality pieces of art.
There’s also high-end clothes, shoes and beauty products to buy, but the store isn’t simply wall-to-wall merchandise. It’s a refreshed take on the department store, which may be just the thing that will get people back in these large retail emporiums.
As with all parts of the retail sector, department stores have felt the pinch caused by the shift to e-commerce and the growing preference for experiences over “stuff.”
Moreover, the traditional “everything for everyone” approach falls short when compared with the likes of e-commerce giant Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +0.91% , whose “endless shelf” has become the first place nearly half of digital shoppers go to start a product search, according to eMarketer data .
“The old retail strategy used to be assortment and availability,” said Brendan Witcher, principal analyst at Forrester. “The internet put a big crunch on that. The internet carries everything. You’re never going to have a bigger assortment than the internet. Store assortment and availability is no longer a competitive advantage.”
To compete, department stores are upending their mission and purpose, focusing on a retail experience that incorporates the most important and potent buzzwords in retail today: personalization, curation and engagement.
“They’re turning from places to transact into places to interact,” said Witcher.
To be sure, this doesn’t mean that shoppers don’t want to make purchases in stores anymore.
“No one wakes up and says I’m an online shopper from here on in,” Witcher said.
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A March report from Moody’s shows that fourth-quarter 2018 same-store sales were up at Macy’s Inc. /zigman2/quotes/201854387/composite M +6.82% , Dillard’s Inc. /zigman2/quotes/200348006/composite DDS +10.02% (both up 2%), Kohl’s Corp. /zigman2/quotes/210414114/composite KSS +11.49% (up 1%) and Nordstrom Inc. /zigman2/quotes/203902116/composite JWN +6.05% (up 1.7%).
Still, shares of Macy’s are down 15.5% over the past year, Dillard’s has slipped 7.5%, and Nordstrom, which was just upgraded at KeyBanc, has tumbled 9.2%. Kohl’s stock has rallied 12.4% for the period, outpacing the SPDR S&P Retail ETF /zigman2/quotes/206947004/composite XRT +2.38% , which is up 1% for the period, and the S&P 500 /zigman2/quotes/210599714/realtime SPX +2.62% up 8.7%.
These retailers are taking steps to ramp up offerings that will drive traffic. For example, Kohl’s has partnered with Amazon on returns. And Nordstrom has launched Nordstrom Local in Los Angeles, stores that don’t have inventory on hand.