LAS VEGAS – Department store retail is alive and well and going through a transitional period, Hudson's Bay Co. (TSE:HBC) CEO Jerry Storch told attendees during the opening keynote at ShopTalk.
The internet and Amazon are not to blame for the recent run of poor quarterly sales results. "It's all wrong," said Storch. "The future doesn't belong to internet, only to customers. All companies will be internet companies, or they won't be companies at all."
Department stores are facing challenges to be sure, but those challenges are rooted in larger economic forces, Storch told FierceRetail.
"I don't see anything to draw any conclusions, to make any sweeping statements," he said. "There was not some giant macro swing in the last quarter. To say that somehow department stores are yesterday's news requires more factual evidence."
Outside economic pressures including rising health care costs, student debt and escalating housing prices are all contributing factors.
The vast majority of sales are still being made in stores – more than 90 percent, depending on the categories included.
For Hudson's Bay Co. and others, this is what makes the value sector so important. The Saks Off 5th format will open 32 stores, and the acquisition of Gilt Groupe has added a new element that skews a bit younger.
Across the board, department store competitors are doing the same. Macy's has Backstage, Nordstrom has the Rack, and even the more value-positioned Kohl's is developing an off-price concept.
Hudson's Bay is also on a mission to more than double its store brand selection, sourcing from the same fast-fashion factories as Zara and H&M, said Storch.
Still, it's not enough to have great merchandise; retail needs to be an experience too, he said. "For most people, going to the mall and going shopping remains our national pastime. It's not that people don't want to go out anymore, but it's very occasion-specific."
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