A story from Money Magazine put the week’s bad news from national retailers in perspective, proclaiming that “department stores are in a death spiral.”
It certainly looks that way. Sears and K-Mart are closing stores across the country, including here in Honolulu. Macy’s also shutting down stores by the dozens. And Kohl’s, the formerly high-flying retailer, saw sales slump during the Christmas season while online retailers continued to prosper.
If anything, the struggles of department stores during the 2016 holidays should serve mostly to reinforce the idea that there is no magical formula that traditional retailers can use to reverse trends that have been years in the making. Consumers have grown steadily more comfortable making the bulk of their purchases online, and they’ve come to expect low prices, deep discounting, and a huge selection of rapidly changing merchandise—all factors that undercut the classic, slow-moving department store model.
It’s no secret where shoppers are turning instead of department stores. American consumers spent a record high $91.7 billion online during the holiday season, up 11% over 2015. Amazon, the world’s largest e-retailer, dominated the season, accounting for nearly 40% of all online purchases during certain peak periods.
A story from Reuters notes that it’s not simply the shift to online shopping that has the traditional department stores on the ropes.
Apart from competition from Amazon, department stores have been hit by a shift in spending away from apparel to experiences such as dining out and traveling.
That’s right. People are not only shopping in different places, they’re shopping for different things.
Reading through the news, let’s be clear. I’m not worried about the department stores, except that this death spiral is just more bad news for newspapers and the delivery of news.
Those inserts featuring the familiar names of national retailers have traditionally been delivered as inserts in your local daily newspaper, and for decades provided a relatively robust source of income for the newspapers. Now it looks like they’ll be going the way of “Help Wanted” ads, real estate and automobile ads, which once fed the news business but now have almost disappeared from the pages of newspapers.
The retail closings are reflected in continuing layoffs of reporters, both at the national level (the Wall Street Journal and New York Times continue to shed reporters) and the local level (the Seattle Times has just announced another round of layoffs).
It’s not a pretty sight.