Global department store spend to rise by $100 billion by 2019: new study
The global department store market will grow by 22.2% in the five years to 2019, according to a new study.
Verdict’s Global Department Store Retailing report is predicting that the market will be boosted by a 38.1% rise in spend in China which will account for almost half of the $100 billion incremental spend. Furthermore, 30% of all department store sales are expected to be made in China by 2019 as a result of rising affluence, increasing urbanisation and expansion opportunities for both domestic and overseas players.
Kate Ormrod, analyst at Verdict, explained: “There are extensive growth opportunities in China; however, as overheads such as labour costs rise, we expect less profitable and weaker players to fall out of the market. Remaining players must further differentiate their offers through greater use of private label ranges, investment in in-store environment and brand exclusives to drive footfall and sales.”
While retailers operating in China and across South East Asia significantly increased their market shares in the last five years, Verdict found that the shares of the leading global department stores had weakened.
Never Miss a Retail Update!While US chain Sears saw its global market share decline by 2.5%, JC Penney’s almost halved to 2.4% due to a change in pricing structure and a proposition revamp.
However, Nordstrom and Macy’s both increased their shares of the global market – the only two to do so in Verdict’s list of top 12 department store chains.
Ormrod added: “Since overtaking Sears’ top position in 2012, Macy’s has increased its lead over its rival and is forecast to reach a 6.4% share in 2014, and while it has not been without its challenges, Macy’s product offer and store environment have been central to its success. Nordstrom’s continued investment in innovation and its decision to embrace multichannel has secured market share growth, and we expect it to remain a strong force in the US market in the coming five years.”
