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TEXAS – US retailer JC Penney has announced it is to close its Milwaukee distribution and customer care centre with the loss of around 670 jobs, with the company suggesting its supply chain is currently too large for its store footprint.

The news comes in the wake of a festive period which has seen many major department stores struggling to remain relevant – and, in some cases, to continue trading. With most financial results now in, we canvassed opinion on the ‘winners and losers’ over the Christmas period.

Asked for his take on the situation, Tony Reynolds, director at Pragma’s Investor Services team, said: “A number of high street players performed okay this Christmas – Ted Baker, Superdry, Jigsaw, Joules, Fat Face. They have a clear view of who their customer is and make sure their product reflects this – they know what they stand for. So well targeted propositions can do well.”

In the US, the likes of Macy’s, the aforementioned JC Penney and Sears all saw underwhelming festive sales, highlighting the problems facing large, generic department stores in the current trading environment. In the UK, Marks & Spencer saw a 2.8 per cent fall in like-for-like clothing and home sales over the 13 weeks to December 30, while department store chain Debenhams saw UK like-for-like sales drop 2.6 per cent in the 17 weeks to December 30. Sales at House of Fraser also fell 2.9 per cent in the six weeks to December 23.

All of this does rather beg the question: is there a future for department stores? Addressing this, Reynolds says: “Debenhams stands out as a self-perpetuating story. It’s home to a range of brands that nobody understands or has resonance with, in outdated stores. It’s essentially lost its relevance as it doesn’t stand for anything anymore. Plus behind the scenes, it’s stuck in a difficult rent scheme compounded by operational issues. On the flipside, Selfridges remains clear on its role to curate great ranges for its customers and its performance supports that.

“The original role of the department store on the high street has evolved unrecognisably. Is there even a fundamental need for them in the age of omni-channel? It’s about how they stay relevant today – through concessions, curating great ranges, their food offer, it’s a really tough one.”

It is indeed, although there is a train of thought which suggests department stores are doing too little too late. On this note, Kurt Salmon, part of Accenture Strategy, surveyed 50 UK apparel, luxury, beauty and consumer goods retailers with online offerings over the Christmas period to measure them on their ability to fulfil customer orders quickly and accurately. The retailers that excelled were Amazon, Argos, Beauty Bay, Boohoo, Escentual, Lookfantastic, Missguided, New Look, Whistles and White Stuff; note, not a department store among them.

The survey also found that in the UK, retailers gave shoppers free shipping options, but with a catch: 86 per cent of retailers surveyed offered a free delivery option over the busy Christmas period, but half offered it on the condition shoppers picked up goods in-store through ‘Click & Collect,’ as opposed to getting goods delivered to their door. Convenience for customers? One thinks not.

Siobhán Géhin, managing director at Kurt Salmon, told Apparel Insider: “Many UK etailers outperformed their bricks-and-mortar counterparts this Christmas when it came to speedy shipping, with deliveries taking on average 2.6 days compared to 3.4 days respectively. They gave themselves added flexibility during the busy period with shipping date ranges, but the majority delivered for customers much earlier than promised. Etailers also offered lower delivery charges for home deliveries on average, reflecting how many retailers are struggling to effectively manage logistics and fulfilment costs for last mile delivery.”

She added: “If you look at the retailers who excelled over the busy Christmas period, you see a couple of key themes. Top performers are meeting consumer demand for instant gratification – “I want it now” sentiment – with top performers delivering orders on average in 2.6 days.

“Many UK etailers – particularly those operating in fast fashion – outperformed their bricks-and-mortar counterparts when it came to speedy shipping and delivering a seamless customer experience. The majority were able to deliver much earlier than promised. These etailers also offered lower delivery charges for home delivery, something that many consumers now expect.”

Asked wether the current Christmas might be the end for some traditional high street stores, Géhin told us: “No doubt about it, the traditional retail model is under severe pressure. How a retailer fares in the intense competition over the Christmas period can be make or break, so those retailers who have been struggling – and had a poor festive trading period – will be feeling the pressure. Many will be reconsidering the purpose, size and format of their store portfolios, and some will need to review and restructure their financing.”


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