Department stores risking obsolescence without 'disruptive change' says GlobalData

9th February 2018

Department stores should make ‘disruptive changes’ to their business models to avoid becoming obsolete, according to a new report from data and analytics company GlobalData.

Benefits which helped department stores prosper in the past have been eroded by the growth of efficient online competitors, and by increasingly diverse discount and convenience stores, says GlobalData. The company says that, meanwhile, many department stores have failed to upgrade their stores.

GlobalData digital retail analyst Andreas Olah says, “Department stores have finally realised that they are no longer market leaders and have to make disruptive changes to their product offerings and business models, and bring in digital technologies to reach out to customers in a modern and engaging way. They also need to upgrade their supply chain, logistics and staff management systems to improve margins and remain competitive.

“To compete with specialist and online retailers, department stores need to establish an omnichannel strategy that allows customers to seamlessly complete their shopping,” Olah adds. “They should also judiciously use space to offer distinctive in-store experiences that may include areas dedicated to product demonstrations, games, cafes, and click-and-collect. Smart devices such as interactive kiosks, tablets and digital signage can be installed to improve customer interaction, while also enabling data collection for customer profiling and analytics to enhance operational efficiency.