Should Your Department Store Be Smaller?
Earlier this year, J.C. Penney announced it wanted to make its department stores smaller. We can understand why. There are a lot of pressures pushing back against large department stores. Here are just a few:
- Online shopping has increased tremendously
- Mobile apps make online shopping easier and more fun
- Department store competition is no longer the chain across the street or on the other side of town; it’s online
- Keeping large amounts of inventory on-hand and then having to unload it at huge discounts eats into revenues
- The overhead for large-space department stores is huge
- Large department stores with a lot of unused space is inefficient and counter-profitable
Why Smaller Department Stores Are the Trend
There’s a reason J.C. Penney and other large department stores want to go smaller. Some iconic brands are going out of business or closing stores. The competition is simply too much.
You might find it desirable to go smaller for a few reasons:
- Shopping is moving online. And that means your customers can just as well shop your store from the comfort of their living rooms. So why not give them that option?
- You can reduce your store inventory. Keep fewer products in stock and fewer amounts of those products on the shelves. This saves you overhead costs and keeps your assets liquid.
- Stock only the most popular items in the store. Let your customers buy everything else online or by special order.
- Centralize your inventory management to a few large warehouses instead while reducing your store sizes. This is less expensive and makes it easier to transfer products when you need to.
- With smaller stores, you don’t need as much staff. Cutting payroll expenses will make your department store chain more nimble and agile. You’ll be more efficient and profitable in the long run.
- Smaller stores are the trend. You may get more foot traffic, but the foot traffic you get will be more loyal. You can also offer incentives for customers to enter your store and buy off the shelves.
It is getting more challenging to manage a department store competitively. Don’t give up. Just go smaller and focus on the right products.