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February 2014
Global Department Store Retailing | Verdict Channel Report page 2
Mature markets North America and Europe su...
February 2014
Global Department Store Retailing | Verdict Channel Report page 3
Private label should be central to the dep...
February 2014
Global Department Store Retailing | Verdict Channel Report page 4
Chinese players need to invest in private ...
February 2014
Global Department Store Retailing | Verdict Channel Report page 5
In contrast to Q2, for the nine weeks ende...
Global Department Store Retailing sample pages
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Global Department Store Retailing sample pages

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We saw a decline in global department store expenditure growth in 2013 caused by a slower European recovery and weak Japanese currency rates. However, we forecast that the market will recover in 2014, growing by 3.5% as department stores invest in improving their instore services and multichannel offer to drive shopper expenditure. Learn more with sample pages from our Global Department Store Retailing report.

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Global Department Store Retailing sample pages

  1. 1. February 2014 Global Department Store Retailing | Verdict Channel Report page 2 Mature markets North America and Europe suffer and lose share… While North America and Europe combined accounted for over half of the market, at 53.5%, in 2009, they have suffered significantly in recent years, with sales weakening due to saturation in the market, lack of growth opportunities and department store players needing to steal market share away from rivals rather than being able to generate organic market growth. Market share is expected to decline for North America and Europe by 4.9 percentage points and 3.5 percentage points, respectively, in the five years to 2014, causing their combined share to fall to 45.1%. …while China and Latin America continue to achieve strong growth The dominance of North America and Europe is weakening, and the focus is now shifting toward the developing markets of China, South East Asia and Latin America, as they have continued to achieve strong growth and gain interest from international players. Department store operators can achieve growth more easily in these regions due to there being fewer local players and therefore less competition, while growing populations, increasing affluence and consumer willingness to purchase discretionary items will drive consumer spend. Figure 1: Share of department store expenditure by region (%), 2009 and 2014e 31.3% 26.4% North America 22.2% 18.7% Europe 18.1% 26.9% China 17.3% 13.5% Japan 1.2% 1.4% Middle East & Africa 6.9% 8.6% Asia Pacific ex Japan & China 2009 2014e Share of global sales 3.0% 4.5% Latin America Source: Verdict V E R D I C T
  2. 2. February 2014 Global Department Store Retailing | Verdict Channel Report page 3 Private label should be central to the department store proposition Private label ranges drive footfall and loyalty Offering consumers unique ranges and brands is necessary for department stores to differentiate from competitors and sector specialists. While providing private label ranges is a logical way to achieve this, they are not vital for all department store operators, as the likes of Selfridges can attest to, instead focussing on branded product exclusives and investing in services and the store environment to distinguish itself from rivals. We do, however, expect more retailers to invest in their private label proposition over the next five years as markets become more saturated and competition increases. These ranges can act as major drivers of footfall for stores and online, as it is unique to that retailer, and if retailers successfully build the profile of their own brands, like Debenhams and Kohl’s have achieved, they can also help the department store to garner customer loyalty, ensuring return visits and repeat purchases. Figure 2: Benefits of private label in department stores, 2014 Benefits of private label Drives footfall Can help to appeal to a new customer base Garners loyalty Quality and design must be on par with branded offer Build margins Differentiates product offer Designer ranges add clout Source: Verdict V E R D I C T
  3. 3. February 2014 Global Department Store Retailing | Verdict Channel Report page 4 Chinese players need to invest in private label We expect private label to become a key battleground for department store operators in China, which have previously relied on a concession-based business model, with little focus on developing their own ranges due to the investment involved and shoppers’ demand for branded goods. Players must set themselves apart from competitors, so alongside brand exclusives and limited edition branded ranges, private label development would be a local solution to the homogeneous market. Department store operators in China should therefore introduce private label ranges by international designers, providing exclusivity to their proposition, as long as products are of high quality and showcase their design credentials. Sears and JC Penney are the greatest losers Macy's holds 1.7 percentage point lead over nearest rival Sears US player Macy's is forecast to maintain its leading market share in 2014, achieving 0.3 percentage point growth in the five years since 2009. Macy's has not been without its challenges in its 2013/14 financial year, recording underperformance in Q2 – with sales down 0.8% on the year, and comparable sales also down 0.8% – but its investment in promotional activities and marketing, as well as widening its price architecture at the lower end of its proposition to better appeal to cash- strapped domestic shoppers, has paid off.
  4. 4. February 2014 Global Department Store Retailing | Verdict Channel Report page 5 In contrast to Q2, for the nine weeks ended January 4, 2014 – incorporating the core Christmas trading period – comparable store sales were up by 3.6% on the year. Macy's turnaround in trading performance is impressive, and in a mature market such as North America, Macy's has been able to achieve organic share growth by attracting shoppers away from competitors by ensuring its store environment and product offer are appealing. We do not anticipate any competitive threats to Macy's leading position in 2014, as its closest rival Sears is now some way behind – despite being in pole position prior to 2010. Nordstrom to seize additional market share in 2014 as investments pay off We expect Nordstrom's focus on customer service with its Fashion Rewards loyalty scheme, and its investment in multichannel activities and integrating its online and offline operations, will help the retailer to grow its market share by 0.1 percentage point to 2.9% in 2014. Nordstrom is one of just two players that have grown share in the past five years, posing a real threat to its rivals in the US such as Macy's, Saks and Barneys. The announcement in January 2014 of plans to open a third distribution centre in the US in summer 2015 will ensure that the retailer can meet consumer demand for fast delivery of online orders and support future growth of its e-commerce business. This report is available to purchase on our store Access sample pages to some of our global reports: GLOBAL LUXURY RETAILING GLOBAL AIRPORT RETAILING

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