Department
stores such as Wal-Mart stock
are smaller retailers that sell items such as clothing, cosmetics, footwear,
home furnishings and the likes thereof. They typically offer multiple
merchandise lines in various departments. These used to be the more influential
market leaders back in the day, however with the advent of hypermarkets and
large scale retailers, the market share and revenue of department stores is
declining over time globally. Nonetheless some successful department stores
have maintained customer loyalty by offering personalized services, providing
with greater discounts and wider varieties of goods less than one roof.
Additionally, many of these department stores have hopped onto the online sales
bandwagon to tap into this new market opportunity and extend their life cycles.
This
industry is also highly concentrated as the top eight companies generate about
95% of the total industry’s revenue. In the United State, the leading
department stores include Dillard’s, JC Penny, Macy’s and Sears. While other
major companies globally include Marks & Spencer’s (UK), Debenhams (UK), El
Corte Ingles (Spain), Galeria Kaufhof (Germany), Galeries Lafayette (France)
and Tokyo Department (Japan). The total revenue generated by the department
stores industry in 2013 was $200 billion while the annual growth between
2009-2014 was 0.3% on average. This minute and in fact almost negligible
increase in the annual growth of the department stores industry is because of
the competition provided by large scale retailers and wholesale chains such as
Wal-Mart, Costco and Target in the US. Out of the global department store
industry, Macy’s has 6.4% of the world market share, Sears has 4.7%, Kohl’s has
4.3%, while Marks & Spencer’s has 3% and JC Penney has only 2.4%. Visit Bidnessetc.com for further details
regarding the changing market dynamics in the retail world and the consequent
changes in market shares and revenues of various department stores.
Even
though US departmental stores seemingly dominate, it has been predicted that
the biggest departmental growth in the world shall be happening in China, Latin
America and Asia Pacific region in the coming years. However, in light of
recent news it has been reported that departmental store sales have declined.
In January 2014 quarter they were expected to fall by 0.1% but fell 0.4%
instead. In fact, according to the US government figures departmental store
sales have been on the decline since early 2000s. Contrary to the popular
belief though, JC Penney has relatively improved its sales by 6.2% in the
second quarter of this year. Online shopping may have helped retain customers
by creating brand recognition for these department stores.
Investors
and shareholders need to be wary of this recent decline in departmental stores
and divest their stocks to other industries perhaps. In case, the departmental
stores undertake expansionist policies or other policies to overcome the
increasing and throttling threat of competition from retail giants such as
Wal-Mart, Costco and Target the investors could possible hold onto the stocks a
little longer. For further details regarding the stock movements, business and
industry analyses of the retail sector please visit Bidnessetc.com.
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