Department stores struggling to catch up pre-pandemic times

The once dominant retail model of the great department store was one of the most several damaged by the pandemic. Despite the rapid growth figures numbers against the 2020, the sector seems to be struggling to reach the sales levels of the pre-pandemic times.

Of the traditional department stores Macy’s has recovered most robustly from the pandemic. However, the biggest department store winner of the pandemic has been Target (grown up as discount department store). Whereas it’s peers have been struggling to reach the 2019 levels, Target has grown throughout the pandemic and is now 36% above the 2019 levels in sales.

Curiously, Target is the one with the smallest share of sales coming from online.

It is about the breadth of the assortment and the value offered for the customer that still drive the biggest gains for a retailer in these digital times.

Despite the US retail market growing red hot, the department stores have only during the summer been able to get on top of the 2019 numbers. Some companies, like Nordstrom and Kohl’s are still barely below those numbers.

Nordstrom once for a long time hailed as the future model of the department stores. For them the pandemic was rather severe blow. However, the image is a bit more complicated as the business can be divided into three parts: offline department stores, discount arm Rack and the online business. The online business of the two offline businesses combined has been one of the highest in the industry (besides John Lewis in the UK) with the online share hovering above 30% for a couple of years already.

The discount arm Rack used to be the other growth sector for Nordstrom. During the pandemic Rack was hit hard as it’s sales declined by -35%. For the last quarter Rack has not been able to recover from the 2019 levels despite a big rise against the 2020 numbers.

Online represents still 40 % of sales for Nordstrom.