What: Department stores face challenges ahead as mall traffic dies down.

Why it is important: Department stores must carefully consider location, partnerships, and target audience in order to survive the evolutions of the business model.

According to Coresight Research’s weekly consumer surveys of the U.S. market, recent positive trends in physical store and mall traffic are reversing. There has also been an uptick in avoidance of shopping centres and malls.

However, department stores are one of few places to compare functionality, style, fit and other tangible features of multiple brands under one roof. This is a value proposition based on experiences that Gen Z shoppers, among others, view as important. Individual brands cannot compete with the reach of the department store network. It is also a place for up-and-coming brands to fight amongst be seen and go head-to-head with recognized competition.

To survive, department stores must do three things: focus on their strengths and define their target audience, reduce their store footprint to focus on location quality, and reset relationships with digitally native brands to drive traffic.

As customer expectations transform, the department stores that will survive will be able to reinvent themselves and adjust to the evolving and changing conditions that the format constantly faces.

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