IADS Press Release: IADS Global Department Store Monitor: Trends and Transformations (2019 - 2022)

Making sense of numbers, away from the noise: 2022 department store performances reveal stark regional contrasts. While Europe experienced significant recovery (+7% from 2021 to 2022), the Americas and Asia presented a more diverse picture resulting in flat results collectively due to varied market responses (with the Americas at +1% and Asia at 0%).

The IADS Global Department Store Monitor was launched as the “IADS 100” in 2021 to make sense of quarterly reports and various fiscal exercise closure dates across the globe, and to provide a comprehensive benchmark for the department store industry, starting with 2019 numbers as a point of reference. This observatory analyses department stores' financial data year-over-year to gauge the state of the industry's recovery post-Covid.

During the tumultuous period from 2019 to 2022, department stores had to redefine their benchmarks for success. The past years, marked by unprecedented events such as the global pandemic and significant geopolitical upheavals, reshaped the retail environment. Traditional metrics of comparison with pre-2019 figures became obsolete as many new challenges created an unprecedented operating field for department store players: how can results be compared in a situation that has not existed before? Department stores indeed embraced a new paradigm, focusing on innovation and adaptability in response to these dynamic challenges, setting new standards for measuring progress and success. 
The 2022 fiscal year exercise for department stores around the world was all about learning how to weather new storms while dealing with the impacts of the past 4 years of disruption. The IADS Global Department Store Monitor looks into how retailers across Asia, Europe, and the Americas faired and just how sound their recovery plan has been in a new age of volatility. 

The 2022 fiscal exercise proved difficult for retailers as they faced ripple effects from the COVID-19 pandemic as well as several new challenges such as social and political unrest, supply chain disruptions, geopolitical and energy crises, as well as inflation. Here is how main global markets fared in 2022:

• Asia: (2022 panel average: turnover remained flat at +0% vs 2021): Chinese department stores generally saw declines in sales, influenced by long-term COVID-19 restrictions, which resulted in their turnover falling below 2021 levels. In contrast, Indian retailers like Lifestyle (Landmark Group) and Shopper’s Stop showed significant and steady growth in 2022 versus 2021. Japanese stores reported mixed results, with some showing slight improvements while others continued to struggle. Korean (Hyundai at +40% and Lotte at +12%), Filipino (SM at +25% and Robinson’s Retail at +61%), Sri Lankan (Odel at +12%) and Thai (Central Retail Corp at +21%) department stores also exceeded 2021 results. These trends highlight the diverse impacts of the pandemic and the emergence of new regional market dynamics on the department store sector in Asia.
• Europe: (2022 panel average: turnover increase of +7% vs 2021): Europe illustrates a pattern of gradual recovery in 2022 following the significant downturns of 2020 due to the COVID-19 pandemic. This recovery, however, is not uniform across the region, with stores like Harrods in the UK showing extreme year-over-year growth (+192%), while others like John Lewis faced more flat results (+0.3%). Overall, sales results in Europe were positive between 2021 and 2022 for the department stores monitored in the UK, Switzerland, Sweden, Spain, Italy, Finland, and Estonia, even if only slightly for some. European stores have demonstrated resilience and adaptability, implementing strategies like enhancing digital presence and diversifying product offerings to navigate the evolving retail landscape and meet changing consumer demands.
• Americas: (2022 panel average: turnover increase of +1% vs 2021): In the Americas, the situation varied. American department store market experienced a complex recovery trajectory through 2022. Key points include the mixed performance of U.S. retailers, where some stores, like Dillard’s and Nordstrom, managed to grow in 2022 compared to 2021, while others struggled (Macy’s, Kohl’s). Latin American retailers saw varying results with Chilean retailers Falabella, Ripley, and Cencosud Paris unable to see growth in 2022 against 2021, while Mexican retailer El Palacio de Hierro and Ecuadorian retailer De Prati saw strong growth in 2022 compared to 2021. This indicates a regional disparity in recovery, influenced by factors such as political shifts, inflationary pressures, and consumer spending trends.
   

The global retail landscape is undergoing a seismic transformation, marked by a surge in department stores changing ownership, going private, or engaging in discussions about such transitions since fiscal year 2022 and continuing into 2023. Notable instances include Japan’s Seven & I Holdings selling Sogo & Seibu to Fortress Investment Group, Hong Kong’s Sogo (Lifestyle) opting for privatization, and France’s Galeries Lafayette Group divesting BHV Marais. These shifts, also exemplified by the sale of Sweden’s Ahlens, or South Africa’s Woolworths divesting Australia’s David Jones unit, underline a strategic response to the challenges of operating in public markets during tumultuous times. The trend towards privatization offers companies the flexibility and agility to swiftly implement changes and adapt to volatile market conditions. 

Globally, complex geopolitical and economic factors are also at play. Ongoing conflicts, such as those involving Israel and Ukraine, are impacting supply chains and driving inflation. Consumers are cautious about non-essential spending, potentially affecting future performance. Consumer preferences are evolving towards in-store experiences and smaller store formats, while retailers are trying to find the right balance between online and physical sales to optimize profitability. In fact, efficiency and profitability are top priorities for the future of retail, driving players to explore AI technology integration which will help the business adapt quickly to changing consumer behaviours. Being dynamic is important for retailers to remain competitive and relevant in the current dynamic environment. 

The IADS Global Department Store Monitor, while being a subjective selection of department store companies which fiscal year results can be compared year over year, serves as a tool for retailers and department store players to better understand how their performance compares across the global landscape in more turbulent times. Such results have become a key indicator of retail performance as external forces, which used to not be considered to impact fiscal results, have multiplied and become part of the conversation. The IADS Global Department Store Monitor is the only report that has been keeping track of such a selection of global department store retailers since 2019, providing a deeper and more accurate conclusion about the retail landscape.

Cencosud Paris, Central Retail Corp, Coin, Coop group, De Prati, Dillard's, El Corte Ingles, El Palacio de Hierro, Falabella, Fenwick, Golden Eagle, H2O (Hankyu Hanshin), Hanwha Galleria (Hanwha Group), Harrods, Hyundai, Isetan Mitsukoshi, J Front (Daimaru Matsuzakaya), Jelmoli (Swiss Prime Site), John Lewis, Kaubamaja, Kohl's, Liberty, Lifestyle (Landmark Group), Liverpool, Lotte, Macy's, Maoye, Marks & Spencer, Marui (0101), Matahari, Myer, New World, NK, Nordstrom, Odel (Softlogic Group), Parkson Retail Group Ltd, Rainbow, Ripley, Rustan's (Robinsons Retail), Selfridges Group, Shopper's Stop, SM, Sogo Seibu(Seven & I Holdings), Stockmann, Takashimaya, Tobu, Tokyu, Wangfujing, Wing On, and Wushang (former Wuhan).

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