Having plunged by more than a fifth during 2020 due to COVID-19 restrictions, the retail constant value sales (2021 prices) of department stores rebounded strongly in 2021, exceeding their pre-pandemic peak. The fact that the number of department stores expanded at a rapid pace during both 2020 and 2021 in spite of the pandemic was a major contributor to this.
Coppel (Coppel SA de CV) and Liverpool (El Puerto de Liverpool SAB de CV) are the dominant chains, accounting for more than three quarters of the retail volume sales of department stores between them in 2021, with Sears, El Palacio de Hierro and Suburbia accounting for most of the remainder. Since the onset of the pandemic, Liverpool, Sears and Palacio del Hierro have all increased their issuance of store credit cards, which has helped them to drive sales growth.
During 2021, demand for big ticket items like home furnishings, consumer electronics and appliances was particularly strong in department stores. This is largely due to the ability of consumers to use store cards and buy now pay, later options to finance their purchases.
The rate of growth in the retail constant value sales of department stores will slow significantly during 2022 and largely remain in line with the review period prior to the pandemic throughout the forecast period. A sharp slowdown in the rate of new store openings will play a significant role in this, as will the growing popularity of e-commerce, particularly in such categories as consumer electronics and apparel and footwear.
Department stores are expected to continue investing in the logistics of e-commerce, as well as partnering with online marketplaces like Mercado Libre, during the forecast period. Rapid delivery is currently not a strength of department stores, and they will undoubtedly work to change this.
In an effort to drive footfall and better compete with pure-play internet retail, department stores will increasingly seek to make their stores a ‘destination’ where consumers come for experience. During the review period prior to the onset of COVID-19, the strategies used by department stores to attract consumers included in-store boutiques and corners, pop-up stores, night sales and commercial alliances, offering consumers new brands, new concepts and new experiences every time they visit stores.
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Outlets selling mainly non-grocery merchandise and at least five lines in different departments, usually with a sales area of over 2,500 sq metres and arranged over several floors. Example brands include Macy’s, Bloomingdale’s, Marks & Spencer, Harrods, Sears, JC Penney, Takashimaya, Mitsukoshi, Daimaru, Karstadt, Rinascente.See All of Our Definitions
This report originates from Passport, our Department Stores research and analysis database.
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