Having plunged by a third during 2020, the retail constant value sales (2021 prices) of department stores recovered only party in 2021, as COVID-19 restrictions were significantly eased. Value-oriented department stores, such as Centrepoint and RedTag, performed better than their premium counterparts during 2020, as the economic shock of the pandemic made many local consumers more price sensitive.
Al Bandar Trading Co, which operates department stores under the Centrepoint banner, has significantly strengthened its leadership position in department stores since the onset of the pandemic, accounting for almost half of their retail value sales in 2021. The brand has a strong presence across the Kingdom, as its stores are not limited to shopping centres or large cities.
With competition, particularly from internet retailers like Amazon and Noon, intensifying, the leading department store chains are increasingly focused on providing consumers with an enhanced shopping experience, both online and in-store. There is a noticeable focus on developing services like buy now pay later, loyalty programmes and providing such services as stylists, in addition to faster deliveries and more flexible returns and refunds.
The retail constant value sales (2021 prices) of department stores will expand over the course of the forecast period, but they will remain below their pre-pandemic level even at the end of it. The growing popularity of e-commerce will be a major factor in this, with local consumers set to increasingly purchase everything from apparel and footwear to consumer electronics online during the forecast period.
With an elevated rate of inflation set to persist at least during the early part of the forecast period, value-oriented department stores like Centrepoint and RedTag are likely to remain the top performers among department stores. Luxury department stores will continue to invest in upgrading the in-store experience by modernising and enhancing interiors, utilising interactive screes and putting more emphasis on employee training.
Department stores will increasingly utilise such technologies as ‘live commerce’ (live streaming via social media) and augmented reality (AR), as they seek to keep younger consumers engaged. Live commerce combines the option of instantly purchasing of a featured product with audience participation via a chat function or reaction buttons.
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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 DefinitionsThis report originates from Passport, our Department Stores research and analysis database.
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