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Department Stores Find Renewal In The Omnichannel Moment

It's well understood that physical stores put the "touch" in "retail touchpoints." But the question remains: how can businesses connect "clicks" to "bricks?"

Department store sales success remain uneven, but the rise of omnichannel could position the space for a comeback.
Department store sales success remain uneven, but the rise of omnichannel could position the space for a comeback.

After years of being regarded as an anachronism, department stores may be on the verge of a comeback thanks to closer integration between retailers’ online and offline marketing strategies, an eMarketer report indicates.

Certainly, the past year has shown brands like Target attempting to align their digital/physical sales by adopting a clearer omnichannel approach — an approach which includes acceptance of mobile payments, express checkout via its branded smartphone app, aisle navigation using LED-to-phone sensor lighting signals, and encouraging online ordering with in-store pickup.

Meanwhile, chains like GameStop have responded to showrooming — the act of comparing in-store prices for a given product to often cheaper e-commerce offerings — by featuring more digital sales connections with physical representatives at its actual locations.

At the other end of the spectrum, Amazon has been opening its own physical stores in the past year — quite an endorsement of the value a branded location confers.

“Amazon.com is thought to be the retail killer from a price comparison standpoint and a research comparison standpoint,” Danielle Bailey, principal at L2 Think Tank, tells eMarketer. “However, where department stores have an advantage is using and leveraging their physical locations as touchpoints to consumers.”

When it comes to department stores taking their digital cues from Amazon and enhancing their in-store sales experience, eMarketer cites Nordstrom’s decision to permit in-store returns
 of online purchases as an important step that recognizes that people want a brand’s service whenever and wherever they want it. This particular move also has the added advantage of getting people into the stores, where the tactile quality of products on shelves and racks  tends to spur more sales.

Erik Nordstrom
Erik Nordstrom

“Well over 60 percent of our Nordstrom.com returns end up at our full-line stores, and well over 70 percent HauteLook and Nordstrom Rack returns end up at our Rack stores,” Nordstrom co-president Erik Nordstrom said during the department store’s Q4 2014 earnings call back in February. As eMarketer observes, those in-store returns led to an additional 1 million store visits last year.

As has been noted many times before, most consumer purchases — roughly 94 percent — occur in-store. And even more conservative measures still have physical retail dwarfing e-commerce, as eMarketer pegs 15 percent of all sales to online.

In the end, for retailers, the first step toward instituting a true omnichannel strategy is to realize that online and offline sales should not be pitted against each other.

“This is not a technology problem: This is a people and process challenge,” said Shelley Bransten, SVP for Retail & Consumer Products Industry Solutions at Salesforce, in an interview with GeoMarketing. “We are seeing change there because it’s their livelihood. There is no choice about ending the competition between internal marketing channels.”