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The Top 5 Department Store Trends of 2016

Department stores, once the engines powering sales at malls across America, have lost steam. As our shopping patterns change and our demand for novelty accelerates, many of these retailers are in need of a jumpstart if they’re to compete.

In 2016, we counted the carnage with each quarterly financial statement, but it wasn’t all bad news. It seems adversity is a great impetus for creativity and a willingness to experiment. Department stores are definitely not giving up the fight. They’re looking to new assortments, unexpected collaborations, evolving formats and emerging consumers to help them evolve and emerge stronger.

1. Counting closures

Retail consolidation continued to dominate headlines in 2016. Faced with falling foot traffic and increasing competition from the Web, department stores announced store closures and job cuts left and right. Among the soon-to-be-shuttered locations were 100 doors at Macy’s, seven at J.C. Penney, 18 at Kohl’s and 10 at Sears. And of course, each time a store goes dark, store workers are left out in the cold. And they weren’t the only ones facing unemployment. Corporate cuts, like those at Nordstrom and Macy’s, were commonplace as well.

2. Off-price opportunities

While uncertainly prevailed at regular department stores, their off-price offshoots continued to flourish. And in 2016, executives looked for ways for the one to burnish the other. On the heels of the Hudson’s Bay purchase of Gilt, the company announced it will test a shop-in-shop concept featuring the flash sales site’s first foray into a physical location within its upcoming Saks Off Fifth location in New York. For its part, Macy’s decided to bring its off-price Backstage format into its mainline stores. Forty-five stores featured the pop-ups, which showcased product and categories not carried elsewhere in Macy’s stores.

3. Perfecting product

Department stores are often chided by being old and stale but this year they looked to shake up—and shake off—those stereotypes with what they hoped to be attention grabbing assortments. Neiman Marcus welcomed Rent the Runway in its San Francisco store. The hope is that the collaboration will draw in young women who will become acquainted with luxury brands and one day graduate from renter to consumer. Following its success selling Madewell, Nordstrom deepened its ties to J. Crew Group, Inc. by adding its namesake to the mix. The retailer also expanded its Space concept, an in-store boutique that features luxury labels like Simone Rocha, Vetements and Comme des Garçons Collection. Not to be outdone, Sears launched Showcase at Sears, a collection of international brands making their U.S. debut.

4. Making margins

Already the workhorse of the industry, department stores leaned even heavier on private label with new launches. J.C. Penney dove into an often overlooked market with Boutique+, its new plus-size private brand. The company hoped the star power from its designer and Project Runway winner Ashley Nell Tipton would help drive traffic. On the other hand, Kohl’s turned to the re-launch of its tried-and-true Sonoma brand. The retailer hopes to rekindle the magic of the label that once accounted for $1 billion in annual sales in apparel and housewares with a tighter selection and more frequent deliveries. 

5. Millennial marvels

Millennials—those pesky young shoppers who are breaking all of the traditional retail rules—continue to be a focus for retailers as they look to compete. Department stores are now trying to ape millennial favorites like Zara and H&M with trendy, private-label selections. J.C. Penney rolled out its quick-turnaround Belle + Sky concept to 500 stores, hoping that a social media push and key influencers will help it draw 20 and 30-somethings. At Kohl’s, hopes are pinned to K/Lab, which uses data from Trendalytics, Google Trends and Instagram to help it determine what it is girls want.

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