The problem of “sameness”
In January, we’re watching Frederick Wiseman’s 1983 documentary “The Store,” about Neiman Marcus’ flagship location and headquarters in Dallas. The movie is available to stream on Kanopy for some library card holders. You can also purchase a DVD on Wiseman’s website. It may also be available to borrow from your local library.
Have you been to a department store recently? The ambiance of the store is not what it used to be. Most won’t look or feel like the Neiman Marcus captured by Frederick Wiseman’s production crew in “The Store.” The 1983 film depicted a shopping experience that could be described as excessive, luxurious and bespoke, but go to a department store in a typical American mall in 2024, and you’d be more likely to describe the selection as sparse and the experience as uninspiring.
The economic data tells a similar narrative. Department store sales haven’t been doing well. They’ve almost half of what they were more than 20 years ago.
Marketplace’s Ellen Rolfes spoke with Rajiv Lal, a marketing professor at Harvard Business School, about what it would take for department stores to turn things around.
This interview has been edited.
What is the value that departments stores offer consumers now? Is there something that consumers are missing? Or is it the corporate executives of department stores who are clueless?
Rajiv Lal: I would probably agree more with your last statement. I mean, the department store has been in trouble for quite a while, even before COVID.
In the last five years, Lord & Taylor went out of business. JCPenney went out of business. Sears went out of business. The competition has only intensified. You have the Zara’s of the world, the Shein’s of the world.
(Editor’s note: Sears and JCPenney still operate brick-and-mortar stores after emerging from bankruptcy in 2019 and 2020, respectively.)
In today’s marketplace, between e-commerce, new specialty stores and the fast fashion stuff, it is becoming even more difficult for department stores to have an identity and a unique value proposition that attracts customers to the store. I mean, just having the people who are coming to the mall drop by to see what’s in the store is not a very compelling value proposition.
I happened to be in a department store last week with my partner. We walked through the jewelry and beauty departments, and nobody was there. It almost seemed as if the lights were slightly dimmed. The products were there but it felt like a ghost town.
And it’s like a circular loop, right? Customers go there. They find nobody behind the counter. Then they leave. Once they leave, [executives] say, “We don’t have enough sales, so we have to cut down on the number of staff.” Gradually, you don’t even have a person behind the checkout counter.
So, what’s the challenge that exists for department stores?
It’s the sameness. Every department store look[s] the same.
If you go back to the history of department stores, they basically were stores that were led by merchandisers, people who went out around the world to buy unique merchandise that nobody else could offer to their clientele in those stores.
And you didn’t buy the same merchandise for New York, as you bought for Chicago as you bought for Dallas. But today, we are seeing all they offer is sameness. You go to any department store, you’ll find the same stuff.
So that’s the Holy Grail, right? If you don’t have merchandise that people are attracted by, then why would they come to the store? If you have very attractive merchandise and have bought attractive merchandise in the past, then, every four to six weeks, they’ll just stop by to see what the store has to offer.
Many department stores have changed ownership while their revenues have declined. Private equity investors and hedge funds have bought up distressed stores. Have these mergers and acquisitions helped or hurt stores?
The private equity angle to the ownership of the department stores has not led to any improvement in the performance of department stores. I cannot think of a single retail transaction in the department store or clothing or apparel space that has done very well under the ownership of private equity. Because it’s a very hands-on business. I mean, you need people. And private equity is good at lots of stuff. But managing an army of people is not their forte.
But the real problem is the sameness. If you don’t have some unique merchandise to attract people into your store, I mean, how do you how do you kind of build a business around that?
How long has this been the situation?
This has been going on for at least a decade, if not more. From time to time, you will see improved performance because the economy is doing better. But the long-term trend is declining, not improving, I think.
This conversation seems a bit like we are pre-writing the department store’s obituary. Are they too distressed to really make the changes they’d need to make to improve their value proposition to customers?
I think you’d have to start from a clean sheet of paper and basically ask the same question, which is, “In today’s competitive environment, how can we offer something really unique?”
Five or six years ago, I was talking to somebody, and I said, “Why don’t you become the store that makes emerging brands successful?” Emerging brands need shelf space and distribution. So you go around to shows looking at who are the emerging designers and you give them space … and you will then get known for setting the design trends of the society, which is what department stores did back in the day.
The second is about technology. Whether it is augmented reality whether it is virtual reality, these are technologies that are here and now. If they can enable people to shop in a more pleasant environment, or a more entertaining environment perhaps — with augmented reality, I mean you could be with your friends sitting in two different physical spaces and shopping in the same store together.
You have to offer something that is exciting, something that people like to talk to each other about. That’s a completely different mindset in terms of reconceiving the concept of a department store.
What do you think will happen in the next 10 years?
The unfortunate thing about some of this stuff is that many of these businesses take such a long time to reach their destiny. It is it is painful for the rest of the marketplace.
What do you mean, it’s painful for the rest of the marketplace?
I mean, some of these stores that are not doing well, they will resort to means that are not going to be productive for the rest of the competition. If I have to lower the prices just to survive in the short run, it is also affecting the competition’s ability to make some decent margins that can be deployed back into the business and do the right thing for the customer.
Next month’s film
For February, we’ve selected “Invisible Beauty,” an autobiographical documentary about model and activist Bethann Hardison, who has fought for better representation and working conditions for Black men and women in the fashion industry. “Invisible Beauty” is available to stream on Hulu, with a subscription. You can also buy or rent the film on Prime Video, Apple TV+ and YouTube.
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