In 2014, Asia Pacific will account for almost half of global department store spend with 49 percent of the market, while North America will account for 26.4 percent, followed by Europe at 18.7 percent. The Latin America region will take 4.5 percent, while the Middle East and Africa just 1.4 percent. However, according to Verdict the Middle East is predicted to grow to 36.1 percent in the five years to 2019, similar to China.
Kate Ormrod, analyst at Verdict, explained: “There are extensive growth opportunities in China; however, as overheads such as labour costs rise, we expect less profitable and weaker players to fall out of the market. Remaining players must further differentiate their offers through greater use of private label ranges, investment in in-store environment and brand exclusives to drive footfall and sales.”
Global department store market to grow by 22.2 percent by 2019
While retailers operating in China and across South East Asia significantly increased their market shares in the last five years, Verdict found that the shares of the leading global department stores had weakened. That out of the top 12 operators, only American department stores Nordstrom and Macy’s have increased their shares of the global market, with Macy’s maintaining its lead over its rivals and is forecast to reach a 6.4 percent share in 2014.
Ormrod added: “Since overtaking Sears’ top position in 2012, Macy’s has increased its lead over its rival, and while it has not been without its challenges, Macy’s product offer and store environment have been central to its success.
“Nordstrom’s continued investment in innovation and its decision to embrace multichannel has secured market share growth, and we expect it to remain a strong force in the US market in the coming five years.”
The biggest losers are Sears, which has seen its share decline by 2.5 percent, and JC Penney, which has seen its share almost halved to 2.4 percent due to a change in pricing structure and a proposition revamp.
Regarding JC Penney, Ormrod stated: “While it will take time to get shoppers back onside, it still has a clear place in the market and its initiatives – such as store refurbishments and its shop-in-shop concept – could bear fruit in the long term.”
Out of the top eight department stores only one is from the UK, Marks and Spencer, which is forecast to reach 3.0 percent share in 2014 in fourth place behind Macy’s, Sears and Kohl’s.Image: Macy's