Department store retail to be worth US$12.6bn by 2030
Private label brands may be the key to future growth
Rising competition has led retailers to extend product categories within private label brands as one way of approaching customers. And the introduction of private label brands can also lead to building consumer loyalty and create differentiation among competitors, according to the 'Departmental Store Retailing Market Study' from PMR.
For example, in 2019, Kohl's launched a significant number of new brands offering newness for its customers. Moreover, digital in-store advertising has gained traction over the years, as in-store media channels and display methods have evolved and turned out to be more modern. Over the years, departmental stores have transformed into retail chains, which are popular shopping destinations for the middle-income group; a trend most seen in developing regions. Digital advertisements in stores can also boost sales to a large extent.
On the back of these factors, global sales of the departmental store retailing market are projected to reach US$ 12.6 Bn by the end of 2030. According to PMR's report, the departmental store retailing market is estimated to register a CAGR of more than 4% over the forecast period of 2020-2030.
Key findings from the study included that:
- The global departmental store retailing market represents a highly fragmented competition landscape, where a majority of key players maintain their strategic focus on pricing, product strategy, digital advertising of products, and remodelling supply chain network.
- PMR identified Asia Pacific as the largest market for departmental store retailing in 2019, followed by North America, attributable to the fact that, customers need high quality products with satisfactory services. With increasing the per capita spending on FMCG and consumer good products, globally, customers are more likely to spend on quality instead of quantity.
- Based on license, the branded segment holds the highest value share in the departmental store retailing market. However, food and beverages are accounted for as the most preferred category, and thus hold the highest volume share in the global market.
- By store type, mid-range department stores hold the largest market share as compared to its others.
"In today's competitive retailing industry, product innovation is a very important factor to attract customers. They are in continuous search of new, creative, different, and innovative products. Moreover, players are engaged in creating a unique and compelling in-store experience for customers," explained an analyst from PMR.
But What Does the Future Hold?
No sooner did the COVID-19 pandemic hit, a majority of store retailers shifted to Internet retailing. The trend of omni-channel retailing had begun even before the COVID-19 pandemic became known to the world. However, the lockdown period was a nail in the coffin. From February to March 2020 alone, there was a dramatic shift to e-commerce: the use of online grocery services more than doubled.
But perhaps a more important fact is that a considerable section of new e-commerce users intend to continue with online retailing. This omni-channel shift during the lockdown has been driving sales mostly across the food and beverage category. Primarily, stores that develop effective omni-channel capabilities so as to maintain position among physical grocers and also in a digital sphere will drive the momentum of the departmental store retailing market.
Sources: Persistence Market Research / The Marketing Factbook.
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