Why Traditional Department Stores are Dying in Regional Shopping Centres

It is a fact that many shopping centres in Australia, Europe and the US are suffering a ‘slow death’ with their traditional department stores as anchor tenants.  The factors of attraction with the typical and older style department stores are no longer as evident as in the early 2000s, and in most cases are now in decline. 

The retail model for department stores originated in the 1980s when we didn’t have the internet and a ‘global economy’.  We also didn’t have the huge variety of goods and services that we have today.  We didn’t have mass and multi-channel communication tools at our fingertips to buy and sell products and services.   Customers didn’t have many choices or ‘channels’ to source their retail requirements and products and services.

woman shopping for vegetables

Its a Global Retail World

The marketing of retail goods today has changed dramatically, as has the sale and supply of retail goods.  Customers today can buy just about anything they want from a huge number of suppliers online from around the world.  Delivery is fast and efficient.  Quality is also good.   Ladies fashion is a good example of a shifting merchandise category.  

The main reason customers go to a shopping centre today is for the ‘immediacy of purchase’, convenience, and for the entertainment.

Today, customers can get most of their products and services from all around the world; they can shop from the convenience of their lounge room, and in doing so they can purchase at the best prices.  Sure, they may have to wait a few days to get their goods, but they know they have purchased well, got what they wanted at a good price, and they trust the proven supply chain to deliver goods on time and accurately.

woman with shopping bag
Know your shoppers and their requirements

Convenience in Retail is Everywhere

Customers can shop from their mobile phone, or their laptop computer.  Shopping is so easy online; it is far easier than visiting a department store with depleted staffing numbers and poor service.  Traditional department stores still play with the concept that ‘big is beautiful’ in retailing.  That business model is outdated.  ‘Big’ doesn’t work in retail anymore. 

‘Experience and entertainment’ are the new factors of attraction for retail customers to a retail shopping centre of any size.  The customers want to enjoy shopping and be entertained as part of the process.  Smaller neighbourhood shopping centres, on the other hand, exist as a ‘convenience’ factor for the local community.  They will continue to offer ‘convenience’ shopping that the regional centres can’t fulfil.

Remember when ‘Uber’ took on the large taxi companies and won?  The same timeline is now evident in shopping centres.  The specialty tenants are now more relevant in the tenant mix than the larger department stores.

woman shopping

What Do Shoppers Want?

Customers are today visiting shopping centres for just a few simple reasons, and they are mostly:

  • Convenience
  • Service
  • Entertainment
  • Value, and
  • Variety

 ‘Big’ is no longer a drawcard in retail property performance and customer attraction.  Customers don’t want or need ‘big department stores’ anymore; they are just not interested in shopping in some ‘boring’ department store with a 1980’s business model and low staff numbers to serve.  Retailing has become more ‘refined’ and specialised.

If you own a larger retail shopping centre with a department store anchor tenant, be aware of these problems and ensure that you encourage the department store to adjust to the retail shopping trends of today.