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Are department stores going to die?

Here’s an interesting graph I found on Businessweek that outlines retail sales growth in America over the past decade:


What’s interesting is not that furniture stores suffered during the housing crisis of 2008-2009 – this much is obvious – but that there seems to be a few other trends at work.

For one, warehouse club sales have gone from being the highest growth to the slowest growth sector (excluding, for a second, department stores). The urbanist in me wonders if this has to do with “The Great Inversion.” That is, the trend towards more and more young people choosing to live in inner city neighbourhoods – where warehouse club penetration is low – as opposed to the suburbs.

The other notable sector is department stores. It’s the only sector that seemingly hasn’t been able to rebound along with the rest of the economy. I think this points to another larger trend at play: there are structural problems with the department store model. They’ve been beaten up by category killers, the internet and the fact that individual retailers seem to want to manage their own brands and experiences from top to bottom.

I know that for me, personally, I rarely shop at department stores. What about you?

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