How department stores are bringing customers back

Kohl’s, Macy’s and Nordstrom are creating experiences and building partnerships

The “before” times can be hard to remember. But the ability to shop — the opportunity to leisurely browse and encounter new brands and offerings, all in one place — was once more aligned with a department store than scrolling online during a yet-another virtual meeting. There’s more to acquiring goods, after all, than simply clicking “buy.”

But where do we go from here? In many ways, the pandemic has trained shoppers to “get in, get out” — if they’re leaving their homes at all.

Department stores — facing unique challenges even before COVID-19 — have pivoted and pivoted again. Organizations such as Kohl’s, Macy’s, Inc. and Nordstrom are rising to the challenge, continuing to seek balance in efficiency, experience, expectations and inspiration.

“While it may be easier to play it safe during a crisis, the companies that lean in, have courage and take risks emerge stronger and thrive,” says Jen Johnson, Kohl’s senior vice president, corporate communications. And that, she says, is what Kohl’s has done.

Creating a destination

The year 2020 was a defining one for Kohl’s: “We’ve faced extraordinary challenges, but also have the most opportunities we’ve ever had,” Johnson says. “The way our team has navigated the challenges of the past 18 months has ignited confidence among all of our stakeholders, associates and customers, in the resilience of Kohl’s to withstand the most challenging headwinds, quickly adapt and come out stronger.”

“When customers visit a store, it has to be worth the trip.”

Jen Johnson, Kohl’s

Customers today are looking to maximize their shopping trips to save time, money and resources, Johnson says. But they’re also looking for “more inspiration and discovery when visiting physical stores, and we’ve invested in creating a compelling destination for customers that is about experience and discovery,” she says.

“When customers visit a store, it has to be worth the trip, and we’ve raised the bar by adding more customer conveniences, services and inspiration through storytelling and store experience.”

Gigi Ganatra Duff, vice president of corporate affairs and public relations at Nordstrom, says being successful today means retailers need to “listen to the customer and have a strong — and, more importantly, connected — digital and physical experience working together to serve customers on their terms.”

The combination of the Nordstrom and Nordstrom Rack brands, along with the combined physical and digital expertise, Duff says, “create a powerful opportunity to get closer to the customer than ever before, enabling us to serve customers when, where and how they want to shop. The better we do that, the more successful we will be.”

Nordstrom has been in ecommerce for more than 20 years, she says. “Last year we saw a shift to more than half of sales coming from digital. Even as we saw store traffic improve, we’ve seen strong growth on Nordstrom.com and NordstromRack.com.”

“During this year’s Anniversary Sale, nearly 40 percent of next-day pick-up orders for Nordstrom were picked up in a Nordstrom Rack store.”

Gigi Ganatra Duff, Nordstrom

The strategy continues to deliver on the promise of convenience. “During this year’s Anniversary Sale, nearly 40 percent of next-day pick-up orders for Nordstrom were picked up in a Nordstrom Rack store,” she says, “further evidence of the power of integrating capabilities across our two compelling brands.”

Partnering for growth

Forbes has credited department stores for helping sustain growth with partnerships — especially those that highlight designers and expert merchants. Kohl’s, for one, has announced partnerships with brands such as Sephora, Cole Haan and Tommy Hilfiger.

“We launched a new long-term strategy for the company last year, which outlines our vision to be the most-trusted retailer for the active and casual lifestyle,” Johnson says. “While we created the strategy before the pandemic, the changes in consumer behavior and preferences — where consumers were displaying preferences to make their lives more casual and active — actually accelerated our commitment to our new strategy.

“Streamlining and modernizing our brand portfolio is a key part of that work, which includes partnering with notable brands in the active and casual space that our customers gravitate toward.”

Nordstrom, meanwhile — aiming to be the “partner of choice for brands,” Duff says — announced a joint venture with ASOS, acquiring a minority interest in the Topshop, Topman, Miss Selfridge and HIIT brands. It’s an extension of a partnership with Topshop and Topman in place since 2012.

“As a result of this partnership, Nordstrom has exclusive multichannel rights for Topshop and Topman in North America, and will be the only bricks-and-mortar presence for these brands worldwide,” Duff says. “ASOS is a leader in fashion for the 20-something customer, and it allows us to create newness and excitement for this important customer segment.” 

Nordstrom has been a launch partner for Reformation, Good American, Warby Parker and many other direct-to-consumer brands, she says, and the focus has been on creating relationships that work for each individual brand rather than a “one-size-fits-all” approach.

Accelerating and adapting

Macy’s, Inc. announced its Polaris strategy in February 2020 to return the company to growth. Marc Mastronardi, Macy’s, Inc. chief stores officer, says by spring of last year, it had been “tested profoundly and proved durable.” In many ways, the pandemic pushed the company to accelerate and adapt the plan.

“We accelerated our shift to digital shopping, strengthened the relationship between online and offline with our omnichannel experience, expanded our assortment, improved our product mix, and further invested in data and analytics to simplify our customer value proposition,” Mastronardi says.

The company recommitted to Polaris this year, refining it to achieve the mission of accelerating growth while improving profitability. It includes six pillars: winning with fashion and style; delivering clear value; excelling in digital shopping; repositioning the store fleet and enhancing omni experiences; modernizing the supply chain and technology infrastructure; and enabling transformation through data analytics and a performance-driven operating model.

Big Show 2022

Macy’s, Inc. has continued to grow its offerings of diverse-owned businesses. In 2020, it added 100 new such lines including Urban Modesty, Harlem Candle Company, Earth’s Nectar and Southern Elegance. In 2021, it also launched Icons of Style, a collaboration with some of the country’s most dynamic Black creatives, joining other diversity and inclusion initiatives.

The company recently announced a partnership with iconic toy retailer Toys “R” Us that includes plans to include in-store Toys “R” Us shops in more than 400 of its locations by next year. Then there’s Bloomie’s, a fresh offering designed to be a “convenient and casual concept that fits into the everyday lifestyle needs of our customer,” says Tony Spring, executive vice president, Macy’s, Inc. and Bloomingdale’s chairman and CEO.

The assortment and experience of Bloomie’s “have been built to attract new customers as well as engage our existing loyal customers both in store and online,” Spring says. With a significantly smaller footprint than a typical Bloomingdale’s, the store has a youthful appeal and a product selection that attracts all generations.

“Coming out of the pandemic, customers want inspiration and convenience,” he says. “Bloomie’s delivers on both of these expectations.”

As a digitally led retailer, Mastronardi says, Macy’s is proud of its department store roots.

“We believe in the relevance, appeal and opportunity of a trusted brand name bringing forth a breadth of offering,” he says. “Our commitment to providing our customers a great shopping experience, regardless of the channel they use, is rooted in our values as a company. We have a deep understanding of our customer and their shopping habits and will continue to refine our Polaris strategy to ensure that their needs are met.”

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