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Department Stores Work to Improve Top-Line Growth

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Strategic initiatives

Major department stores like Macy’s (M), Nordstrom (JWN), JCPenney (JCP), and Kohl’s (KSS) are taking several initiatives to improve their sales amid a tough retail environment.

Department stores continue to enhance their merchandise offerings. On August 24, Macy’s announced the launch of Lucky Brand Home—a new bedding collection that would be available on its website and in 100 Macy’s stores effective September 15. On August 22, JCPenney announced the launch of Frank + Lulu—a new bedding and decor brand for kids. The new brand has been available on its website and in more than 200 stores since September 1.

In August 2017, Nordstrom announced its collaboration with Hanes for an exclusive collection of t-shirts designed by ~40 brands and designers.

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Growth beyond apparel

Many department stores are focusing on merchandise categories beyond apparel. Macy’s has been aggressively revamping its shoes and fine jewelry business. The company has also been enhancing its furniture and mattress business. The company is adding or expanding 58 furniture and mattress departments in its Macy’s brand stores across the US. Macy’s is also focusing on growing its Bluemercury beauty business. The company is adding more beauty products, opening additional free standing Bluemercury stores in urban and suburban markets, and enhancing its online capabilities.

JCPenney’s beauty business continues to be a key growth driver. Currently, JCPenney operates over 600 Sephora stores in its locations. JCPenney intends to end the year with nearly 650 locations. The company has also been rebranding its salon business to Salon by the InStyle brand.

JCPenney is focusing on driving higher sales in its home business through categories like appliances, furniture, and mattresses. In July, the company announced that it’s introducing toy shops in JCPenney locations to capture opportunities in the $20 billion toy industry.

Other strategies

Macy’s is expanding its presence in the off-price space in an attempt to revive its performance. In fiscal 2Q17, the company opened 12 new off-price Macy’s Backstage stores within its Macy’s brand stores. At the end of fiscal 2Q17, Macy’s had seven freestanding Macy’s Backstage locations and 38 in-store Macy’s Backstage locations in operation. The company intends to open seven additional Macy’s Backstage locations inside its stores in fiscal 2017.

Kohl’s is focusing on smaller store formats to boost its productivity. The company’s 35,000-square foot prototype intends to capture opportunities in rural and dense urban markets. Kohl’s plans to open four new 35,000-square foot stores in October.

Online sales are a key part of department stores’ growth strategies. In the next part, we’ll discuss online sales.

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