For two of the biggest department stores in the United States, Nordstrom and Kohl’s, financial analysts are warning of potential closures due to the impact of the coronavirus. Systematic closings of both stores could become an inevitability if the pandemic and economic slowdown continue for the length of 2020 and beyond.
The Challenges for Kohl’s and Nordstrom
The department store industry has been facing intense competition from online giants like Amazon as well as discount stores such as Walmart for years. Now, during this pandemic and economic downturn, Kohl’s and Nordstrom have felt the wrath of falling demand. Therefore, analysts are predicting some stores from both of these retailers will have to close.
Add to this, the sales drop that is expected to occur due to the affect of the coronavirus, the global pandemic and the economic effects that have impaired all industries.
To stay afloat amid the competition and global pandemic, both retailers are trying different approaches to counteract the situation. For Nordstrom, the strategy is to focus on digital efforts. They have created an omni-channel approach, providing customers with a wide range of options when shopping.
Kohl’s, on the other hand, is trying to capitalize on the changing landscape of the retail industry. The department store is looking at the industry shifts and making changes to their store locations to optimize their return.
Both retailers have long highlighted their in-store experience. During the pandemic, they have pivoted to the digital realm by expanding their web stores and introducing new features to engage customers from the home setting.
Kohl’s and Nordstrom Finances
In response to the current business climate, Nordstrom has made strides to reduce expenses. During the first quarter of 2020, Nordstrom reported total net sales of nearly $3.5 billion and operating losses of $621 million.
Kohl’s also experienced a first quarter of staggering losses. Overall, the retailer reported a 21.1% drop in sales during the first quarter from 2019 levels. Operating losses totaled $759 million.
How Can These Retailers Stay Open?
Analysts suggest that the only way for Nordstrom and Kohl’s to stay in business is to embrace the digitalization of the shopping experience. There are potentially a few other strategies they could look at to remain open:
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Consolidate Store Locations: Store closures due to economic downturns are not new, yet consolidating store locations is an effective way for retailers to become more efficient and drive greater sales.
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Pursue Multi-Brand Strategies: Many department stores are investing in multi-brand strategies by bringing in more brands and concepts to drive customers to their stores.
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Maximize Personalization: Nordstrom and Kohl’s both need to leverage personalization to maximize customer experience and become a go-to destination for customers.
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Offer Superior Customer Service: Superior customer service is the goal of any retail store. Nordstrom and Kohl’s need to focus on ensuring the customer service experience throughout their stores is consistent.
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Advocate Collaboration with Partnerships: Retailers need to look at collaborations between multiple stores or brands to share cost and bring in customers.
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Leverage Digital Technologies: Leveraging digital technologies such as artificial intelligence and machine learning is important to reach out to customers by predicting their needs and providing them with the best tailored product recommendations.
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Increase Store Efficiency: Nordstrom and Kohl’s need to make sure their stores are more efficient and use technology such as mobile apps to streamline in-store processes.
Analysts Warn of Overall Retail Industry Shifts
Analysts are warning it will be difficult for major retailers to stay open in the face of shutting down, but potential store closures reflect the overall disruption of the entire retail industry.
The current pandemic has impacted several retailers in the industry, forcing them to look for innovative solutions to stay afloat. Many established retailers are opting for digital transformations or consolidations. Others are seeking to become more economical and efficient, while some are looking to pivot their business model.
In addition to this, many retailers are opting to re-evaluate their advertising and marketing strategies. Companies are turning to more data-driven decisions to understand their customers and create more targeted campaigns that resonate with their key demographic.
Overall, while Nordstrom and Kohls may not be experiencing the best financial quarter to date, analysts are warning that persistent pandemic-induced financial woes and economic uncertainty could cause major closures for both department stores.
To stay afloat, both retailers need to leverage digital technologies, invest in personalization and adopt a multi-brand strategy. Not only that, but they must optimize store locations and create targeted marketing campaigns to reach out to customers.
Retailers in general need to innovate and come up with new strategies to cope with the current global downturn. Only then will these companies be able to sustain growth in the months ahead.
