Death of the ‘Department Store’: Exaggerated or Eventual

Go Lean Commentary

The acceptance of modern technology has transformed so many aspects of Western society. Today’s technology adds a lot to our lives … and takes a lot away, (makes obsolete). Just consider:

Appliances: camera, watch, pager, map, address book, calculator, planning-calendar, payphones, books and more.

Industries: travel agencies, music producers/retailers, book retailers, newspapers, travel agencies, Big Box retailers, etc..

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Take note – This, transformative change, is perhaps happening again, this time with Department Stores. They are on a death kneel, fighting for survival.

What went wrong? What hope for survival? Can this industry be saved: reformed and transformed?

VIDEO – Are we witnessing the death of the department store? – NBC News (Retrieved 01-21-2016) – – If you loathe a trip to the mall, you might not be alone. With the rise of online shopping, many experts are now suggesting that we’re witnessing the death of department stores. TODAY’s Sheinelle Jones reports:

Department Stores are not uniquely American, (for example, London, England has the renowned Harrods’s Department Store). But the focus of this commentary is a review of the American eco-system, past, present and future. The hypothesis is simple, the lessons learned and strategies developed for application in the US can be applied elsewhere, throughout the world, and even in the Caribbean.

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This industry is confronted with a lot of modern challenges. But this commentary is not an obituary of the industry, but rather a prescription on how to correct (mitigate and remediate) the inherent defects. Defects?

  • Technology – Online retailers are able to better compete on price, brand and quality, as long as there is deferred gratification. This is the entire business model of electronic commerce – companies (and websites) like Amazon, eBay and Alibaba – where their market capitalization (value on Wall Street) is greater than traditional companies like Coca Cola.
  • Competition – Factory Outlets have become “all the rage”; these ones have bred new life to older-dying malls in the inter-city. Even the manufacturers can sell directly to consumers, bypassing Department Stores.
  • Changing social values – Americans have become increasingly casual in its fashion-taste. Few people dress-up for work, leisure activities or even Church these days. Blue Jeans are “standard uniform attire” for young and old, men and women, even celebrities; in addition, many men – “millennials” especially – do not even know how to tie a neck-tie.

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These are the agents-of-change that comprise the “present” of this Department Store industry. But if abated, the industry can boast a bright “future”. Take technology for example, the prospects of technology-aids for the retail industry are exciting. Imagine:

  • The “One-Two Punch” of cutting-edge e-Commerce – in the mode of Amazon – but with local store fulfillment; (i.e. order online, pick-up at the store).
  • Smart-phone Apps that find and reserve parking spots at the Department Store or the Shopping Mall in general.

The book Go Lean…Caribbean also focuses heavily on the future, and how to manage, monitor, and mitigate the changes that the future will bring. The acute industry transformations caused by technology, competition and “changing social values” do not have to be a death stroke for Department Stores. Change can be embraced, anticipated and cajoled.

Department Stores can easily be early adopters of innovation. (Though their prior stance was one of orthodoxy).

The Go Lean book posits that the Caribbean region must also be early adopters of innovation; that we cannot wait until our industries are at death’s door, before seeking change. This is the reality of technology; a community cannot only consume technology, but rather must create, develop and contribute to the world of innovation.

Being an early adopter of innovation can also mean jobs.

This point was pronounced early in the book with these visionary statements in the opening Declaration of Interdependence (Page 12 & 14):

xiii.   Whereas the preparation of our labor force can foster opportunities and dictate economic progress for current and future generations, the Federation must ensure that educational and job training opportunities are fully optimized for all residents of all member-states, with no partiality towards any gender or ethnic group. The Federation must recognize and facilitate excellence in many different fields of endeavor, including sciences, languages, arts, music and sports. This responsibility should be executed without incurring the risks of further human flight, as has been the past history.

xxvi.  Whereas the Caribbean region must have new jobs to empower the engines of the economy and create the income sources for prosperity, and encourage the next generation to forge their dreams right at home, the Federation must therefore foster the development of new industries, like that of ship-building, automobile manufacturing, prefabricated housing, frozen foods, pipelines, call centers, and the prison industrial complex. In addition, the Federation must invigorate the enterprises related to existing industries like tourism, fisheries and lotteries – impacting the region with more jobs.

xxvii. Whereas the region has endured a spectator status during the Industrial Revolution, we cannot stand on the sidelines of this new economy, the Information Revolution. Rather, the Federation must embrace all the tenets of Internet Communications Technology (ICT) to serve as an equalizing element in competition with the rest of the world. The Federation must bridge the digital divide and promote the community ethos that research/development is valuable and must be promoted and incentivized for adoption.

xxviii. Whereas intellectual property can easily traverse national borders, the rights and privileges of intellectual property must be respected at home and abroad. The Federation must install protections to ensure that no abuse of these rights go with impunity, and to ensure that foreign authorities enforce the rights of the intellectual property registered in our region.

xxx.   Whereas the effects of globalization can be felt in every aspect of Caribbean life, from the acquisition of food and clothing, to the ubiquity of ICT, the region cannot only consume, it is imperative that our lands also produce and add to the international community, even if doing so requires some sacrifice and subsidy.

The Go Lean book serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU), a technocratic federal government to administer and optimize the region’s eco-systems. In fact the book identifies the prime directives of the CU with these statements:

  • Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
  • Establishment of a security apparatus to protect the resultant economic engines.
  • Improvement of Caribbean governance to support these engines.

A technocratic framework is what is needed for Department Stores, and what is needed for the Caribbean. Consider how the exercise of technocratic efficiencies have been proven to help the Department Stores industry, in this research project, presented here:

Title: Can department stores compete again?
Research Project Name: Resurgence of the Department Store

We undertook an investigation into the future of the department store under the premise that although we keep hearing about the imminent “death of department stores,” it hasn’t happened. To learn more, we spoke with industry leaders, visited successful stores around the world, and conducted research by scanning business and trade publications. What we concluded is that there are distinct advantages for department stores in today’s business and retail climate, but bold strategies are needed to regain the competitive advantages these businesses once held.

Many department stores currently sit on a precipice: Sales are languishing, malls are struggling, and their future existence is in question. But it doesn’t have to be this way. Exciting new strategies are emerging that capitalize on changing shopping habits and advances in technology. Department stores are uniquely positioned to lead this paradigm shift in the retail experience, a shift that consumers are already demanding. By moving forward with a bold, no-holds-barred approach, and by leveraging what made them successful to begin with, department stores not only can survive, but can thrive— and rise to the top of the retail sector once again.

On closer examination, the deck is stacked in favor of department stores. At both the regional and the national levels, department stores have tremendous access to merchandise based on their buying power. They can utilize this power to demand exclusives from designers as limited-run collaborations, exclusive product offerings, or special events.

Department stores are also major stakeholders in malls, and they have the anchor clout to push the daily, weekly, and yearly programming that is vital to driving foot traffic. The specialty stores that are their mall neighbors offer opportunities to develop corporate relationships and forge strategic alliances that result in mutually beneficial synergies.

The fact that department stores often have a significant space advantage, plus they frequently own the buildings in which they sit, provides a real opportunity. Strategic planning of the available space—combined with technology-enhanced product displays, leveraging of websites, and stocking efficiencies enables by RFID (radio frequency identification)—can reduce the amount of physical area required to showcase pure product without reducing offerings. That surplus space can then be used to provide unique guest experiences. Enormous marketing budgets can also be better leveraged.

Budget and space allocations can be shifted from pure commercial advertising to training and community outreach, strengthening department stores’ connections to their local communities and investing in employees to enhance customer service.

And in the end, the one thing shoppers can’t buy is time, which they seem to have less and less of every day. The department store can look to its roots and provide a wide selection of relevant offerings to create one-stop shopping that has a curatorial edge.

Curate products and pursue synergies to deliver the unexpected. Department stores have the power to select and curate their selection of products, to demand exclusives from designers, and to drive the creation of new products. Use this power to develop new and unexpected product synergies. Get feedback by asking customers what they want and delivering what they ask for. And consider platforms that put the customers even more in control, allowing them to “create” their own collections or online stores.

Elevate the guest experience. Department stores need to unify the virtual and physical shopping experience and truly deliver something better. STEP 1: Consistent pricing. STEP 2: Go beyond that by connecting with local communities to deliver something unique and to better understand customers. STEP 3: Remember that the shopping experience always comes first. Technology is a powerful tool, but not an end in itself.

Create a culture of customer service. To get the guest experience right, a culture in which the customer comes first is key. Again, department stores have the advantage: They can use their scale to train staff, share best practices, and deliver service and experiences smaller specialty stores couldn’t dream of. This may require a rethinking of staffing priorities. Consider dropping commissions in favor of training as a long-term investment.

Be socially responsible. Customers want to give their money to companies whose culture they respect, companies they believe share their values, and companies they feel are positive contributors to the community. This sentiment seems to be even stronger in the BRIC countries (Brazil, Russia, India, and China) and in developing nations, where often cash-strapped consumers are making decisions based on what they think a company stands for. Partner with local communities to deliver value and invest in contributions to the community.

The opportunities for department stores to deliver differentiated products and experiences are plenty. The key is to think beyond the ordinary, to make the bold investment, and to gauge the results. But the true challenge will be to continually pursue daring innovations. A one-dimensional strategy isn’t going to cut it. A far-reaching, persistent, unexpected—even risky—strategy for success is what will push stores ahead of the pack. Making that push means daring to be great, and understanding that change must be constant.

The Go Lean book projects a technocratic solution for the Caribbean region: the CU Trade Federation. This CU/Go Lean roadmap estimates that the technology job-creating effect of innovative retail solutions  can amount to thousands of new direct and indirect technology/logistics jobs in the region. This is just one ethos. The Go Lean roadmap was constructed with more community ethos in mind to forge change and build anticipation and excitement for technological transformative changes. The book lists samples of the community ethos, plus the execution of related strategies, tactics, implementations and advocacies:

Community Ethos – Deferred Gratification Page 21
Community Ethos – Economic Principles – People Choose Page 21
Community Ethos – Economic Principles – People Respond to Incentives in Predictable Ways Page 21
Community Ethos – Economic Principles – The Consequences of Choices Lie in the Future Page 21
Community Ethos – Economic Principles – Job Multiplier Page 22
Community Ethos – Governing Principles – Lean Operations Page 24
Community Ethos – Ways to Impact the Future Page 26
Community Ethos – Ways to Foster Genius – Fashion and Art Page 27
Community Ethos – Ways to Promote Intellectual Property Page 29
Community Ethos – Ways to Impact Research & Development Page 30
Community Ethos – Ways to Bridge the Digital Divide Page 31
Community Ethos – Ways to Promote Happiness Page 36
Community Ethos – Ways to Impact the Greater Good Page 37
Strategy – Vision – Confederate 30 Member-States to Create Single Market Page 45
Strategy – Mission – Build and foster local economic engines Page 46
Strategy – Mission – Exploit the benefits and opportunities of globalization Page 46
Tactical – Confederating a Permanent Union Page 63
Tactical – Fostering a Technocracy Page 64
Implementation – Ways to Pay for Change Page 101
Implementation – Steps to Implement Self-Governing Entities Page 105
Implementation – Ways to Improve Mail Service – Caribbean Postal Union Page 108
Implementation – Trends in Implementing Data Centers – Creating the ‘Cloud’ Page 106
Implementation – Ways to Deliver Page 109
Implementation – Ways to Impact Social Media – Caribbean Cloud Page 111
Planning – 10 Big Ideas for the Caribbean Region – Cyber-Caribbean Page 127
Advocacy – Ways to Grow the Economy Page 151
Advocacy – Ways to Create Jobs Page 152
Advocacy – Ways to Better Provide Clothing – Improve Fashion Merchandising Page 163
Advocacy – Ways to Improve Governance – e-Government & e-Delivery Page 168
Advocacy – Ways to Foster Technology Page 197
Advocacy – Ways to Foster e-Commerce Page 198
Advocacy – Ways to Impact Main Street Page 201
Advocacy – Ways to Impact Urban Living Page 234
Appendix – CU Job Creations Page 257

This Go Lean roadmap calls for the heavy-lifting to transform Caribbean society. Technological change is coming … anyway; rather than fight or resist change, we all need to embrace it. The roadmap advocates getting ahead of the change, to shepherd and navigate important aspects of Caribbean life through the “seas of change”. These goals were previously featured in Go Lean blogs/commentaries, as sampled here: Tourism Stewardship — What’s Next? The need to Master e-Commerce 3D Printing: Here Comes Change Move over   Mastercard/Visa – The emergence of Caribbean e-Payments China Internet Policing – Model for Transforming the Caribbean Transformative Tesla unveils super-battery to power homes Patents: The Guardians of Innovation Cash, Credit or iPhone – New Trends in Retail payments Net Neutrality – This Matters … For Transformation & Innovation Truth in Commerce – Learning from Yelp Change the way you see the world; you change the world you see How One Internet   Entrepreneur Can Rally a Whole Community Robots help Amazon tackle Cyber Monday Role Model Jack Ma brings Alibaba to America Amazon’s new FIRE Smartphone PayPal expands payment services to 10 markets CARCIP Urges Greater Innovation

The Go Lean book focuses primarily on economic issues;  retail sales fit that distinction. As portrayed in the foregoing VIDEO, the future is bleak for Department Stores if they continue business-as-usual. They must reform and transform.

This analysis is a good study for the Caribbean. We, too, must reform and transform. Change has come; our business models are no longer as assured.

Who moved my cheese?
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The Go Lean book offers the turn-by-turn directions of strategies, tactics and implementations so that our communities may keep pace with the agents-of-change. This is not easy; this is heavy-lifting, but this is worth the effort. Everyone in the Caribbean, institutions and individuals alike, are urged to lean-in to this roadmap for empowerment of the region’s societal engines. 🙂

Download the book Go Lean…Caribbean now!

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