Discount department stores, on-line shopping services, specialty shops and warehouse clubs dominate much of today’s retail scene.  They fill the void created by the closing of many locally-based downtown department stores over the past fifty years.  National department store chains such as Wal-Mart, Target, Macy’s, Kohl’s, Dillard’s, Saks 5th Avenue, J.C. Penny’s, Nordstrom’s, Sears & Roebuck and K-Mart have survived the on-slot of those closings.  Although some such as Sears and K-Mart are finding it increasingly difficult to sustain their retail niche.  Their lack of significant capital outlays over the past twenty years to modernize and upgrade their stores generally has impacted sales.  However, economic problems, of that magnitude, are nothing new to the U.S. retail scene.

Some economists, beginning in the 1960s, predicted bad times ahead for traditional department stores especially those who refused to change with the times.  Problems first surfaced during the recession of 1957-58 when about fifty department stores closed their doors.  If a minor recession like that forced so many stores to close imagine what a major economic depression might do to this industry.  Many economists believed that the future of U.S. retailing would be in the hands of a new breed of retailer.  They would not only fulfill the needs of their customers today, but also, set the pace for future consumer spending.

If department store owners doubted their wisdom they had only to look around.  Small suburban shopping strips, large-scale shopping centers and huge regional malls with their growing number of discount department stores and specialty shops had begun to nudge out giant retailers.  It would be only a matter of time before they dominated.  Critics, at that time, considered these recent, and in many cases, dramatic shifts in the preferences and practices of customers to be a major wake-up call for traditionally-focused retailers.  They warned department store owners to act quickly to combat this growing threat or they will find themselves out of business.  Specific recommendations for change ranged from adopting more flexible layaway plans and instituting better return policies to offering a greater variety of merchandise and initiating more lenient installment programs.

Unfortunately, few large-scale retailers paid much attention to these warnings.  U.S. department stores, in the immediate post-war years, enjoyed unprecedented high profits.  Rising wages for the U.S. workforce, promoted in large measure by an expanding national economy, accounted for much of it.  The majority of department store owners saw no reason to worry about potential future financial downturns and they certainly were not about to change their highly successful business strategies.

Local retailers viewed these dire warnings as just that, unsubstantiated caveats with little basis in fact.  Or so it seemed, then.  Large-scale store owners believed that this latest round of competition would end quickly once their loyal customers realized that traditional department stores still provided them the best quality merchandise and services at the lowest possible price.  Of course, this scenario did not unfold like that.  Instead of seeing less competition over the next several decades, it only intensified until it dominated local retailing.


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Let's Go Shopping at the Square by Richard Klein, Ph.D is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.


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