Tuesday, February 7, 2017

Where Do Customers Go When Their Department Store Closes?

IMAGE COURTESY OF (JAKEROME)
This year, more than 150 locations for Macy’s and Kmart will close their doors forever. When these stores shut down, where do their former customers take their business?
Foursquare, in a report released Tuesday, analyzed foot traffic at Macy’s and Kmart stores, and found that while the closing stores often see a jump in sales thanks to closeout sales, retail rivals win in the long run.
“When a retailer announces store closures, one might assume that competitors see an immediate benefit,” Sarah Spagnolo, Foursquare editor-at-large, wrote in a blog post. “Yet that’s not what the data tells us.”
Instead, according to the report, Macy’s and Kmart stores slated for closure attracted a wealth of shoppers during their closeout sales, many from its rivals.
Foursquare dubs these shoppers opportunists — people who hadn’t previously visited the closing locations more than six months prior to the announcement of the closure. Specifically, 81% of shoppers at Kmart closing sales were opportunists, while 86% of Macy’s shoppers fell into this category.
The majority of the new shoppers visiting the closing stores were men and millennials, while the typical shoppers were often women over the age of 35, according to Foursquare.
While the influx of new shoppers was a benefit to Macy’s and Kmart, it was a temporary loss for rivals. For example, Foursquare found that during Kmart’s closeout sales, Kohl’s lost 32% of its foot traffic, Target lost 14% and non-closing Kmart stores lost 12%.
Macy’s competitors also suffered the temporary loss of customers with Sears losing 73% traffic, Kohl’s lost 38%, Kmart lost 19%, and JCPenney lost 15% of its market share.
Once the sales were over, however, Foursquare found that shoppers tended to either pick a new store or if they truly loved the closing store, they would driver further to visit one that remained open.
Loyal Kmart shoppers weren’t willing to write off the retailer, with 92% of loyal customers staying with the company, albeit traveling on average 4.3 miles to visit a nearby location.
Macy’s was able to retain 71% of its loyal shoppers after closures, with customers willing to travel a mere two miles, on average, to visit an alternative Macy’s.
Despite retail rivals losing customers during closeout sales, they ultimately benefited, if they were willing to wait.
Foursquare found that T.J. Maxx and Walmart were the main beneficiaries of Kmart customers’ business, with T.J. Maxx seeing a 47% gain and Walmart seeking an 8% gain.
Macy’s customers tended to filter to other larger stores: Kohl’s market share increased 20% and JCPenney’s traffic jumped 10%. However, the biggest beneficiary was Dillard’s, which say an 88% increase in traffic.
“What we learned is that while a competitor’s store closures might hurt in the short-term, there is a sizeable opportunity to take advantage after closeout sales and closures are complete. This is a finding with a silver lining,” Spagnolo wrote.

No comments:

Post a Comment