Market Overview

Is The Department Store Model Doomed? This Pro Reveals 3 Different Competitive Threats

Share:
Is The Department Store Model Doomed? This Pro Reveals 3 Different Competitive Threats

Jan Kniffen of J. Rogers Kniffen Worldwide was a guest on CNBC's "Squawk Box" segment to discuss the fate of department stores and where the competitive pressures are really coming from.

Kniffen started off by pointing out that Amazon.com, Inc. (NASDAQ: AMZN)'s business has seen a 27 percent growth at a time when many department stores and retailers themselves are reporting declines in sales and traffic.

Accordingly, he suggested that department stores will see the largest impact to their business from the surge in online clothes shopping being conducted on Amazon.

However, department stores have to worry about more than just competitive threats coming from Amazon.

Related Link: Pro: This Is The One "Disappointing" Aspect Of Wal-Mart's Q1

"Fast fashion gained share again this quarter, just like it has every year," he said. "Off-price gained share again this quarter, just like it has every year. Amazon has gained share again this quarter just like it has every year."

Nevertheless, Kniffen suggested that Macy's, Inc. (NYSE: M) and Nordstrom, Inc. (NYSE: JWN) will both stay "winners" in their respective spaces — but the "real question" is what will this look like on an ROI basis.

He continued that both Macy's and Nordstrom are the best omni-channel retailers right now, and they will both continue pouring money into online business. However, the problem is a retailer can build a brick-and-mortar store and then just needs to refurbish the space over time, but an online business needs to be continuously rebuilt.

As such, both Macy's and Nordstrom will be forced to spend "more money than they ever expected to." Over the longer term, both companies will "win" in the sense that they will be "left standing," but "they may not get the returns they had in the past."

Posted-In: CNBC Department Stores J Rogers Kniffern J. Rogers Kniffen Worldwide Jan KniffenAnalyst Color Media Trading Ideas Best of Benzinga

 

Related Articles (AMZN + JWN)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
UPSUBSMaintains136.0
TXNUBSMaintains110.0
SHWUBSMaintains570.0
PGUBSMaintains126.0
MCDUBSMaintains212.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

The S&P 500 Is The World's Best Momentum Trade

Apple's Set For A 'Facelift,' Unveils New Store Design