“The overarching narrative of doom and gloom seems to miss out on the lingering strength and potential of leading players.”
Pandemic-era fears over the death of the department store were largely overblown, at least according to a new analysis from Placer.ai. Kohl’s and Dillard’s posted traffic declines of just 8.3% and 3.5% respectively in May 2021 when compared to 2019 numbers, while Macy’s and Nordstrom showed declines of 16.8% and 14.3%, dramatically narrowing the visit gap the brands experienced during the throes of COVID-19.
“While the sector has certainly experienced its fair share of challenges, the overarching narrative of doom and gloom seems to miss out on the lingering strength and potential of leading players,” the firm’s Ethan Chernofsky says. In fact, Nordstrom and Macy’s—often held up as examples of the challenges facing the department store sector—had their strongest months in May since the onset of the pandemic’s impact on retail.
Chernofsky predicts the coming months may be even better for the sector, especially as the back to school season looms and states like New York and California fully reopen. Kohl’s is a frontrunner here, he says, but even mall based department stores may post better numbers than expected.
“Critically, this doesn’t overcome foundational challenges within the approaches of some of these brands, and a continued evolution for the sector is still likely necessary,” Chernofsky says. “However, it does put the performance into context, showing that these department leaders still carry a lot of strength that can be leveraged to driving a fuller and longer-term turnaround.”
In the grocery sector, Trader Joe’s and H-E-B, both brands that were particularly hard-hit during the pandemic’s early months, showed strong signs of recovery in May, with visits up 7.1% and 2.2% respectively over same-month 2019 numbers. This, according to Chernofsky, “speaks to the strong standing of these brands and their unique ability to weather the storm of COVID. Essentially, while visits declined in the short term, the strong relationship developed with customers over time was resilient enough to drive shoppers back as ‘normalcy’ returned.”
Fitness chains like Planet Fitness and Orangetheory Fitness have also proven their ability to recover, with visits up compared to 2019 in both March and May. And “this could be just the beginning,” Chernofsky says. “The consistency of these brands alongside their strong geographic reach could push visits even higher as reopenings continue and routines return, especially for the many people whose former gyms closed due to the pandemic.”
And the comeback of sit-down chains like Olive Garden and Panera, both brands that showed strong recoveries in May, “speaks to a potential revival that goes far beyond COVID,” Chernofsky says. If their trajectories continue, he says, it could have a spillover effect to other sit-down restaurants.
“As QSR was clearly privileged during the pandemic, a shift towards more drive-thru and takeaway was widely discussed,” he says. “While this could end up being a greater part of the overall mix, the power of a dining recovery could create a far more favorable equilibrium.”
