Sector Focus 

The end of the department store

The end of the department store

Two pieces of data have prompted doubt over the viability of the department store as a successful retail business model in the 21st century. First, our recent analysis of property leases found that department chain Debenhams (DEB) was the most highly leveraged business among its peers, with a significant proportion of those leases extending beyond 20 years. Second, recent data from the US showed that retail sales contracted for a third consecutive month – the first time that has happened since 2012. Breaking that data down further, most of the contraction was limited to three specific sub-sectors: auto dealers, gas stations and traditional department stores. Department stores saw sales slump by 0.9 per cent, while internet retailers managed to grow sales by 1 per cent – admittedly not a huge improvement as consumers tighten their belts across the board.

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