IADS Press Release: IADS 100: Comparing department stores’ 2021 financial results to 2019 numbers

Comparing department stores’ 2021 financial results to 2019 numbers show stark differences according to the region:  -20% in Asia, -8% in Europe… and +10% in the Americas. 

The IADS 100 monitor, launched in May 2021, observes and tracks changes in the department store retail format and how players in various markets adapt to challenges and change. Based on data and results captured from a selection of global department store companies (out of the 211 companies still operating in 2023), the IADS 100 aims to step away from the immediate and constant stream of news to analyse the situation based on actual and reliable numbers. 

Department stores can no longer compare their recent businesses to ‘normal times’ as they hoped to with 2019 figures as they are operating in a new era of radical changes. Between 2019 and now, the amount of ground-breaking and disruptive global events has multiplied, thus impacting the business operations of retailers around the world. From a global pandemic, a war in Europe, supply chain blockages, to sustainability regulations and revolutions in tech leading to the emergence of new business models, department stores can no longer refer to their baseline figures when comparing annual results to ‘business as usual’ times. Therefore, decision-makers in the space are having to learn how to operate in such dynamic times in order to get ahead of the next block in the road.  

While the impact of the global Covid pandemic seem to be in the rear-view mirror, other economic events have not paved an easy road ahead for department stores. Based on their fiscal results, here are how parts of the world fared by the end of 2021 results: 

Asia (2021 panel average: turnover decrease of -20% vs. 2019): Many companies in the region struggled to get their feet on the ground due to repeated waves of Covid lockdowns and strict travel bans, particularly in Japan and Korea, with a -32% decrease of the business on average on the panel for those countries. It is worth remembering that in 2021, China was less prone to massive lockdowns throughout the year compared to 2020 and other countries in the area, even though Shijiazhuang (11m people) was closed in January and X’ian (8.5m people) in December. For that reason, and also thanks to local demand, high disposable income and the nature of the market (social commerce as a habit, high rates of smartphones among the population and logistical infrastructure), a number of Chinese department stores (BHG, Wushang Group, and Golden Eagle) were able to go against the tide and outperform 2019 numbers, IADS member BHG (owner of SKP in Beijing, X’ian and Chengdu) growing +62% vs 2019, and Wushang Group (formerly known as Wuhan) at +42% vs 2019.  

Europe (2021 panel average: turnover decrease of -8% vs 2019): In 2021, department stores started to bounce back from 2020 results, but were still feeling the effect of recurring lockdowns, decreasing local customer morale and the lack of tourists due to closed borders, preventing them from reaching 2019 levels (not to mention that the products sold during the lockdowns, such as food, home equipment or tech, provided lower margin levels than personal equipment products and fashion). Only Marks & Spencer, Coop Group, John Lewis, and NK outperformed 2019 results in 2021, suggesting that department stores with a grocery arm tended to perform stronger, while those that rely on tourism continued to suffer (NK being an exception due to the acquisition of a new business in 2021).  

Americas (2021 panel average: turnover increase by +10% vs. 2019): The sampling of department stores from the US, Mexico, and Chile all reported positive sales trends between 2020 and 2021. However, the situation was more contrasted in the US when it came to recovering back to 2019 levels, as only Dillard’s and Neiman Marcus managed to reach the target. In Central and South America, the situation was different: in Mexico (IADS member El Palacio de Hierro, and Liverpool) performances surpassed the 2019 reference, and in Chile (IADS member Falabella, and Ripley, Cencosud, owner of the Paris department stores) the target was significantly surpassed. While the pandemic did not hit this region as hard as it hit other parts of the world, the next string of challenges might be the tipping point for these retail players. 

While department store leaders around the world have learned to pivot their businesses to remain relevant in volatile times, they need to remember the lessons learned during the recent challenging times (i.e., pandemic, war) and be ready for the next wave that might question their business model (i.e., regulation, recession, AI). 

Currently, retailers are gathering and reporting 2022 fiscal results, but there were clear obstacles that presented themselves over the 2022 fiscal exercise that will be sure to impact retailers. In Asia, tourism was hurt due to extended border lockdowns and the ban of outside spectators at the 2022 Winter Olympics. With consumers stuck in China, European department stores that cater to Asian tourists also needed to rethink their strategy and target customers. Europe was also heavily impacted by the crossfire of the war between Ukraine and Russia as this impacted store operations, supply chains, and contributed to an energy crisis. Nearing the end of 2022, the world was looking at inflation with consumers keeping their spending money in their pockets with fear of a recession in 2023, thus resulting in questions about the 2022 holiday sales season. Finally, sustainability is becoming a more concrete topic as regulators impose new laws for businesses of all shapes and sizes to comply.  

While these obstacles may seem daunting, difficult times can be eased for retail leaders by understanding how similar business cases have been dealt with by department store partners around the world. Expert bodies such as the IADS give global retail leaders an opportunity to ask hard questions when facing difficulty and share the lessons of their triumphs. 

Download the full IADS 100 data sheet with FY2020 & FY2021 department store figures below:

Read the full press release below:

Read the full press release, in French, below: