Not too long ago, department stores relied on their local markets for the majority of their revenue. The Marshall Field’s or Hudson’s or Mervyn’s (remember those names?) in the local mall was the one-stop shop for most families for Christmas shopping, for back to school shopping–for really any shopping. Not out of loyalty, per se, but out of convenience and because options were limited. Today, thanks to quick and fast e- and m-commerce, the more convenient purchase channel for not just U.S. shoppers but shoppers around the world — particularly those not in major metropolitan cities — is through clicks, not bricks. For Department Stores, the road has been rocky. In our new Digital IQ Index: Department Stores report, we studied how effectively 40 global retailers have used digital to penetrate cross-border markets. The top 250 global retailers average 23.8 percent of revenue from foreign operations, and that figure is on the rise. But while the intention of these department stores to be global brands is there, execution is still a work in progress. For example, in the chart above, you’ll see that 15 percent of international department stores–including Holt Renfrew in Canada, GUM in Russia, and Printemps in France–still aren’t e-commerce enabled.
Today, 55 percent of department stores ship to an average of 56 countries outside their home markets, yet just a quarter publish prices on their sites in local currency–putting the onus on shoppers to manually configure conversion rates. Emerging luxury markets are not surprisingly among the most popular destinations with 33 percent of department stores now shipping to China, 30 percent to Russia, and 40 percent to Brazil and India.
The market every retailer and brand is focused on right now and for the near future is China. In the past five years, department store revenues on the Mainland have doubled t0 almost $110 billion. Despite this significant penetration, local stores like Maoye and New World are still the powerhouses. Of the global department stores that offer shipping to China, only Lane Crawford, Le Bon Marché, Neiman Marcus, Net-A-Porter and Selfridges maintain sites in Mandarin. Another three, Galeries Lafayette, Neiman Marcus, and Marks & Spencer, sell through official Tmall shops. In the infographic below, a breakdown of the site features department stores do and don’t provide international shoppers:
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