System of the Department Store Industry

nc efi placeholder

The department store industry is an important part of the global retail market. The market includes brick-and-mortar stores that offer a wide range of products, as well as online stores that sell them. The sector has seen growth over the years due to increasing consumer spending and rising demand for convenience, but it’s also been affected by new technologies such as e-commerce. This article explores how these factors have impacted the industry overall from its history to its future outlook.

Department Store Industry Overview

The department store industry is in decline. The reasons for this are numerous, but one of the most significant is the rise of e-commerce. As consumers have more access to online shopping than ever before, they are less likely to go out and visit physical stores. This problem has led some companies to close their doors entirely or merge with other businesses. For example, Macy’s announced in January 2018 that it would be closing 68 locations nationwide because of declining sales. In addition to closing stores, retailers like Sears have been forced into bankruptcy protection due to high levels of debt and dwindling profits.

E-Commerce’s Impact on the Department Store Industry

E-commerce has had a significant impact on the department store industry. It has helped to increase sales and profits, while also improving customer service and competitive advantage. In today’s world, online shopping is more convenient than traditional brick-and-mortar stores because it allows you to shop from home or work at any time of day or night without having to worry about traffic jams or crowds of people waiting in line at checkout counters. It also saves you time by eliminating the need for transportation between stores; this means less gas consumption and reduced vehicle emissions as well as less wear & tear on your car or bike tires!

Furthermore, buying products online is generally cheaper than purchasing them offline because there are no taxes added to the price tag (unless they have been marked up). Additionally, many retailers offer free shipping on all orders above a certain dollar amount, so if your order doesn’t reach that threshold then there will be no additional charges added onto what you already paid for each item individually before adding them together into one package which reduces overall costs even further down into nothingness!

Future of the Department Store Industry

As the retail environment changes, department stores will have to adapt. Companies in this industry need to focus on customer service and personalization in order to stay relevant in the eyes of shoppers. They also must make sure their in-store experience is top-notch, as well as their online presence so that customers can buy what they want when they want it. Finally, brands like Nordstrom have been able to expand beyond their brick-and-mortar locations by offering services such as same-day delivery through Jet Black (the company’s own delivery app) or trying out pop-up shops where customers can try on clothes before buying them online at a discounted price if they decide that’s where they want their purchase delivered from next time around!

Organizational Structure of a Department Store

The department stores industry can structure their organizations in numerous ways, based on what they sell, if they have multiple locations and other factors. Some department stores may even use a combination of organizational structures, according to Reference for Business. A department store will often use a flat or tall organizational structure, depending on its size. For example, single-unit department stores may have very few levels of management. Consequently, a single-unit department store may use a flat organizational structure. Larger department stores with many levels of management will typically use a tall organizational structure.

Advantages of Different Structures

The advantage department stores receive from product organizational structures is specialization. Product groups are so diverse that managers, for example, may need great product knowledge to buy and price these items. A department store may use a functional organizational structure to make use of a strong marketing or engineering team. For example, multiple marketing personnel, such as advertising, marketing research, and product managers, may be required to combat competitive strategies. Matrix organizational structures make use of product and functional specialists. A matrix structure is also easily dissolved when a project ends.

Department store sales are declining and online shopping is up

Online shopping is on the rise and department stores are losing market share. In the past decade, online shopping has become a more popular way for consumers to buy products. In fact, according to a 2018 survey by Accenture and retail consulting firm Boomerang Commerce (as reported in Forbes), “online sales now account for nearly 10% of total retail revenue up from 7% just five years ago”. This means that while overall sales have increased over time due to population growth and economic expansion, they’re not growing at the same rate as they did before: instead of increasing by 3-5% annually or more (as they did between 2000-2008), they now increase only 1%-2%.


With the rise of e-commerce and the decline in department store sales, it seems that the industry is changing. Department stores may also use a functional organizational structure, especially if they are smaller and carry fewer items. A functional organizational structure would be controlled by vice presidents of marketing, finance, engineering, and accounting. Marketing people, for example, would be responsible for all product lines, including housewares and sporting goods. However, with new technologies like augmented reality (AR) being used to enhance customers’ shopping experience and improve profitability, there is still hope for the future of this industry.