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As pandemic-related restrictions eased this year with a strong vaccination drive, department stores witnessed rising foot traffic. As a result, most department stores reported impressive earnings results for the second quarter. However, the resurgence of COVID-19 cases might slow down the increase in foot traffic in the near term. Also, e-commerce giant Amazon.com, Inc.’s (NASDAQ:AMZN) decision to add department stores to its list of business ventures will likely increase competition in the department stores space.
On a positive note, the inelastic demand for consumer goods and the practice of passing on higher costs due to inflation to customers should buoy the industry. The global department stores & other general merchandise stores market is expected to grow at a 6% CAGR to $2.18 trillion by 2025. Therefore, both M and JWN should perform well.
