skip to Main Content


Department Store Industry

Department store companies are purveyors of diverse line of nonfood merchandise – from clothing, accessories, cosmetics, home furnishings to housewares. Most department stores today operate both, brick and mortar operations with their local flagship stores, as well as e-commerce, and offer various supplementary services like credit lines and registries.

With an estimated global market size of €839B by 2018 per, the industry is expected to grow at a compound annual growth rate of 5.4% between 2015 and 2020, according to the research firm GlobalData. While historically department store sales have typically been strongest in Europe, Japan, and the US – these regions are expected to see contracting sales with growth coming from developing economies. According to research by Dun & Bradstreet, Indonesia is expected to experience the fastest growth in the industry, followed by India and the Philippines.

Some of the evolving challenges facing department stores today include:

  1. Outmaneuvering discount or “off price” retailers who have increasingly cut into the mainstay customers of department stores with all year bargains and price cuts.
  2. Increasing share of e-commerce purchases, which according to Bain Consulting reached about 8% of the total market in 2016, and
  3. Reinterpreting the maxim ‘Location, Location, Location’ to better balance fixed costs of huge flagship stores at prime real estate locations with changing consumer buying habits.

From a supply chain strategy perspective, successful department store retailers will continue to focus on:

  • Differentiated products or brand offerings that create unique shopping experiences and wins back pricing power from the consumers.
  • Faster throughput of merchandising from supply chain to store registers to reduce store clogging, overstocks or forced clearance pricing.
  • Enhancing digital demand and assortment planning capabilities for both in-store as well as e-commerce platforms

Benchmarking database and methodology:

Our department stores industry benchmarking report is based on 34 department store companies with publicly available financial information and includes department store giants like Lotte Shopping Co., Macy’s Inc., Sears, and Marks and Spencer Group Plc. Privately held department store companies such as Galeries Lafayette Group or Selfridges & Co are excluded from this study due to lack of adequate publicly available financial data. Off-Price retailers such as Ross Stores Inc. or The TJX Companies Inc. are also excluded from this study.

Summary demographic profile of the benchmarking database is below:


Demographic Profile

Companies HQ in Europe 8
Companies HQ in NA 9
Companies HQ in Asia 17
Total Companies 34
2016 Revenue (USD M) – Average $5,359
2016 Revenue (USD M) – Middle 80% $14,862 – $137


Supply Chain KPIs Benchmarking Summary: Table below summarizes the financial performance of the benchmarking pool of 39 companies on five key supply chain metrics:
5 Year CAGR Gross Margin EBITDA Margin Inventory Days Online Sales
Top 25% 0.8% 47.4% 14.2% 27 26%
Median -0.3% 36.2% 6.7% 71 22%
Mean -0.7% 38.1% 9.1%/td> 72 21%
Bottom 25% -2.3% 24.3% 3.8%/td> 111 8%

The 5 Year CAGR is the mean annual revenue growth rate over the last five years (2012 -2016). Gross Margin and Net Income Margin are based on ‘as reported’ financial results. Days Inventory on hand is calculated based of average inventory holding for a period over cost of goods sold.*Reported Online Sales is based on public disclosures made by approximately 15% of the companies in the benchmarking pool only.

Top 5 Supply Chain Performers:

Rank Company Country Growth Gross Margin EBITDA Inventory
1 Hyundai Department Store Co Ltd. South Korea 2 1 1 2
2 Lifestyle International Holdings Hong Kong 3 5 2 2
3 Shinsegae Inc. South Korea 1 4 5 22
4 Takashimaya Company Japan 4 22 21 5
5 Nordstrom, Inc. USA 10 18 8 17
– Rankings based on a scale of 1-39, with 1 being top ranked. UR – Un-Ranked
Gross Margin & Inventory frontier for department store retailers 5 Year Industry Supply Chain Performance
Image Here Image Here
Overall based on the pool of 34 companies, there is a relatively flat trade-off curve between inventory days and gross margins for department stores. However, the class has clear distinctions between leaders and stragglers. While a few leading companies appear to earn high gross margins while maintaining short inventory days (Hyundai, Lifestyle, Gwangju Shinsegae), department store companies primarily in the US and UK lag the industry averages. Key supply chain matrices have held flat for department stores over the last five years. While EBTDA margins have improved 4% in 2016 compared to 2012, inventory days holdings have also gone up by 5% over the same period.

About Solvoyo

Solvoyo is the next generation planning and optimization platform built for the digital revolution in supply chain. Solvoyo helps companies close the gap between planning and execution. Our all-in-one platform forecasts demand, optimizes inventory, plans production, replenishes networks and concurrently optimizes transportation plans. Solvoyo is the only planning platform that allows companies to plan strategic, tactical and operational supply chain actions in one tool. The scalability, analytical capabilities and short implementation cycles of our true cloud platform help our clients achieve dramatic improvements in performance. We are headquartered in Boston, MA with our R&D center in Istanbul, Turkey. For more information,

please visit:

Start Your Journey Now!


4 Keys to a Successful Supply Chain Visibility and Analytics Project

Digital Transformation of Your Supply Chain Network in the Age of AI


Success Factors for Retail Supply Chain Analytics Projects

Digital Transformation Of Supply Chains

Supply Chain Analytics for Wholesalers & Distributors

Back To Top