Department store troubles continue (JCP)

Nordstrom and JC Penney both reported declining same-store sales for Q1 2017 on Friday, rounding out a week of department store earnings announcements that showed the strain of falling in-store foot traffic across the sector.

Both companies have been working to convert their large and expensive store footprints into engines for e-commerce growth. Nordstrom hired a new chief innovation officer at the beginning of the year, charged with developing the retailer’s omnichannel efforts around building customers’ mobile devices into its in-store experience. Meanwhile, JC Penney and Nordstrom both offer omnichannel delivery services, such as in-store pickup and ship-from-store. JC Penney said earlier this year that 75% of its online sales in 2016 involved a physical store location.

The retailers seem to be betting on these omnichannel efforts to help them stay relevant by both increasing online sales and drawing customers back into their stores. JC Penney said 40% of customers who pick up an online order in one of its stores make an additional purchase of more than $50 during their visit. However, these efforts will require additional investments in innovation and inventory management at a time when retailers’ bottom lines are under increasing pressure. That will make it critical for them to streamline costs and operations without damaging sales to find the resources for new initiatives.

E-commerce has been on the rise in the last several years, thanks in large part to titans in the industry such as Amazon and Alibaba. E-commerce will truly become the future of retail, as nearly all of the growth in the retail sector now takes place in the digital space.

BI Intelligence, Business Insider's premium research service, forecasts that U.S. consumers will spend $385 billion online in 2016. Moreover, BI Intelligence predicts that number will grow to $632 billion in 2020.

This is hardly surprising considering e-commerce's healthy growth. Though the U.S. retail average growth rate in the first half of 2016 was just 2% for total retail, it was 16% for e-commerce.

The number of online shoppers has grown by nearly 20 million from 2015 to 2016. And these 224 million shoppers are spending more, as the total amount spent online grew from $61 billion in the first quarter of 2015 to $68 billion in Q1 2016. Finally, these customers are transacting more frequently, as the number of online transactions has risen by 115 million from 2015 to 2016.

But all of this shopping online creates its own set of challenges, both for consumers and the companies that are trying to get their products onto shoppers' screens and into their shopping carts. In short, you need a plan.

And to create your ultimate e-commerce battle plan, you need the right intel.

BI Intelligence is here to help.

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