Online Operations Hurting Profits At Department Stores, Study Reveals

Department stores’ efforts to expand their e-commerce operations are hurting their profit margins, according to Credit Suisse. Results of an analysis by the financial services company revealed around 14 percent of revenue at leading department stores that anchor shopping malls in the US came from e-commerce in 2015. Retailers Nordstrom and Macy’s derived 19 percent and 21 percent of their sales from e-commerce, respectively. Data from Kohl’s annual report, however, showed the retailer’s e-commerce operating margin was 9 percent, while its stores recorded 14 percent in 2015. E-commerce-related costs adversely affecting retailers’ bottom line include those related to free shipping, free returns, and the investments needed to build infrastructure, such as distribution facilities.