It's a question that retail analysts, CEOs, investors and even consumers are trying to answer: Why are some retailers thriving while others are struggling to survive? Is it age? Retailers like J.C. Penney (NYSE:JCP), Sears (Nasdaq:SHLD) and Radio Shack (NYSE:RSH) are struggling to stay in business, but can the same be said for Macy (NYSE:M)'s or Dillards (NYSE:DDS)? Industry experts generally disagree on the reasons for such a discrepency, but there are some common theories.

Create a Buzz!
You can always tell that a company is in trouble when it starts redefining itself; J.C. Penney is attempting do just that. J.C. Penney and new CEO Ron Johnson implemented a strategy where the company has eliminated coupons and gone to a straightforward pricing model that management calls "fair and square pricing;" but judging by the company's recent quarterly earnings announcement, it didn't know its customers as well as it thought.

"We did not realize how deep some of the customers were into coupons," says J.C. Penney COO Michael Kramer. J.C. Penney failed to realize something that other retailers understand: Everybody loves a good bargain, even if it's not a bargain at all. Coach does it with its factory store sales, and anybody who receives a newspaper or has a Macy's credit card knows that Macy's knows how to create a buzz that brings people into the stores.

SEE: The Industry Handbook: The Retailing Industry

Location
Not all malls are created equal; there are upscale malls and small strip malls in the not-so-attractive area of town. Retailers look for ways to not only drive traffic to their stores, but also the right kind of traffic; if people aren't going to spend money, then they aren't the right customer base.

RadioShack has seen its shares plummet over the past year because of location problems. It feels like you can find a RadioShack in every community strip mall, but that's part of the problem. Lower rent equals lower traffic and lower traffic is one of the reasons why the days for "the shack" might be numbered. When was the last time you saw a Macy's or a Dillard's in a low-income area strip mall?

SEE: Big Box Stores Vs. Small Retailers

Technology
Struggling retailers such as Best Buy (NYSE:BBY) and RadioShack, among others primarily in the technology business, blame their decline in sales on people using their stores as a showroom and later buying the product online for a lower price. There's no doubt that this is part of the problem, but why aren't people doing the same thing at Saks (NYSE:SKS), Macy's and other healthy retailers?

In 2011, Macy's upgraded its website to allow the 36 million annual foreign visitors to its stores to make purchases online, in their country's currency. Macy's employed a technology that converted the price in to the user's foreign currency, calculated all fees and taxes and handled the customs paperwork.

People aren't as quick to purchase lower-priced items like clothes online, because of the risk that they won't fit, but stores like Macy's are finding innovative ways to be ahead of other online retailers, in order to compete. Did retailers like Sears and Best Buy take too long to respond to the online craze?

SEE: How To Shop At Wholesale Retailers

The Bottom Line
It may be unfair to compare stores like Macy's and Saks to retailers like Best Buy and RadioShack, but department stores like J.C. Penney and Sears are competitors that aren't finding the staying power of their competition. All of these ailing companies have restructured, rebranded and attempted to streamline their businesses, but none have reported any sign of recovery that would get investors' attention.

Macy's, in a lawsuit against J.C. Penney, recently called J.C. Penney a "less than upscale retailer." While that insult may serve to infuriate J.C. Penney, that appears to be the common industry perception of the company, and as many analysts have noted, the market for mid-priced retailers has remained challenged since the economic downturn.

Related Articles
  1. Budgeting

    Bespoke Post Review: Is It Worth It?

    Find out if Bespoke Post, the fast-growing, e-commerce subscription service for men's lifestyle and grooming products, is worth all of the hype in this review.
  2. Stock Analysis

    The Biggest Risks of Investing in Costco Stock (COST)

    Read about some of the biggest risks of investing in Costco stock. Gain a better understanding of its business model before buying in.
  3. Stock Analysis

    The Top 5 Retail Penny Stocks for 2016 (TWMC, DXLG)

    Find out which retail stocks trade for less than $5 a share. Learn about bargains that can avoid bankruptcy and produce nice returns for investors.
  4. Stock Analysis

    Wal-Mart's 3 Most Profitable Lines of Business (WMT)

    Learn about the key drivers of Wal-Mart's profitability as the company is concluding its fourth quarter, which is the period of its highest sales and income.
  5. Investing Basics

    4 Value Plays in the Retail Sector for H1 2016 (BBBY, WMT)

    Discover four value stocks of companies operating in the retail sector that can prove valuable investments for the second half of 2016 and beyond.
  6. Stock Analysis

    The Top 5 Micro Cap Retail Stocks for 2016 (KIRK,TCS)

    Identify five promising micro-cap retail stocks that all growth investors should have their eyes on when making portfolio decisions for 2016.
  7. Stock Analysis

    Party City Holdings: How It's Fared Since Its 2015 IPO (PRTY)

    Learn about Party City Holding's performance as a public company. Investors would have lost much more than the Russell 2000 Index by investing after the IPO.
  8. Stock Analysis

    5 Anticipated IPOs that Didn't Make it in 2015

    Pay attention to the IPO stock debt levels. Rising interest rates make debt more expensive. As the novelty of such an IPO stock fades, its price might follow.
  9. Retirement

    Harry's Review: Is It Worth It?

    Find out if Harry's, the fast-growing, online purveyor of low-cost razor blades and shaving kits, is worth all of the hype in this review.
  10. Stock Analysis

    Will "FANG" Stocks Outperform in 2016?

    Facebook held the most bullish accumulation-distribution pattern into year’s end, telling investors to focus on this issue in 2016.
RELATED FAQS
  1. Does QVC accept debit cards?

    QVC accepts debit card payments as one of its many payment options. The company, which is the world’s leading video and e-commerce ... Read Full Answer >>
  2. Does QVC charge sales tax?

    QVC, an American TV network, is registered with states to collect sales or use tax on taxable items. QVC is also required ... Read Full Answer >>
  3. Can you pay off a Walmart credit card in store? (WMT)

    Wal-Mart Stores, Inc. (NYSE: WMT) allows multiple payment options for its credit cards, including in-store payments. The ... Read Full Answer >>
  4. Does Walmart take international credit cards?

    Foreign visitors to Walmart locations in the United States can use their credit cards issued by banks outside of the U.S. ... Read Full Answer >>
  5. How can I invest in electronic retailing (e-tailing)? (AMZN, W)

    Electronic retail is one of the fastest growing segments of the economy. Every year, more people are choosing to purchase ... Read Full Answer >>
  6. What is the difference between JIT (just in time) and CMI (customer managed inventory)?

    Just-in-time (JIT) inventory management focuses solely on the need to replenish inventory only when it is required, reducing ... Read Full Answer >>
Hot Definitions
  1. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  2. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  3. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  4. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  5. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center