How Amazon Is Consuming Department Stores’ Customer Share

Online shopping theme with woman using a laptop

Life in a pandemic has cultivated change in every aspect of life. Despite years analyzing consumer data, never would I have predicted the rapidly evolved paradigm shift Covid-19 has had on retailers. In the last year alone, we’ve seen dramatic shifts that have left analysts and retail experts questioning the future of retail as we know it.

I had a chance to speak with Aimee Koontz and Victoria Buxton, who have been analyzing Covid-19’s impact on generational retail habits. Using the data of over 7,500 respondents each month from Prosper Insights & Analytics US Consumer Survey, the duo looked at changes happening at the department store level to shed light on current and forward-looking trends impacting this shopping format.

Aimee, a consumer, brand and marketing expert, is Vice Chair member to The Ohio State University Fashion and Retail Studies Industry Advisory Board. An active mentor to students and interns, she regularly analyzes and writes on consumer trends. Victoria, a senior at The Ohio State University and intern with Prosper Insights & Analytics, has interest in behavioral and psychological analysis and hopes to develop a deeper understanding of the processes that drive consumer motivations.


Gary Drenik: Aimee, what can you tell me about the work you and Victoria, are seeing regarding the state of department stores.

Aimee Koontz: One consistency throughout this pandemic has been the amount of change happening at the consumer level. When Victoria and I started this project, we asked ourselves what retailers would be most impacted by the pandemic, and what behaviors would be changed. Having done prior generational research, my gut told us the generation to be most impacted was the one not born in a digital era. Younger generations are relatively acclimated to online shopping. While it wasn’t a surprise to see changes in how Boomers shopped, what was surprising was the fact that their digitalization was so rapid. Due to restrictions on store closures, mask wearing and just the general black cloud of safety and health concerns we intuitively knew changes to this segment were happening, but we had a hunch that these changes were potentially impacting department stores in a bigger way. And, we were right. During the pandemic, Boomers finally got up close and personal with Amazon. The data clearly showed a shift away from a shopping format that has been foundational to the Boomers’ profile for years – to digitally native retailers, such as Amazon. What the Macys of the world once considered their bread-and-butter clientele – Amazon can now call the icing on their cake. Over the last 6 months, Boomers represent the highest growth category in new Prime Memberships to the tune of 10%. What’s even more powerful is the fact that, in the last 6 months of 2020, 150% more Boomers shopped Amazon most often, specifically in the category of women’s clothing.

Drenik: Victoria, as a Gen Z, were you surprised by what you saw? What were your biggest takeaways from the research?

Victoria Buxton: I definitely had an “aha” moment during the analysis phase. My expectations on the differences I would find between each generation, even from Gen Z to Boomers, were not high. As someone born into an age of convenience and technology, I’m heavily accustomed to both, and expected to find similar mindsets across all generations. I was surprised by how vastly I underrated those variations. You don’t have to have a 50-year age difference to have completely different shopping preferences; sometimes the biggest differences are seen in adjacent generations like Gen Z and Millennials. The reality is that with each generation, you see some pretty big differences, even when looking at Millennial and Gen X’s online shopping preferences. The data showed us that more Millennial and Gen X respondents stated they use the internet as a preferred shopping format than did those of Gen Z, who ended up only 4% above Boomers. There comes a point where you need to step outside of what you think you know and look at what the data is telling you. Aimee encouraged me to think about what drives shopping habits, and to not make assumptions as to what customers want. In digging deeper, I realized half the battle for retailers is understanding each generation from a historical, financial, and social standpoint. Striving for a more holistic view of these human nuances enables us to anticipate consumer challenges and expectations. Thinking again about Amazon, over the last year, they’ve been able to widen their reach towards categories, which historically, they’ve never had stock. Below you can see how department stores are losing Boomer business to Amazon in every category. Amazon has proved that they are adaptable and fluid, and that has given them an edge over legacy formats, like department stores. With Amazon, there’s not necessarily one specific category that comes to mind as their primary specialty. It’s no longer just about market share; it’s monopolizing the mind share among a generation known for being habitual. Without a doubt the pandemic flipped Boomer behavior overnight and Amazon was in prime position to grab their shifting attention. This is further substantiated by the fact we are seeing major decreases in Boomers who shop most often at Kohl’s, Macy’s, and JC Penney – stores that, for decades, have been central to their shopping habits.

Prosper – Boomers Shopper Preference Index

Drenik: So, what is the outlook for department stores?

Buxton: This data does appear somewhat discouraging for department stores, especially in cases like Macy’s, whose Consumer Equity index has seen a 24.9% drop among Boomers from January of 2020 to January of 2021. In the coming months, it will be crucial for department stores to look generationally at where they are seeing category success and delve into why that might be the case. As the pandemic lingers, Boomer preference for quality over convenience, may be a dying advantage of department stores to Amazon. The data tells us that older groups are likely to remain at home and may value home delivery over high quality material. As far as retail motivators go, less Boomers say new styles and trends are priority to them, down 21.5% in 2020. However, there may be a silver lining for Macy’s specifically as we’re seeing double digit increases in Millennials and Gen X saying they’ve shopped Macy’s most often over the past 12 months.

Koontz: Even with the pockets of positivity for the likes of Macy’s, overall, we are seeing substantial decreases in Consumer Equity among Boomers, Millennials and Gen X in the broader department store category. Between Boomers and Gen X, from January 2020 to January 2021, JC Penney saw an average decrease of 29% in people who shop the brand most often. Similarly, Kohl’s lost over 12% of primary Millennial shoppers in that same time period. Boomers represent the largest shift in share away from department stores. While we see some decreases in the younger generations, it is important to note that this isn’t the case for all. This is why the best plan of action for department stores is to look to the data to determine where you are winning, and specifically what customers care about. Outside of the women’s clothing trends declines, bedding, men’s clothing and shoes appear to be entry points for Macy’s. Again, this is where focusing efforts on those categories that are still attracting people to the physical stores will be key for building on the future. Cracking the code on Millennials and Gen Z are more important now than ever – as is the ability to adapt and understand what motivates and drives generational differences.

Prosper – Macy’s Top Categories by Generation

Drenik: Victoria and Aimee, thanks for your detailed analysis of how Covid-19 has changed the behaviors of consumers, particularly for those who are either Baby Boomers, Millennials or Generation X. Even though Amazon has had a tremendous negative impact on department stores, they may still have a future if they can focus beyond just merchandise buying and incorporate a better knowledge to anticipate the needs of Millennials and Gen X.

I cover consumer-centric insights and analytics that provide executives with solutions needed to drive strategy. I am the CEO of Prosper Business Development where, for