USA Today is reporting that department stores are making a come back. From an article dated February 21, 2007:
"Department store sales, led by Federated, Nordstrom and Neiman Marcus, have been climbing. Meanwhile, specialty stores, including Talbots, Ann Taylor, Chico's and the beleaguered Gap, have been stumbling. There are exceptions among specialty stores. Luxury and teen retailers continue to shine but analysts and consumers agree that, as usual, it comes down to product. Some specialty stores have erred by going either too dowdy or too trendy, while department stores have made the most of their square footage by adding more designer and private-label merchandise to distinguish their offerings.
Among department stores leading the current bounce-back:
• Nordstrom. Spokeswoman Deniz Anders says Nordstrom, which has had growth in same-store sales for the past five years, never really was in a slump. Still, Black notes that Nordstrom's women's apparel hadn't kept pace with growth in the shoe, children's and men's departments over the past few years, a situation Nordstrom acknowledges.
"Any time we go through challenges in any part of the business, it's a chance to look at things in a new light," says Pete Nordstrom, president of merchandising and a great-grandson of the founder. "The relative struggles motivated us to dig deep and get after it again."
Black says the women's apparel turnaround is almost complete, and Nordstrom is "stealing market share from the huge group of specialty retailers who have not been trend-right."
• Federated. Last September, all of the remaining May department stores owned by Federated became Macy's, creating an 860-store retail powerhouse. Now, Lundgren says, "We have more shots at encouraging customers to try us," and the company's same-store sales increases of 4.4% and 8.6% for December and January, respectively, suggest it's working. He also credits brands such as Ralph Lauren and private-label merchandise, including the recently launched Oscar de la Renta and Tahari lines that are only for Macy's. Federated, which also owns Bloomingdale's, is now the largest seller of Ralph Lauren in the country.
Renovations at Macy's stores have helped. "Department stores, especially Macy's, used to take the approach that 'We'll just put a lot of product in and let customers sort it out,' but now they've pulled some things out and given a clearer point of view on what the store is about," Bogan says. "It's making department stores much easier places to shop."
• Neiman Marcus. The high-end retailer, which also owns Bergdorf Goodman and teen retailer Cusp, had comparable revenue growth for each of the last four years, with more than 6% increases in quarterly same-store sales since July 2003.
Other retailers say one of Neiman's biggest accomplishments is doing about as much business as rival Saks while having less than half the number of stores. Neiman credits its loyalty program, which begins offering rewards after customers have spent $5,000, for some of its sales increases. Members of the program spend 20 times more at the stores than non-members.
• J.C. Penney. After a near-death experience in 2000, Penney's is well into a comeback. CEO Mike Ullman says the 1,000-store chain is one of the few department stores with positive same-store sales every year. Same-store sales were up 3.6% in January, 2.6% in December.
Ullman says Penney's is capitalizing on its spot between Macy's and Kohl's to emphasize low prices and high quality. He also says the chain has the largest department store website owned by a retailer, has the only "big book" catalog business and is the largest department store in terms of private brand merchandising."
Click here to read the article in its entirety here:
http://www.usatoday.com/money/industries/retail/2007-02-20-dept-stores-usat_x.htm
We both began our retail careers at department stores and we still love to shop in them. Whether you are a department or specialty store retailer it all comes down to the article's closing line:
"But it still comes down to product. 'Customers don't make a big distinction … as long as you offer a compelling reason to be there,' Pete Nordstrom says. 'They just like shopping where they can find the things they can want.' "
