Dinosaurs, Dodo Birds and Department Stores
By George Anderson
Annette McEvoy, a retail analyst and president of A. McEvoy & Associates, is among those who believe the prognosis for department stores is grim.
“Some of them will not make it,” she told The Boston Globe.
Ms. McEvoy is far from alone, particularly in her assessment of so-called middle tier department stores that are watching share being chipped away on the high-end by luxury retailers
and by discounters for the mass market.
“You’ve got your Macy’s stuck in the middle,” said Steve Spiwak, an economist at Retail Forward. “For the necessities in life, people want to pay as little as possible so they
go to the Targets of the world. For the rest of the stuff, they like to splurge on the special items, and those are sold at Coach or Neiman Marcus.”
According to Retail Forward, overall department store sales dropped from 11.1 percent of non-automotive retail sales in 1994 to 6.6 percent last year. At the same time, Wal-Mart,
Target and warehouse clubs were seeing their share go from 3.2 percent to 7.9 percent of the total.
Moderator’s Comment: Is the middle-tier department store an endangered species? What will it take to save it?
One of the department stores stuck in the middle that has managed to buck this trend of late has been J.C. Penney. The company has focused its merchandising
efforts on exclusive fashion brands. According to the Globe report, the chain’s turnaround plan initiated under former chief Allen Questrom has been successful. Excluding charges
from its former Eckerd drugstore unit, the department store chain has gone from a $705 million loss in 2000 to increasing profits in recent years. –
George Anderson – Moderator