June 13, 2011Somebody forgot to tell Macy's that it was extinctGreat article on the reality in retail and Macys. With Walmart and Target treading water, the department stores like Macys and Dilliards have been going great guns thanks to omnichannel strategy. Somebody forgot to tell Macy's that it was extinct | StarTribune.com
What gives? For the past decade we've been assured that department stores, if not already dead, were slouching toward extinction as their customers abandoned them for hipper, cheaper or more convenient specialty stores, big-box retailers, discounters and online outlets. Those forecasts apparently did not reach Cincinnati, home of Macy's, the nation's biggest department store operator. In May, sales at Macy's stores open at least a year -- a key retailing metric known as same-store sales -- surged 7.4 percent. Last year, same-store sales rose 4.6 percent -- Macy's best annual gain in at least 15 years and one of the highest among all large retailers. That's surprising, given that high unemployment and general economic uncertainty would seem to favor the fortunes of discount-oriented merchants. But Wal-Mart Stores saw sales fall 1.1 percent at its namesake stores during the first three months of 2011, while Minneapolis-based Target posted a weak 2 percent gain in same-store sales. To be fair, the dire forecast for department stores wasn't concocted out of thin air. David Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas, points to U.S. economic census data showing that only 2 percent of retail spending occurred in department stores in 2007. The sector's market share had plunged almost 50 percent since 1997. The institutional decline of the local department store can be seen in the demise of Minneapolis' once-magisterial Dayton's chain. First it suffered the indignity of having the name of its longtime Chicago rival, Marshall Field's, imposed upon it. Then it was sold downriver, and down market, to St. Louis-based May Department Stores Co. Less than a year later it was sold again, to Macy's, which eventually brought another name change. These gyrations generated a fair amount of trumped-up nostalgia. Sure, today's department store may lack a certain grandeur or seem somewhat generic, but merchants had begun ripping out the dark paneling and pushing their own private labels long before Macy's came to town. It may be "too bad" that you can't buy toys at a department store today, but that's something consumers inflicted on department stores, not vice versa. Posted by staff at June 13, 2011 08:20 AM |