Wider aisles, centrally located cash registers, and new brands greet customers of Sears, Roebuck and Co.
The Hoffman Estates, Ill.-based merchant is one of many retailers reeling from recession and hoping to turn things around this year. Sears, known for its appliance and tool departments, just embarked on a revitalization plan it developed in 2001. Fifty stores were remodeled, and all 863 stores in the chain will receive renovations before the campaign winds down in 2004.
“It’s a move away from the department store model X as were moving toward more of a self-service model,” said Peggy Palter, a spokeswoman for Sears.
With discount retailers breathing down their necks, department stores are being forced to reinvent themselves to remain relevant. For most major retailers, it’s an attempt to stay fresh and keep in tune with their customers changing needs.
“Years ago people had more leisure time. They wanted to browse and window-shop. Now theyre mission shoppers. They want to get in and get out,” said Palter.
After a dismal holiday season, and a year of conservative spending by consumers, department stores are trying to lure back reluctant shoppers. Discounters have been cashing in on the weak economy and their all-in-one formats, leaving traditional department stores in the lurch.
With economic recovery on their minds, department stores are taking a hard look at what they can offer shoppers.
Britt Beemer, chairman and founder of America’s Research Group, a Charleston, S.C.- based consumer behavior research firm, says department stores have to distinguish themselves from the pack to survive.
“Retail companies have to stand for something,” he says. Years ago consumers went to department stores because of their service. They offered amenities such as hassle-free returns or next-day alterations. Nowadays, “there are none of those things that justify paying the extra 10 percent,” he said, adding that shopping at a department store was once a status symbol.
To capitalize on its strengths, Sears extended the selling space for home appliances and tools, and added plasma TV shops to some of its stores. “Were carrying a larger selection of plasma and LCD TVs because our lower price point makes it a very attractive option for customers,” Palter said. “We want to make sure they can find the products they want at Sears.” Meanwhile, Federated Department stores unveiled its own plan in September to reinvent 42 stores nationwide, including Macy’s East stores in Garden State Plaza, Willowbrook Mall, and Newport Centre.
The changes, originally announced two years ago and slated to wrap up this year, include enhanced fitting rooms, high-visibility directional signage, price check equipment, lounge areas, in-store computer kiosks, and shopping carts.
The plan is part of the Cincinnati-based company’s continuous improvement strategy. “Through our reinvent initiatives, we are able to remain focused on those ideas that best meet evolving customer expectations,” said Terry J. Lungren, Federated’s president, chief operating officer, and chief merchandising officer. “The results are seen in our rejuvenated department stores with an emphasis on fashion and newness, distinctive presentation, ease of navigation, and, above all, greater convenience and simplicity in the entire shopping experience.” Department stores have been feeling the heat from discount retailers for several years.
Of the top five retailers in the nation, Sears is the only department store that makes the cut, according to a list of the top 100 retailers put together by software provider Triversity Inc. and published in July by the National Retail Federation in its publication STORES.
The retailer at the top of the list is Bentonville, Ark.-based Wal-Mart, followed by Home Depot of Atlanta and Cincinnati-based Kroger, which owns mostly supermarkets. Sears ranks fourth and Minneapolis-based discounter Target rounds out the top five.
Beleaguered Kmart, which has been operating under bankruptcy protection for nearly a year, managed to score a spot in the top 10, although it fell two notches from No. 5 to No. 7. The Troy, Mich.-based discount store’s fate is still up in the air The blue light maven expects to close an additional 326 underperforming stores this year as it tries to climb out of bankruptcy.
Plano, Texas-based J.C. Penney, one of the few retailers that experienced a hearty holiday season, also fell two spots, from No. 8 to No. 10. It was outperformed by wholesaler Costco and grocer Safeway.
Federated Department Stores slid from No. 15 to No. 16 with a sales volume decline of 5.9 percent. It was knocked out of place by consumer electronics seller Best Buy, which experienced back-to-back years of double-digit growth.
May Department stores, which owns Lord & Taylor, slipped from 19th to 20th place with a 2.3 percent decline in sales volume. It was replaced by Delhaize America, a Salisbury, N.C.-based supermarket operator, which had a 17.3 percent increase in sales volume.
Beemer’s firm has interviewed more than 5 million consumers since it opened in 1979, and he says shoppers want department stores to be more into general merchandise rather than becoming apparel specialty stores.
One way to liven up the department store experience, Beemer said, would be to make it more entertaining by bringing in musicians and having cooking demonstrations in home goods departments.
“Think outside the box,” he said.
Another incentive consumers might respond to would be to earn something through the store credit cards most department stores offer, he said, pointing to Neiman Marcus InCircle Rewards. “When youre buying, even at the regular price, you at least know that youre getting InCircle points.” With many department stores focusing on Wall Street, not Main Street, Beemer said, theyre missing the synergy or collectivity of the category. “There’s no wow. Theyre just there.” Otherwise, he predicts, some players in the retail industry will be forced to consolidate. “There are too many chasing too few shoppers,” he said.
