Of the 306 industry officials — 140 presidents, chief operating officers and chief executive officers from 50 department store chains representing about 85 percent of the sector’s worldwide volume, as well as top officials from 40 vendors — attending last week’s Global Department Store Summit in New York, the consensus, not surprisingly, was that the sector has turned a corner and is adapting to competitive challenges and the anemic economy.
The view is supported by this year’s earnings reports so far, which have been strong from the likes of Kohl’s Corp., Macy’s Inc., Nordstrom Inc., Saks Inc. and Neiman Marcus Inc., among others. But whether they’re gaining or still losing market share was debated at the summit.
“If you look at the last 10 years, department store market share has declined. No matter what country you are in, there has been a decline,” said Bernie Brookes, chief executive officer of Australia’s Myer chain. “However, department stores are going through a metamorphosis….Yes, they continue to lose share, but we are back in the game and will be more back in the game.”
William Lauder, executive chairman of the Estée Lauder Cos. Inc., took a more bullish view. “In China, we are growing magnificently and it’s a department store market,” he said. Lauder added that, starting in 2008 when the recession hit, “We saw a dramatic shift in the trend between our own stores in the mall versus department stores. We saw a strong migration back into the department store, because of the message of value, and those trends have somewhat continued today.”
“For the first time, we are seeing department stores regain share,” said Paolo de Cesare, chairman and ceo of Printemps.
“Around the world I think department stores are transforming before our very eyes,” said Roger Farah, president and chief operating officer of Polo Ralph Lauren Corp., who cited exciting changes at Bloomingdale’s 59th Street, Saks Fifth Avenue and Selfridges flagships. But, he added, “The challenge is to take some of that magic and stretch it over more of the stores. Quite frankly, much of the magic can be centralized and it’s not fully understood how it can be transferred. The customer who walks into the branch store has the same expectations as walking into a flagship location.”
There’s more to the challenge, for both brands and department stores — creating a sense of repeat visit, Farah said. “The connection with the customer. We all need to develop that more frequent contact with the customer — an urgent sense of connection.” Farah questioned whether department stores, after years of cutting many categories, might rethink the offering to be more broad based and not overly reliant on high-margin categories in order to become more of a destination, with a diversification of reasons to go there.
“Don’t let a good recession go to waste,’’ advised Stephen I. Sadove, chairman and ceo of Saks Inc., which organized the event along with the Intercontinental Group of Department Stores. His words became the mantra at the two-day conference and, apparently, many department stores have already seized the moment. Several speakers said through cost cutting, remerchandising for exclusivity and better values, and by investing in service and technology, department stores are stronger now than before the recession.
The take-home points, emerging through presentations and panel discussions with senior officials from some of the world’s most iconic retailers and brands including Macy’s, Selfridges, Marks & Spencer, Printemps, The Bay and Coach, were:
• Embrace change, particularly social media, the Internet and mobile technology. “The [personal computer] is dead. It will all be on your wristwatch,” predicted Stuart Rose, executive chairman of Marks and Spencer Group plc.
• Think small and local with marketing — tailor service and amenities to customers depending on their level of spend. “Developing local marketing plans has been transformational,” Sadove said of the Saks strategy to shift a percent of marketing dollars from national to local campaigns and install local marketing directors.
• Work hard to “wow” the customer, go younger with the appeal and add sustainability and value-over-price to the formula. “How do we surprise her? How do we surprise her enough so she has a smile on her face and says, ‘That’s great. I really love it,’” said Lauder.
• Speed to market of new products and trends is critical. “The biggest threat to department stores is fast fashion,” observed Myron E. “Mike” Ullman 3rd, chairman and ceo of J.C. Penney Co. Inc. Forever 21, H&M, Zara, Uniqlo and Mango are taking “a big bite” out of department stores. While Penney’s has significantly cut its product cycle time, it’s also launching Mango shops inside its stores, joining the fast-fashion bandwagon. “Retail has been a bit slow in understanding the customer,” Ullman said.
• Think young. “The biggest challenge is attracting new, young consumers into the department store channel,” said Lew Frankfort, chairman and ceo of Coach Inc. He advised replicating the “intimacy” of the specialty store experience within the department setting by subdividing it. “Use micro marketing or laser marketing in unorthodox ways to get these young people,” he said.
• Think local. “This whole localization has got such legs and potential,” said Macy’s chairman, president and ceo Terry Lundgren of the My Macy’s localization organization. Asli Karadeniz, ceo of Boyner in Turkey, stressed the success of her company’s marketing efforts with local cell phone carriers to target young people.
“If you follow the shopper, you will see the future,” said Wendy Liebmann, founder and ceo of WSL Strategic Retail. “If you think the recession is over, it is not,” she said, noting her national online survey of 1,950 men and women indicates 50 percent of consumers believe the recession will last another one or two years; another 30 percent believe it will last three to five years. Sixty-three percent said, “I’ve gotten used to spending less,” and 17 percent said they miss buying things. Liebmann gave “eight-and-a-half” pieces of advice: restate worth, think small by honing in on the customer, reframe value, embrace the Internet, innovate discounting, reinvent service, romance the brand, seize the white spaces and be bold or fail.
Brookes said his Myer chain “had to change” to survive, and, in a way, took the reverse approach from what Farah said should be considered. Myer exited some unprofitable businesses such as appliances and chocolates and beefed up product to better lure shoppers, such as diffusion designer brands — items that would provide “pop and uniqueness” to the floors.
In a session titled “Winning With Technology,” Gary Loveman, chairman, president and ceo of Harrah’s, explained how his company uses marketing to spur spending. Saying it was possible to “create a sense of intimacy through technology,” he said Harrah’s employs sophisticated “relationship marketing” to best communicate with the 44 million adults who participate in its loyalty program. The goal, he said, “is to speak to each of you individually in a way that is valuable.” Unlike retailers who either treat every customer the same or market most heavily to their best shoppers, Loveman said his company “accelerates” its efforts to customers who are less loyal or unhappy in hopes of converting them.
“If you lose a lot of money [at our casinos], you’re going to hate us. But I can do something about that: I can put $100 in your pocket immediately, I can put you in the front row at Cher,” he said. “The goal is to speak to each of you individually in a way that is valuable….Loyalty programs seem pedestrian. We work on a behavioral modification program. The dumbest thing you can do is discount to someone who already shops with you.” He recommended, “Treat everyone well, just treat some extraordinarily well.”
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews