Most Recent Articles In Business
Latest Business Articles
- Patrik Frisk Heads to Aldo in Surprise Move
- Deckers Beats Street, Ugg Still Drives Business
- Rocky Hampered By Weather, Buying Shifts
More Articles By
NEW YORK — After a tumultuous fall — defined by the promotional hurricane that swept through the retail landscape — department stores are going on the offensive this spring.
Facing dramatically declining sales and decreased traffic, retailers such as Macy’s, Saks Fifth Avenue and JCPenney are overhauling their pricing strategies, scaling back inventories and upping the fashion quotient.
“Communicating to customers our value proposition of style and quality at a smart price [is both a challenge and an opportunity for us],” said Cindy O’Connor, GMM of family footwear and accessories for JCPenney.
But the spate of new initiatives doesn’t mean the sales are over. A recent FN store check found that many retailers are still quietly discounting merchandise, including new product that has just arrived in stores.
And some execs admit that promotions are inevitable, given the highly competitive environment.
“If we are carrying the same products and deal with the same customers in the same markets, we obviously are going to be competitive with [markdowns],” said Nordstrom president of merchandising Pete Nordstrom in the retailer’s fourth-quarter conference call, noting that the department store has been pitted against everyone from Macy’s to Neiman Marcus.
While it’s too early to tell whether merchants will be forced to roll out the deep discounts this season, it’s clear they are changing their game plans dramatically.
More Compelling Product
A number of department stores are ramping up their exclusive merchandise to create a point of difference.
“[Private-label] business is very important,” said O’Connor. “Our in-house design team has allowed us to improve our offering and attract new customers.” O’Connor noted that private-label and exclusive brands account for half the retailer’s annual sales.
Macy’s relies less on its house brands, but has recently shown an interest in growing its exclusive offerings. “Last year, private-label was about 19 percent of the store, and we continue to look for opportunities where there are voids in the market,” said EVP and CFO Karen Hoguet at the Bank of America Consumer Conference on March 11.
At the same event, CEO Terry Lundgren highlighted the Tommy Hilfiger brand, which is exclusive to Macy’s, as a bright spot in the business. Going forward, he said, the company will carefully consider similar brand partnerships. “When we talk to people about the various brands we have exclusively, it’s working, it’s winning,” Lundgren said. “[But as far as establishing new exclusive agreements], I’m only going to want to talk about some bigger ideas that can move the needle.”
In addition, department stores now are trying harder than ever to stock the must-have fashion items that appeal to those increasingly discerning shoppers.
“It would be easier to stay on stock plan, [but] playing a game of offense at this moment is vitally important” Bloomingdale’s CEO Michael Gould told Footwear News recently.
Saks also is banking on a bold product assortment this spring.
“Emotional shoes, which possess a strong fashion point-of-view are performing well ... [such as] the YSL tribute in a variety of colors, the Camilla Skovgaard peep toe bootie, Givenchy’s aggressive shoes and Chanel pumps,” Saks accessories director Elizabeth Kanfer told FN.
Even lower-tier department stores are upping the focus on style. JCPenney this spring rolled out several new and exclusive fashion lines, including Kimora Lee Simmons’ Fabulosity, I [Heart] Ronson designed by Charlotte Ronson, and Miss Bisou, among others.
“Our offering of style and quality at a smart price is key to gaining market share in this very competitive environment, and we have also worked to improve the fashion and style relevance of our footwear,” said JCPenney’s O’Connor.