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Department Store Retailing - US - August 2010

While the economy continues to show lackluster performance and many retailers are struggling to achieve sales targets, some innovative department stores have been able to make significant gains in the latter two quarters of 2009 and the first half of 2010. Clearly, there are opportunities for growth, yet it is also apparent that those who succeed are keenly focused on the needs and wants of customers.

In order to provide facts and insights that can be used to help department stores develop and refine their offering, this report addresses the following questions:

  • How are macro-level economic conditions impacting demand for department store offerings?
  • What are the most popular department stores?
  • What types of innovations have department stores introduced in recent years to drive growth?
  • What types of innovations and improvements are consumers most interested in?
  • What products are most commonly purchased at department stores?
  • How are department stores using social media and social networking tools to drive growth?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Insights and opportunities
                        • Market size and segmentation
                          • Market drivers
                            • Psychographic drivers
                              • Innovation and innovators
                                • Shopping attitudes
                                  • Strategies used to avoid paying full price
                                    • Shopping trends, by retailer
                                      • Discount and value-driven department stores
                                        • Mid-end department stores
                                          • Luxury department stores
                                            • Shopping trends, by product type
                                              • Electronics
                                                • Clothing, accessories and footwear
                                                  • Furniture and housewares
                                                  • Insights and Opportunities

                                                    • Consider expanding the food offering to attract new customers
                                                      • Increase selection of plus sizes to attract more female shoppers, especially in the southeast
                                                        • Figure 1: States in which at least 27% of the population are obese, 2007
                                                      • iPhone Parents
                                                        • Figure 2: Incidence of using mobile devices to search for bargains, by parent segments, April 2010
                                                      • Give customers control over clothing design
                                                        • Retail Theater: Interactive dressing rooms and counters
                                                        • Inspire Insights

                                                            • Media Evolution
                                                              • What's it about?
                                                                • What we've seen
                                                                  • Specifics
                                                                    • Implications
                                                                    • Market Size and Trends

                                                                      • Total annual sales
                                                                          • Figure 3: Department stores sales at current prices, 2005-10
                                                                          • Figure 4: Department stores sales at inflation-adjusted prices, 2005-10
                                                                        • Department store sales vs. total retail sales
                                                                          • Figure 5: Department stores vs. total retail sales at current prices, 2004-09
                                                                      • Segmentation

                                                                        • Key points
                                                                          • Total department store sales by segment
                                                                            • Figure 6: Total department stores sales, discount vs non-discount stores, 2004-09
                                                                          • Leased department sales by segment
                                                                            • Figure 7: Leased department sales at department stores, discount vs non-discount stores, 2004-09
                                                                          • Discount department stores sales
                                                                            • Figure 8: Discount department stores sales at current prices, 2004-09
                                                                          • Sales of department stores (excl. discount department stores)
                                                                            • Figure 9: Sales of department stores (excl. discount department stores) at current prices, 2004-09
                                                                        • Market Drivers

                                                                          • Key points
                                                                            • Economic drivers
                                                                              • Persistent unemployment drives many to shop carefully
                                                                                • Figure 10: U.S. unemployment and job openings rate, December 2009
                                                                              • Disposable income remains limited in many households
                                                                                • Figure 11: Real disposable personal income, January 2007-January 2010
                                                                              • Consumer confidence remains at historically low level
                                                                                • Figure 12: Consumer Sentiment Index, 2007-09
                                                                              • Income and job concerns drive many into mass merchandisers
                                                                                • Figure 13: Shopping patterns in discount vs. department stores, by household income, October 2009
                                                                            • Psychographic Drivers: Attitudes that Shape the Market

                                                                              • Key points
                                                                                • Value for money primary driver
                                                                                  • Figure 14: Shopping attitudes, 2005-09
                                                                                • Price and convenience critical behavioral drivers
                                                                                  • Figure 15: Reasons for not shopping at department stores, April 2010
                                                                              • Innovation and Innovators

                                                                                • Key points
                                                                                  • What the consumer wants
                                                                                    • Price, nice staff and tailoring key to driving foot traffic
                                                                                      • Figure 16: Demand for various innovations and improvements, by age, April 2010
                                                                                    • Free beverages and tailoring may be especially effective in driving traffic among affluents
                                                                                      • Figure 17: Demand for various innovations and improvements, by household income, April 2010
                                                                                    • What retailers are doing—recent innovations from leading retailers
                                                                                      • Macy’s Online Finder
                                                                                        • Macy’s iPhone app
                                                                                          • JCPenney iPhone App
                                                                                            • Kmart: Smart Assist Program
                                                                                              • Kmart leverages free shipping and social media to gain an edge
                                                                                              • Case Studies: Department Stores

                                                                                                • Luxury department stores
                                                                                                  • Macy’s
                                                                                                    • Figure 18: Proportion of total Macy’s sales accounted for by four major categories, 2007-09
                                                                                                  • Nordstrom
                                                                                                    • Saks Fifth Avenue
                                                                                                      • Mid-end department stores and discount
                                                                                                        • JCPenney
                                                                                                          • Sears and Kmart
                                                                                                            • Kohl’s
                                                                                                              • Ross Dress For Less
                                                                                                              • Advertising and Promotion

                                                                                                                • Overview
                                                                                                                  • Bon-ton brands offer savings to those who bring in Goodwill donations
                                                                                                                    • Figure 19: Bon-ton Goodwill donation ad, 2010
                                                                                                                    • Figure 20: Younkers Goodwill donation ad, 2010
                                                                                                                  • JCPenney and Carson Pirie Scott offer savings in appreciation
                                                                                                                    • Figure 21: Carson Pirie Scott (Carsons) ad, 2010
                                                                                                                    • Figure 22: JCPenney (JCPenney) ad, 2010
                                                                                                                  • Social media tools and tactics
                                                                                                                    • Macy’s
                                                                                                                      • Nordstrom
                                                                                                                        • JCPenney
                                                                                                                          • Kmart
                                                                                                                            • Kohl’s
                                                                                                                              • Bloomingdale’s
                                                                                                                                • Responding to users
                                                                                                                                  • Advertising events and promotions
                                                                                                                                  • Shopping Attitudes

                                                                                                                                    • Key points
                                                                                                                                      • Young adults more likely to state they enjoy shopping and tell others
                                                                                                                                        • Figure 23: Shopping and related attitudes, by age, April 2010
                                                                                                                                      • Affluents more likely to rate purchases
                                                                                                                                        • Figure 24: Shopping and related attitudes, by household income, April 2010
                                                                                                                                    • Strategies Used to Avoid Paying Full Price at Department Stores

                                                                                                                                      • Key points
                                                                                                                                        • Circulars still a key piece of collateral
                                                                                                                                            • Figure 25: Strategies used by consumers to avoid paying full price at department stores, by age, April 2010
                                                                                                                                          • Affluents more likely to research online and use mobile tools
                                                                                                                                            • Figure 26: Strategies used by consumers to avoid paying full price, by household income, April 2010
                                                                                                                                        • Shopping Trends, by Retailer

                                                                                                                                          • Key points
                                                                                                                                            • Mass merchandisers dominate but traffic remains fairly stable at many department stores
                                                                                                                                                • Figure 27: Incidence of shopping at department store retailers in last three months, by named retailer, 2005-09
                                                                                                                                              • Young adults and affluents are key segments
                                                                                                                                                • Figure 28: Incidence and frequency of shopping at department stores, by age, April 2010
                                                                                                                                                • Figure 29: Incidence and frequency of shopping at department stores, by household income, April 2010
                                                                                                                                              • Young adults and affluents more likely to report increased spending, despite economy
                                                                                                                                                • Figure 30: Incidence of shopping at department stores more, Less or About the same amount as last year, by age, April 2010
                                                                                                                                                • Figure 31: Incidence of shopping at department stores more, Less or About the same amount as last year, by household income, April 2010
                                                                                                                                            • Discount and Value-driven Department Stores

                                                                                                                                              • Key points
                                                                                                                                                • Chains closely associated with value remain most popular
                                                                                                                                                    • Figure 32: Incidence of shopping at Discount and value-driven Department stores in last three months, by named retailer, by age, November 2008-December 2009
                                                                                                                                                    • Figure 33: Incidence of shopping at Discount and value-driven department stores in last three months, by named retailer, by household income, November 2008-December 2009
                                                                                                                                                • Mid-end Department Stores

                                                                                                                                                  • Key points
                                                                                                                                                    • Most mid-end department store chains relatively small
                                                                                                                                                      • Figure 34: Incidence of shopping at mid-end department stores in last three months, by named retailer, by age, November 2008-December 2009
                                                                                                                                                      • Figure 35: Incidence of shopping at mid-end department stores in last three months, by named retailer, by household income, November 2008-December 2009
                                                                                                                                                  • Luxury Department Stores

                                                                                                                                                    • Key points
                                                                                                                                                      • Macy’s a dominant player in the luxury segment; women key segment
                                                                                                                                                        • Figure 36: Incidence of shopping at luxury department stores in last three months, by named retailers, by gender, November 2008-December 2009
                                                                                                                                                      • High appeal among affluents helps Macy’s recover quickly from recession
                                                                                                                                                        • Figure 37: Incidence of shopping at luxury department stores in last three months, by named retailer, by household income, November 2008-December 2009
                                                                                                                                                    • Category Purchase: An Overview

                                                                                                                                                      • Key points
                                                                                                                                                        • Clothing and food/drug remain key categories for all three segments
                                                                                                                                                          • Figure 38: Incidence of shopping at department stores most or all of the time for various categories, by age, April, 2010
                                                                                                                                                          • Figure 39: Incidence of shopping at department stores most or all of the time for various categories, by age, April, 2010
                                                                                                                                                      • Electronics

                                                                                                                                                        • Key points
                                                                                                                                                          • About one in four shoppers purchased an appliance, computer or other electronic device
                                                                                                                                                            • Figure 40: Incidence of category purchase, by age, November 2008-December 2009
                                                                                                                                                          • About half purchase electronics at department stores at least some of the time
                                                                                                                                                            • Figure 41: Frequency of purchasing electronics at department stores, by age, April 2010
                                                                                                                                                          • Price and convenience most common reasons for buying elsewhere
                                                                                                                                                            • Figure 42: Reason for not purchasing electronics at department stores, by gender, April 2010
                                                                                                                                                        • Clothing, Accessories and Footwear

                                                                                                                                                          • Key points
                                                                                                                                                            • Fit, price and style primary purchase drivers
                                                                                                                                                              • Figure 43: Importance of product attributes when purchasing clothing and accessories, by household income, April 2010
                                                                                                                                                            • Apparel more popular than shoes and accessories among affluents
                                                                                                                                                              • Figure 44: Frequency of purchasing clothing, shoes and accessories at department stores, by household income, April 2010
                                                                                                                                                            • Personal care and cosmetics relatively popular among young adults
                                                                                                                                                              • Figure 45: Frequency of purchasing personal care, cosmetics/perfume and sporting goods at department stores, by age, April 2010
                                                                                                                                                          • Furniture and Housewares

                                                                                                                                                            • Key points
                                                                                                                                                              • Incidence of category purchase relatively consistent across demographic groups
                                                                                                                                                                • Figure 46: Incidence of furniture and housewares category purchase, by age, November 2008-December 2009
                                                                                                                                                              • Most purchase furniture, home appliances and tools at department stores at least some of the time
                                                                                                                                                                • Figure 47: Incidence of furniture and housewares category purchase, by age, April 2010
                                                                                                                                                              • Price, convenience and brand selection most common reasons for buying outside the channel
                                                                                                                                                                • Figure 48: Reasons for purchasing furniture, appliance and lawn-garden equipment in other channels, by gender, April 2010
                                                                                                                                                            • Impact of Race/Hispanic Origin

                                                                                                                                                              • Few actionable differences between race/ethnicity groups
                                                                                                                                                                • Figure 49: Incidence of shopping at department store and mass merchandiser chains, by named retailer, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                                              • Price, color and fit especially important among blacks
                                                                                                                                                                • Figure 50: Importance of specific product attributes in clothing/accessory/shoe purchases, by race/Hispanic origin, April 2010
                                                                                                                                                            • Cluster Analysis

                                                                                                                                                                • Online Savers (33%)
                                                                                                                                                                  • Demographics
                                                                                                                                                                    • Characteristics
                                                                                                                                                                      • Opportunity
                                                                                                                                                                        • Short and Spend-less (42%)
                                                                                                                                                                          • Demographics
                                                                                                                                                                            • Characteristics
                                                                                                                                                                              • Opportunity
                                                                                                                                                                                • Low-tech Infrequents (25%)
                                                                                                                                                                                  • Demographics
                                                                                                                                                                                    • Characteristics
                                                                                                                                                                                      • Opportunity
                                                                                                                                                                                        • Cluster characteristic tables
                                                                                                                                                                                          • Figure 51: Department store shopper clusters, April 2010
                                                                                                                                                                                          • Figure 52: Frequency of shopping at department stores, by department store shopper clusters, April 2010
                                                                                                                                                                                          • Figure 53: Strategies used by consumers to avoid paying full price at department stores, by department store shopper clusters, April 2010
                                                                                                                                                                                          • Figure 54: Importance of specific product attributes in apparel/shoe/accessory purchases, by department store shopper clusters, April 2010
                                                                                                                                                                                          • Figure 55: Shopping and related attitudes, by department store shopper clusters, April 2010
                                                                                                                                                                                          • Figure 56: Demand for various innovations and improvements, by department store shopper clusters, April 2010
                                                                                                                                                                                          • Figure 57: Incidence of shopping at department stores more, Less or About the same amount as last year, by department store shopper clusters, April 2010
                                                                                                                                                                                        • Cluster demographic tables
                                                                                                                                                                                          • Figure 58: Department store shopper clusters, by gender, April 2010
                                                                                                                                                                                          • Figure 59: Department store shopper clusters, by age, April 2010
                                                                                                                                                                                          • Figure 60: Department store shopper clusters, by household income, April 2010
                                                                                                                                                                                          • Figure 61: Department store shopper clusters, by race, April 2010
                                                                                                                                                                                          • Figure 62: Department store shopper clusters, by Hispanic origin, April 2010
                                                                                                                                                                                        • Cluster methodology
                                                                                                                                                                                        • Custom Consumer Groups

                                                                                                                                                                                          • The search for status as well as unique products and experiences drives many into department stores
                                                                                                                                                                                              • Figure 63: Incidence of shopping at department stores in last three months, by retail segmentation group, November 2008-December 2009
                                                                                                                                                                                            • Many high-value customers enjoy culture and wellness
                                                                                                                                                                                                • Figure 64: Incidence of shopping at department stores in last three months, by named retailer, by high incidence shopper Mosaic groups, November 2008-December 2009
                                                                                                                                                                                                • Figure 65: Incidence of category purchase, by high incidence shopper Mosaic groups, November 2008-December 2009
                                                                                                                                                                                              • Many minorities, and some urban affluents, belong to lower incidence groups
                                                                                                                                                                                                  • Figure 66: Incidence of shopping at department stores in last three months, by named retailer, by lower incidence shopper Mosaic groups, November 2008-December 2009
                                                                                                                                                                                              • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                  • Figure 67: Shopping and related attitudes, by gender, April 2010
                                                                                                                                                                                                  • Figure 68: Incidence of category purchase at department store, by race/Hispanic origin, April 2010
                                                                                                                                                                                                  • Figure 69: Incidence of furniture and housewares category purchase, by household income, April 2010
                                                                                                                                                                                                  • Figure 70: Importance of product attributes when purchasing clothing and accessories, by household income, April 2010
                                                                                                                                                                                                  • Figure 71: Frequency of purchasing electronics at department stores, by household income, April 2010
                                                                                                                                                                                              • Appendix: Simmons Retail Shopper Segmentation Defintions

                                                                                                                                                                                                • Just the Essentials
                                                                                                                                                                                                  • Upscale Clicks and Bricks
                                                                                                                                                                                                    • Status Strivers
                                                                                                                                                                                                      • Virtual Shoppers
                                                                                                                                                                                                        • Mall Maniacs
                                                                                                                                                                                                          • Original Traditionalists
                                                                                                                                                                                                          • Appendix: Simmons Mosaic definitions

                                                                                                                                                                                                              • Type A02: Dream Weavers
                                                                                                                                                                                                                • Type A05: Enterprising Couples
                                                                                                                                                                                                                  • Type A07: New Suburbia Families
                                                                                                                                                                                                                    • Type B01: Status-conscious Consumers
                                                                                                                                                                                                                      • Type G02: Rural Southern Living
                                                                                                                                                                                                                        • Type B02: Affluent Urban Professionals
                                                                                                                                                                                                                          • Type E01: Ethnic Urban Mix
                                                                                                                                                                                                                            • Type J02: Latino Nuevo
                                                                                                                                                                                                                              • Type J03: Struggling City Centers
                                                                                                                                                                                                                                • Type K03: African-American Neighborhoods
                                                                                                                                                                                                                                • Appendix: Trade Associations

                                                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                                                  • Adidas (USA)
                                                                                                                                                                                                                                  • Amazon North America
                                                                                                                                                                                                                                  • Barneys New York, Inc.
                                                                                                                                                                                                                                  • Best Buy stores (USA)
                                                                                                                                                                                                                                  • BJ's Wholesale Club, Inc
                                                                                                                                                                                                                                  • Bloomingdale's
                                                                                                                                                                                                                                  • Bureau of Economic Analysis
                                                                                                                                                                                                                                  • Calvin Klein, Inc.
                                                                                                                                                                                                                                  • Centers for Disease Control and Prevention
                                                                                                                                                                                                                                  • Chanel USA
                                                                                                                                                                                                                                  • Costco Wholesale Corporation
                                                                                                                                                                                                                                  • Dillard's, Inc
                                                                                                                                                                                                                                  • Facebook, Inc.
                                                                                                                                                                                                                                  • Family Dollar Stores, Inc
                                                                                                                                                                                                                                  • J C Penney Company, Inc
                                                                                                                                                                                                                                  • JCPenney (department stores and catalog)
                                                                                                                                                                                                                                  • Juicy Couture, Inc.
                                                                                                                                                                                                                                  • Kmart Corporation
                                                                                                                                                                                                                                  • Kohl's Corporation
                                                                                                                                                                                                                                  • Lands' End
                                                                                                                                                                                                                                  • Levi Strauss
                                                                                                                                                                                                                                  • Lord & Taylor
                                                                                                                                                                                                                                  • Macy's, Inc.
                                                                                                                                                                                                                                  • Martha Stewart Living Omnimedia Inc.
                                                                                                                                                                                                                                  • Meijer
                                                                                                                                                                                                                                  • MTV Networks
                                                                                                                                                                                                                                  • National Council of Chain Restaurants (NCCR)
                                                                                                                                                                                                                                  • National Football League Inc.
                                                                                                                                                                                                                                  • National Retail Federation (NRF)
                                                                                                                                                                                                                                  • Neiman Marcus (retail stores)
                                                                                                                                                                                                                                  • Nike
                                                                                                                                                                                                                                  • Nordstrom
                                                                                                                                                                                                                                  • Polo Ralph Lauren Corporation
                                                                                                                                                                                                                                  • Research In Motion (USA)
                                                                                                                                                                                                                                  • Retail Industry Leaders Association (RILA)
                                                                                                                                                                                                                                  • Saks Incorporated
                                                                                                                                                                                                                                  • SAM's Club
                                                                                                                                                                                                                                  • Sears Holdings Corporation
                                                                                                                                                                                                                                  • Sephora
                                                                                                                                                                                                                                  • ShopKo Stores, Inc
                                                                                                                                                                                                                                  • Stage Stores, Inc
                                                                                                                                                                                                                                  • Takashimaya
                                                                                                                                                                                                                                  • Target Corporation
                                                                                                                                                                                                                                  • The Bon-Ton Stores, Inc
                                                                                                                                                                                                                                  • The Conference Board
                                                                                                                                                                                                                                  • The New York Times Company
                                                                                                                                                                                                                                  • Twitter, Inc.
                                                                                                                                                                                                                                  • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                                  • U.S. Bureau of the Census
                                                                                                                                                                                                                                  • U.S. Environmental Protection Agency
                                                                                                                                                                                                                                  • University of Michigan, The
                                                                                                                                                                                                                                  • Verizon Communications Inc.
                                                                                                                                                                                                                                  • Walmart Stores (USA)
                                                                                                                                                                                                                                  • Women's Wear Daily (WWD)

                                                                                                                                                                                                                                  Department Store Retailing - US - August 2010

                                                                                                                                                                                                                                  £3,174.67 (Excl.Tax)