Mr. Brown:
As I previously stated, my primary reason for participating on this list is
to understand how lefties think. Therefore, if you don't mind, please
explain why you posted these articles to this list. Why are they
interesting to you? What is their relevance? Thanks.
David Shemano
-----Original Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED]]On Behalf Of Charles Brown
Sent: Tuesday, January 16, 2001 8:13 AM
To: [EMAIL PROTECTED]
Subject: [PEN-L:7003] Retail Darwinism
Discounters show they must change fast or die
Mainstay department stores struggle to survive
Ricardo Thomas / The Detroit News
Nationwide, Montgomery Ward stores are going out of business, like this
store in Dearborn, following changes in the buying habits of its clientele.
Retail closings
Some of the retailers announcing store closures:
Ricardo Thomas / The Detroit News
Barbara Garcia of Canton Township shops for a handbag in Parisian, a
division of Sak's, in Livonia. Parisian is a newer concept store, catering
to quickly changing demands.
By Karen Talaski / The Detroit News
DETROIT -- How the mighty department store has fallen.
Once a retail mainstay, department stores are struggling to show their
relevance in a marketplace dominated by discounters and specialty stores.
Stores that ruled the retail landscape now face closures, bankruptcy,
even extinction. Last month, 128-year-old Montgomery Ward announced its
demise, citing competition and declining sales.
In our own back yard, Metro Detroit will witness the end of an era when
its beloved Hudson's nameplate disappears. Later this year, the formerly
Detroit-based department store will adopt the name of Marshall Field's, its
more popular and well-known cousin, a move its corporate parent believes
will enhance its brand identity and market position.
The Hudson's name recalled the days of one-stop shopping for Mike
Lobsinger, 51, of Bloomfield Hills. "There never was a better store than
Hudson's. It's a shame we can't capture it in a bottle forever for
everyone," he said.
But to regain their prominence, department stores say they must move
forward -- fast -- and reinvent themselves. They must build new identities,
focusing on traits or specific products that make them stand out, and learn
to move quickly to capitalize on consumers' ever-changing needs.
Some will fail, experts say, but the survivors will be more responsive to
their customers, provide a better selection and offer competitive prices.
Department stores are learning a lesson from the world of science, said
Joe Grillo, an analyst who covers the industry for Deutsche Banc Alex.
Brown. Grillo calls it "retail Darwinism."
"Retail is about evolution," he said. "It's about new concepts coming in
and attracting the customer, taking market share from the existing
operators."
Department stores grew out of necessity. As cities expanded, citizens who
lived beyond the hubbub looked for stores that sold a variety of goods so
they could finish their shopping in a single trip. Between 1870 and 1950,
the department store became the major outlet for goods and services in this
country.
Montgomery Ward, founded in 1872 as a catalogue retailer, opened its
first store in 1926. Four years later, the company operated 550 stores
across the country. Wards and its young rivals -- stores like JCPenney and
Sears, Roebuck & Co. -- carried everything a household needed from floor to
roof.
But department stores felt the pinch as the nation's social and
demographic patterns shifted. Consumers flocked to suburban areas, where
shopping malls emerged. Shoppers' time became more limited, and fashions
moved faster as television and later the Internet grew in popularity.
"The department store industry continues to be the fashion authority for
the majority of Americans. However, this position is being challenged on one
side by the growth in specialty retailers and on the other by better
execution from the mass retailers such as Kmart with Martha Stewart," said
Michael Exstein, retail analyst with Credit Suisse First Boston.
Ricardo Thomas / The Detroit News
Montgomery Ward, founded in 1872 as a catalogue retailer, opened its first
store in 1926. Four years later, the company operated 550 stores across the
country. Now, Wards is closing for good.
Rethinking shopping
Discounters gave one-stop shopping a new definition, Grillo said. Instead
of wandering a mall for hours, consumers could head for Target, park close
to the door, grab a cart and complete several errands in less time with less
stress.
"Retail is about theater. It's about attracting the consumer. It's not
only about having great products, but keeping an eye on the whole shopping
experience," he said.
Discounters are nibbling away at chain department stores, according to
U.S. Department of Commerce. Discount stores earned 65 percent of the retail
market in 1998 with sales of $184 billion. Those figures increased in 1999
to 67 percent and sales of $203 billion, the most recent figures available.
Chain stores saw sales drop from $43 billion in 1998 to $42 billion in
1999. Their market share also dipped from 15.1 percent to 14 percent.
While department stores have kept one eye on the shopper, they've had to
train the other on their competition. Consolidation among department stores
over the past two decades has led to bigger and more efficient chains,
Exstein said, that have the money to buy out their weaker rivals.
Most at risk are regional department stores, which do not have their
rivals' buying power. Monty Mitzelfeld, co-owner of Mitzelfelds in downtown
Rochester, said consolidation has made it harder for single-store operators
like him to compete.
"We're all dinosaurs," he said. "It's just a matter of who's going to be
the best dinosaur."
Even larger chains are under pressure. Along with 252 Montgomery Ward
closures, JCPenney closed 36 under-performing locations in 2000. Even Saks
and Nordstrom have announced store closures this year as retail sales slow
in pace with the economy.
Mitzelfeld counters his competitors with customer service -- his
salespeople know customers by name, size and preferences. Sears is testing
stores with wider aisles and shopping carts. JCPenney is focusing on private
brands to encourage repeat customers and a larger market share.
Newer department store concepts are working their way through the market,
reviving customer interest. Parisian, a division of Saks, Inc., will be an
anchor tenant at the refurbished Meadowbrook Mall in Rochester Hills. It
becomes Meadowbrook Village in 2002.
This is Parisian's second Metro Detroit location. It also is an anchor at
Laurel Park Place in Livonia.
Parisian's designer apparel and its ability to anticipate trends were the
best fit for this growing area of Oakland County, said Jim Fielder,
vice-president of acquisitions and marketing for Robert B. Aikens &
Associates LLC in Troy.
"Because of the information age, consumers change their opinion on what's
in and what's out faster than they ever have before. So it puts the pressure
on the store to keep up with what their desires are and to keep it fresh,"
he said
