RETAIL TRENDS: DEPARTMENT STORE CHANGES AFOOT

The high-profile, large-scale barometer of retail health, the department store, is in flux. Three
of the biggest retail tenants on the planet all made print in the Wall Street Journal on February 24. Sears is shrinking, almost to the point of a retreat from the national-scale department
store class. Bloomingdales, the tony NewYork-based icon is adopting grocerystore marketing tactics, and J.C. Penney is touting a grand future.

Big pronouncements are nothing new from department stores. Their size assures them notice
from national media such as the WSJ and their corporate suites make the most of that. But it remains fascinating to see how this outsized model is evolving – some say devolving – from the days they were considered the pinnacle of retail merchandising. Nobody would doubt department stores are struggling to maintain relevance.

Sears will be closing – and in many cases selling – 1,200 stores across the nation in a last-ditch effort to stop the hemorrhaging from a futile attempt to reposition the chain pursuant to their merger with Kmart. The fact is that a venerable merchandising brand has been allowed to deteriorate from pure physical neglect. They have short-changed their physical plant, allowing their stores to deteriorate. Simple property management common sense. The only real value left there is in their great product brands, including Craftsman tools and Kenmore appliances. Whether they can rebuild on those nuggets is anyone’s guess.

Bloomingdales is ditching their branded credit card loyalty strategy for a bar code fob used by the major grocery chains. This doesn’t, in this writers view, detract at all from their upscale values. In a word, smart. And Ron Johnson, the new CEO of J.C. Penney, formerly of Target Corp and Apple, has pronounced department stores the “number 1 opportunity in American retail.”

But just like in the business world in general, the real work in retail is done on a small scale, on the shop level. As always, this is where new ideas, new energy, and the vast majority of retail jobs come from. And this is where we will find reliable indicators of a reemerging economy.