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Current success of department stores may be model for dealers

The so-called experts who declared the venerable department stores dead must be wiping off egg right now. With the June retail sales numbers in, overall retail dropped 0.5 percent. This followed an even steeper drop of 1.1 percent in May. This was all “expected.”

What wasn’t expected, however, is that department stores appear to be doing much better than the averages. While consumers are clearly still guarding their checkbooks, stores like Nordstrom, Macy’s and others are surging ahead.

Department stores were hurting this time last year so the comparisons look pretty good. Specifically, Nordstrom set a hot pace with its sales rocketing up 19.8 percent and, most important, its same-store sales up 14.1 percent. That was the highest of all reporting department stores. Macy’s reported a 6.5 percent increase, Kohl’s weighed in at 5.9 percent, JCPenny up 4.5 percent and Saks rose 2.2 percent, rounding out the top five. How are they doing it?

Let’s look at the leader. For one thing, Nordstrom has stayed true to its belief that consumers will go for luxury. Apparently they’re right, but the times now dictate luxury be presented as a value proposition. Unfortunately, it has become almost automatic that we now associate value with discounting. We’re told we’re seeing consumers moving down to “bargain’ retailers – the “new normal” as they say. Not necessarily!

Nordstrom is successfully protecting its trademark image of offering high quality products, thus keeping its customers who still have the income and want chic topped with indulgent service. Realizing customers will buy luxury products when they are presented to them as a value has prompted Nordstrom to use a variety of promotional events such as its big ladies and kids sales event, online and catalog promotions. In fact, online and catalog sales in the first quarter this year rose 39 percent. So Nordstrom is successfully promoting to customers in a variety of ways.

Interestingly, at the same time, Nordstrom has calculated that its customer base now includes many who, because of the economy, must be more frugal than before. So, Nordstrom has expanded its outlet stores division. The strategy is aimed squarely at keeping those long-standing customers who must buy down still buying from Nordstrom.

And, there’s an added bonus, too. It attracts new customers who want the prestige of Nordstrom, even if they aren’t in a position to pay main store prices. It also puts Nordstrom in a strong position to gain market share.

Most analysts now think the department store sales gains are not an aberration. Rather, it could be that this Great Recession has taught them to employ a multifaceted approach to promoting sales events and targeting the old customer base. Moreover, gains in market share are being realized by serving multiple levels of customers in new ways. It’s all something worth looking at for our retail boating businesses, too.

Comments

3 comments on “Current success of department stores may be model for dealers

  1. Full Sail

    Apples and Oranges.

    Nordstrom sales are typically far less $$$ than the sale of a boat. Maybe I’m ignorant of the fact that Nordstrom has a finance department in which those sales can be financed over a period of 10 or more years. Perhaps Nordstrom requires proof of income, W2s, proff of insurance, and other items in the purchase of a particular item; howeber, I seriously doubt it.

    Furthermore, I can’t really understand why you would promote online and catalog sales as an alternative. Very few attempts at this type of marketing has proven to be a Win-Win in the marine industry. That seems to be an attidute of dire consequencies for not only the dealers but the consumer. Perhaps you have a better understanding of this than most dealers that I know. I would argue that true VALUE is created in the other services that a dealer provides…service, accessories, financing, and actual face-to-face understanding of the consumer’s wants and needs.

    Sorry Norm, but you really missed the mark on this one.

  2. dave boso

    Plus I don’t thimk they have just one Item and take orders from that demo…. What a stupid idea all that will do is to encourage every “Jack Leg” with 20 grand to buy a boat and go into the boat dealer business, and don’t think greedy boat builders won’t sell them one at a time

  3. rog

    Even though I don’t live in the US we live close enough so that my wife, daughter and grand children shop at Nordstrom and other good US department stores. The big difference between the department stores and most marine sales people is that the department store sales people generally know what they are talking about and the marine sale or service person does not. With the pressure on to sell, sell, sell, most dealers hire sales people based on their ability to sell, with maritime knowledge being far down the qualification list if even on it. As an example I walked into an inflatable sales operation and asked the sales person what material a certain boat was made of and he said “hypalon.” Hypalon is an adhesive and a coating, not a fabric. This guy had been in the inflatable business for 12 years and didn’t know even the basics.

    A knowledgeable sales person will instill confidence in a possible buyer and if the sales person can communicate the value of good service, the buyer will feel comfortable and secure in his or her decision and will be prepared to pay more than at the discount place. So until the marine retailers start to realize they have to have experienced, knowlegeable people on the sales floor or behind the counter, they will have trouble competing with the discounter.

    The good department stores have already got the picture.

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