Few retail sectors have it tougher than department stores these days.
As mass merchandisers enhance soft goods and cosmetics offerings, niche specialty stores lure youngsters out of Junior’s departments, and discounters put pressure on high-ticket items, department stores are feeling the competitive heat more than ever.
And that heat is melting market share: A “How America Shops” survey executed by New York City-based newsletter Wall Street Letter found that 72 percent of Americans made purchases in department stores last year, down from 86 percent in 1999.
As a result, department stores are working vigorously to defend their positions with expanded merchandise assortments and new private-label SKUs, store redesigns that facilitate the shopping experience, and invigorated use of promotions to retain and attract customers.
In addition to standard marketing fodder like sales, circulars, and media advertising, special events are becoming higher priorities. Whether it’s Carlos Santana unveiling a shoe line, nightly concerts in the Men’s section, or Julia Child holding cooking classes, department stores are trying to make noise, be different, and give vendors promotional opportunities.
“Department stores are definitely becoming a lot more open to creative promotions,” says Robin Weed-Mason, director of marketing with Tommy Hilfiger’s toiletries group in New York City. “They know that, to stay alive, they’ll have to be innovative.”
New York City-based Primedia, Inc.’s Seventeen is running a three-month national tour called Check it Out that brings fashion shows, dance parties, and events to malls and department stores. The magazine’s advertisers (read: store vendors) including Chanel and Bonne Bell will support. The program is customized by retailer.
New York City-based Bloomingdale’s continued its ongoing run with theatrical entertainment (such as Broadway shows and movies) this spring with an in-store program tied to Los Angeles-based Twentieth Century Fox’s Moulin Rouge. The 23-store chain’s cosmetics departments were decked out with a Parisian theme as Christian Dior-supplied Can-Can girls provided makeovers. Dior sales spiked. “Adding entertainment to the retail environment is important to us,” says Anne Keating, a senior vp with Bloomingdale’s. “Our customers respond well to special events.”
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Out to hype its new Cool Spray fragrance line, Hilfiger last month staked out the Hampton Jitney buses that transport New York City denizens to their weekend retreats on Long Island. Tommy staffers handed out CD singles from Arista Records artists with sample sprays and a bounce-back coupon good for a miniature radio with purchase at Macy’s.
Cause-related activity is also tops. Chains use philanthropic projects to facilitate a deeper relationship between stores and their communities. The majority of Cincinnati-based Federated Department Stores’ seven chains (including Macy’s, Bloomingdale’s, and Bon Marché) run programs in which stores are closed to the public and shoppers “buy” tickets from local charities to access special sales.
“Each of our chains executes marketing on a regional basis,” says Sharon Bateman, spokesperson with St. Louis-based May Department Stores, which operates 11 chains under such banners as Filene’s and Lord & Taylor. “It allows them to tailor cause-marketing efforts to each market.”
Sometimes the special event is the cause. San Francisco-based Macy’s West has turned what started 19 years ago as a men’s fashion show in an employee cafeteria into the industry’s largest charity event. Called Passport, the AIDS fundraiser runs five nights (three in San Francisco, two in Los Angeles) each September, and features themed nights, celebrity models (like Sharon Stone and Magic Johnson), and the latest fashions from top designers. The event sells out 15,000 tickets each year and has raised $13 million since 1988.
Sponsors, which include Keds, AT&T, and National Car Rental, get on board for leveraged branding. Fashion brand DKNY, New York City, holds a Teen Night for local youths to catch the shows and partake in other activities. Top sponsor American Express, New York City, has been a partner for 14 years, and runs an “American Express Night” to give cardholders dibs on tickets. “This setting works,” says AmEx spokesperson Tom Sclafani.
“In the end, we want customers to say, ‘Macy’s has a heart,’” says Anita Jaffee, Macy’s West director-event development.
Win their hearts and their wallets may follow.
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