Report: Department Stores Losing Their Edge With Luxury Shoppers
Stevens, Pa., Although Federated Department Stores continues to transition the May Department Store chain into the Macy’s brand, shoppers are turning away from traditional department stores in droves, according to the Luxury Report 2006 from Unity Marketing. Total retail sales in traditional department stores have dropped 13% in the last five years, from $96.3 billion in 2000 to $84.1 billion in 2005. Wal-Mart and other discount stores have siphoned off sales from lower-income customers, while the luxury shoppers, long the most loyal customers of department stores, are turning to other shopping destinations.
The report also revealed that Bloomingdale’s and Neiman Marcus ranked as luxury shoppers’ favorite department stores. Macy’s ranked as the No. 1 department store shopping destination, used by the largest percentage of luxury shoppers in 2005 (23%), followed by Nordstrom with 18% of luxury shoppers, then Dillard’s with 12%. Bloomingdale’s and Neiman Marcus, however, ranked 49% more popular than the average department store for luxury shoppers, and Nordstrom as 40% more popular. Even though the largest percentage of luxury consumers shopped at Macy’s, the retailer also has the largest number of stores nationwide.
Food Lion to Open New Format
Salisbury, N.C., Food Lion is opening three new stores in South Carolina that represent a new format for the company, according to a report by morningnewsbeat.com. The 35,000-sq.-ft. new format has an expanded natural and organic selection, a large wine department and offers products that meet some specific dietary needs of customers, such gluten-free and dairy-free items. The renovation also includes re-designed grocery aisles, new customer-service counters and checkout lanes and a new decor package, with new signs, graphics and colors and improved lighting. Food Lion also announced last week that it is unveiling fresh makeovers at 26 stores in the tri-state area of Virginia, Maryland and West Virginia. Each store will reopen June 21.
Rite Aid Rumored to Be Eying Eckerd
Harrisburg, Pa., According to a Credit Suisse analyst, Rite Aid Corp. could be considering a purchase of some of Jean Coutu Group Inc.’s Eckerd stores if the chain decides to divest the mid-Atlantic and southeastern U.S. units.
Analyst Edward Kelly estimates the probability of such a deal at 25%. Further deterioration of Longueuil, Quebec-based Jean Coutu’s financial situation could increase the odds, according to Kelly.
Although neither Jean Coutu or Rite Aid has responded to the speculation, Rite Aid has said it will participate in ongoing industry consolidation.
Kelly estimated that the 729 Eckerd stores could be sold for $700 to $800 million.