Sunday, January 25, 2004

By LaMont Jones, Pittsburgh Post-Gazette

The scheduled closing of Lazarus-Macy's in Downtown Pittsburgh is the latest sign that department store dominance is ending.

"Is the department store dead? No. But the department store is challenged," said Tom Julian, who grew up in Pittsburgh and is now a fashion trend analyst for Fallon Worldwide in New York City.

"Domestically and internationally," said Julian, "we've seen department stores that have really created new concepts and new offerings that make the old and tired ones a little less appealing to consumers."

Beginning around the 1960s, the department store rose to prominence as the popular place for consumers to buy the ordinary and the special. Whether they were looking for baby booties, bed linens or evening bags, shoppers could count on a plethora of choices at reasonable prices. All things domestic under one roof heralded the era of one-stop shopping.

Now, some department stores are struggling to survive. Lord & Taylor, Downtown, announced last year that it would be closing as part of a national restructuring that would involve 32 stores. And Lazarus-Macy's, a block away, will close by May.

There are many reasons department stores are having a tough time. In Downtown Pittsburgh, for example, factors range from pricey parking and routine roadwork that discourage drivers to the lack of a comprehensive development plan to -- perhaps most critical -- fierce competition fueled by a laissez-faire free-enterprise market.

Gone are the days when department stores such as Kaufmann's and Lazarus-Macy's could count on the lion's share of shoppers. Increasingly, there are other options:

Catalog shopping, a decades-old alternative, continues to command a loyal following.

Off-price and close-out stores such as TJ Maxx, Marshalls and Burlington Coat Factory have filled a niche.

Value chains such as Kohl's, Wal-Mart and Target -- which exclusively has Mossimo and Isaac Mizrahi fashion brands -- have dramatically changed the retail scene.

Vintage stores such as Eons in Shadyside and consignment shops such as ChaMELeon Consignment in Scott are a growing trend.

Specialty stores, from independent boutiques such as Choices in Shadyside to high-end luxury venues such as Saks Fifth Avenue, are drawing customers who favor exclusivity and are willing to pay higher prices for it.

And online shopping grows yearly as many people find that it's faster and sometimes cheaper to buy via computer. Online sales remain less than 2 percent of all retail revenue, but U.S. Department of Commerce says e-sales grew 22 percent from 2000 to 2001, outpacing the overall retail growth of 3 percent. It's a growth trend that continues.

Just how much have these other options combined to bite chunks out of territory once owned by department stores?

If you're looking for a glitzy evening bag, you can find several options at Lazarus-Macy's. But you can also find styles for $14 at ChaMELeon Consignment and $16 at TJ Maxx, vintage versions for $25 at Eons, designer brands such as Lambertson-Truex at Dress Circle in Shadyside and a wide selection online at www.ebags.com.

It's the same story with bed linens. Need a cotton, 300-count flat sheet for a queen-size bed? Again, department stores offer an array of choices. But so do Linens N Things, Bed Bath & Beyond, Wal-Mart, www.linensource.com and specialty store Feathers in Shadyside.

"Statistics and insights show American shoppers today are gravitating more toward lifestyle centers and strip centers" over department stores and the malls they tend to anchor, said Julian.

The changing patterns of shoppers are something department stores will have to challenge if they are to remain viable.

"It's not that the department store isn't right. It's just that today's lifestyles don't necessarily align with the way they're set up," he said. "Where a consumer decides to shop is more about lifestyle now."

Department stores try to be all things to all people, but the United States market has become one in which the new consumer is more focused.

"We're into specialty, specialty, specialty or value, value, value," said Julian.

The issue goes beyond the travails of the department store, noted Stan Eichelbaum, president of Marketing Developments Inc., a Cincinnati-based research and planning firm that specializes in retail and has clients in 39 countries.

"Retail is the most challenged sector of the American economy," said Eichelbaum. He said factors that influence retail are "not just demographic restructuring of the country with the stratification of wealth and the evolution of neighborhoods and urban districts, but also the technological aspects that help people stay competitive."

The department store has survived because of its ability to restructure, he said. Economic factors work in its favor to make it more resilient than the specialty store, he added, and the department store is already swinging in its pendulum cycle back toward the merchant and away from the consumer.

This month, Julian attended an international retailing symposium in New York City. At the forefront of department stores most successfully reinventing themselves were Harrods and Selfridge's in London.

Part of the stores' success was attributed to exclusivity and technology. They also added strong food components. On this side of the Atlantic, Marshall Field's has won acclaim for following suit.

Eichelbaum predicted that as the merchant regains control from the consumer, department stores will be transformed into their next incarnation.

"Have they had problems? Absolutely. Do they need to reinvent? Yes. Will it take a while? Absolutely. But it won't be the first time we've been through that cycle."

Post-Gazette fashion editor LaMont Jones can be reached at ljones@post-gazette.com or 412-263-1469.

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