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NPD's Cohen: Department Stores Must Change Their Game (Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York, Bloomberg eleven to Washington, d C.
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  Speaker 1: enclave of classic style and contemporary luxury. We're going to
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  Speaker 1: talk about retail spending. We've got Marshall Cohen, chief industry
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  Speaker 1: analysts for the np D Group. Maybe he could explain
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  Speaker 1: why retail sales were up one point three percent like
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  Speaker 1: many department store chains showed losses in a Marshall start
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  Speaker 1: started his career pim folding Ralph Lauren Polo sweaters at
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  Speaker 1: a Macy's Bloomingdale's on Long Island. Will be interesting to
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  Speaker 1: see he's watching his industry for so long because he's
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  Speaker 1: Pim Fox, and we are continuing our live broadcast here
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  Speaker 1: from Elbow Beach, Bermuda, an ocean front on claim of
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  Speaker 1: classic style, contemporary luxury. Just a delightful place to be.
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  Speaker 1: These entire island at Nation is brimming with beautiful sites
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  Speaker 1: and wonderful, kind, gracious people, and I certainly want to
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  Speaker 1: thank all of them that have helped us here at
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  Speaker 1: Elbow Beach and in our time so far on the island.
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  Speaker 1: Retail sales people are spending money here that where people
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  Speaker 1: are spending money at resorts. What about the United States,
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  Speaker 1: What about department stores? The government's retail sales report look
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  Speaker 1: pretty darn good today, But for a lot of retailers,
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  Speaker 1: Nordstrom's j C Penny list gets longer and longer. They're
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  Speaker 1: cutting earnings forecast, they're cutting their sales forecast. Joining us
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  Speaker 1: Marshall Cohen he retails US at np D Group. Marshall,
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  Speaker 1: do you ever check in on places like community to
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  Speaker 1: see how people are spending money? Actually I do. I
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  Speaker 1: don't get to be there often enough, but we certainly
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  Speaker 1: do look at boos spending on resorts and boos spending
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  Speaker 1: on experiences. And that's actually one of the reasons why
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  Speaker 1: that middle sector of the market has challenged, because the
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  Speaker 1: experiential customer, the millennial, is a big part of the
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  Speaker 1: focus for these guys, but it's also a big part
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  Speaker 1: of the spend diversion. Marshall wondering if you can help me.
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  Speaker 1: I looked at the numbers from the government today, an
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  Speaker 1: increase of one point three. But all week I've been
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  Speaker 1: mindful of the downturn in the reports from many of
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  Speaker 1: the major department store chains. You saw it happened to
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  Speaker 1: northstron You saw what happened to Macy's and Coal's. Can
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  Speaker 1: you explain this when you look at what's going on.
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  Speaker 1: It's actually a four part answer online, which is, you know,
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  Speaker 1: you have to be careful what you wish for you
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  Speaker 1: might just get it. Well. A lot of these retailers
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  Speaker 1: have really stepped up and ramped up their offerings online.
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  Speaker 1: That cannibalizes the activity in the store. Omni channel, which
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  Speaker 1: is the big piece of what they're all talking about
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  Speaker 1: as far as how they're going to grow their business
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  Speaker 1: doesn't really grow business at displaced this and then online
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  Speaker 1: outside of that retail environment certainly has become a formidable
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  Speaker 1: competition in some categories. Four Online penetration is eroding the
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  Speaker 1: market share that these mid level of department stores have had.
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  Speaker 1: Uh you add in the fact that they've all made
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  Speaker 1: the play to the millennial consumer, and as we just
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  Speaker 1: kind of discussed, millennial is all about very limited discretionary
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  Speaker 1: income spending across a very wide field of product, and
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  Speaker 1: very experiential, which is what the department store doesn't offer.
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  Speaker 1: The third piece of the puzzle is value. Right now,
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  Speaker 1: a lot of the categories that are not getting growth
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  Speaker 1: are all about price points and lower price points and discounts,
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  Speaker 1: and an example of that would be the ath leisure movement.
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  Speaker 1: We all know how the big uh trend for the
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  Speaker 1: whole season of and now into has been this movement
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  Speaker 1: towards more athletic inspired product. So imagine what stores are doing.
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  Speaker 1: They're selling, you know, stretched leggings for forty dollars where
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  Speaker 1: they used to sell stretched denim for a hundred and
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  Speaker 1: fifty dollars. They have to sell two and three times
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  Speaker 1: as much merchandise to make up those lost dollars. Marshall,
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  Speaker 1: you spend what fifty weeks out of the year on
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  Speaker 1: the road. You go to three or four different stores
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  Speaker 1: a week. You're all over the country, You're in and
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  Speaker 1: out of them. Let's take a look at Nordstrom's. Northstrom's
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  Speaker 1: has been such a successful department store chain, expanding over
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  Speaker 1: the entire country. But it's even a big successful chain
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  Speaker 1: like north Rom's kind of doomed. Have we seen the
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  Speaker 1: end of retail and department stores as we once knew it? Not?
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  Speaker 1: If they change with the consumer. The consumer has changed
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  Speaker 1: at a faster pace than the stores at Nordstrom if
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  Speaker 1: you look at them and any other traditional retailer are
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  Speaker 1: steeped in tradition, they still keep doing the same thing
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  Speaker 1: they've been doing since I was folding sweaters of Bloomingdales
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  Speaker 1: are absolutely right, I've heard that, um. But it's really
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  Speaker 1: about recognizing that if they don't change who and what
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  Speaker 1: they are, they will have a tough time. But they
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  Speaker 1: really can do better, they can do more. They just
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  Speaker 1: have to learn how to transition quicker. They don't have
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  Speaker 1: time to test some of these things and then sit
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  Speaker 1: there and see because the consumer has already moved on
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  Speaker 1: to something else. So when you have the leading edge
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  Speaker 1: when it comes to service, that's a big differentiator than online.
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  Speaker 1: So the stores do have the ability to not only survive,
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  Speaker 1: but actually start growing again. Well, Marshall, can you tell
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  Speaker 1: us who the good, the bad, and the ugly when
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  Speaker 1: it comes to being able to execute as you describe, Well,
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  Speaker 1: you have to look at individual performers within certain channels. Uh.
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  Speaker 1: And it's a nice fancy way of basically saying there's
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  Speaker 1: going to be one or two leaders in every one
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  Speaker 1: of the of the different channels of distributions. So when
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  Speaker 1: you look at somebody like in the mass market a target,
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  Speaker 1: they're out performing the mark it uh. When everybody else
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  Speaker 1: in apparel was dropping for the quarter, they actually had growth.
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  Speaker 1: When you look at somebody like a warehouse club, the
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  Speaker 1: warehouse club channel, you know they actually for the first time,
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  Speaker 1: you're starting to show some vulnerability. So there's another one
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  Speaker 1: that you've got to look at. On the negative side,
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  Speaker 1: when you look at some of the luxury retailers, they're
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  Speaker 1: holding their own, but they're up against some softer numbers,
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  Speaker 1: So we have to be careful that we're not looking
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  Speaker 1: at them as being the growth of the market when
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  Speaker 1: they're up against some you know, lower numbers, easier softer
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  Speaker 1: numbers to kind of anniversary. And then when we look
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  Speaker 1: at the department store sector, but we have to recognize
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  Speaker 1: is that we are looking at a channel of distribution
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  Speaker 1: that must change the game. So we have Marshall Cohen,
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  Speaker 1: Chief Industry Analysts, the n p D Group based in
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  Speaker 1: Port Washington, New York. You're listening to Taking Stock on
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  Speaker 1: stepping back from the tough time for retailers this week
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