- The Washington Times - Tuesday, October 17, 2006

Department stores, which have been struggling to capture the elusive young shopper, may be poised for a comeback this holiday shopping season.

Young people plan to do a growing majority of their holiday shopping in department stores this year, according to a study set to be released today.

About 79 percent of 18- to 24-year-olds plan to shop at department stores for at least some of their holiday gifts this year. That’s up 6 percent from last year and an additional 7 percent from 2004, according to the National Retail Federation (NRF), a Washington-based retail group.

“Young adults see the holiday season as a time to splurge, not skimp, on gifts for loved ones,” said Phil Rist, vice president of strategy at BIGresearch, the market-research firm that conducted the survey for the NRF.

“Department stores are likely to see a surge in sales from young consumers, positioning them well not only for the holiday season, but for years to come.”

About 62 percent of consumers of all ages plan to shop in department stores this year, up 3 percent from last year.

Department stores have been struggling in recent years to capture young shoppers, who have turned to discount and specialty stores.

But retailers, including chains such as Nordstrom Inc., Neiman Marcus and J.C. Penney Co. Inc., may be making a comeback.

“Especially department stores are doing a good job in reaching out to young adults,” said NRF spokesman Scott Krugman. “They need to be offering the right merchandise at the right prices, and they’re doing just that.”

Barneys New York and Neiman Marcus Group have opened new stores targeting young adult and teen shoppers. Co-Op, owned by Barneys, is smaller than its department stores and sells fashionable clothes and accessories. Cusp, owned by Neiman Marcus, opened its first location in Tysons Corner in July.

J.C. Penney reached out to teens as the sole retail sponsor of the MTV Video Music Awards in August.

During September, sales at stores open at least a year rose 8.4 percent, the best month since January 1997, according to monthly index figures released by the International Council of Shopping Centers and financial firm UBS earlier this month.

Kohl’s led department stores with a 16.3 percent jump in stores open at least a year after marketing with an MTV vee-jay and teen star Hilary Duff and completing a massive restructuring program. Nordstrom and Saks Inc. followed with 13.4 percent and 10 percent increases, respectively. Sales at Federated Department Stores Inc., which owns chains Macy’s and Bloomingdale’s, rose 6.2 percent during September, the chains reported earlier this month.

An exception was discounter Wal-Mart Stores Inc., which posted a same-store sales increase of 1.3 percent, missing expectations and signaling that consumers are moving away from it and toward higher-priced brands.

In the NRF survey, discounters were the only group to take a hit: Seventy percent of shoppers plan to spend at discount stores, down 1 percentage point from last year.

The survey also found that consumers plan to spend on average $791.10 on holiday shopping this year, a 7 percent increase from last year. On top of that, they plan to spend nearly $100 on themselves.

“We believe consumers in general feel like they’re in a very good place in spending power,” Mr. Krugman said. “You’ve got lower gas prices fresh on their minds — that has a lot to do with it.”

Nearly half — 47.1 percent — of consumers plan to shop online this year, up 4 percentage points from last year.

About 40 percent of consumers said they plan to start their holiday shopping before Halloween this year.

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