Department Stores

SIC 5311

Companies in this industry

Industry report:

Establishments that sell a similar range of merchandise with less than 50 employees are classified in SIC 5399: Miscellaneous General Merchandise Stores. Establishments that do not carry these general lines of merchandise are classified according to their primary activity.

The apparel, home furnishings, and housewares sold in department stores are normally arranged in separate sections or departments with accounting on a departmentalized basis. The departments and functions are integrated under a single management. The stores usually provide their own charge accounts, deliver merchandise, and maintain open stocks.

Industry Snapshot

According to the U.S. Census Bureau, there were 8,813 department stores operating in the U.S. with industry-wide employment that totaled nearly 1.3 billion workers in 2008. California led the nation with 1,029 department stores employing 205,022 workers followed by Florida with 539 department stores employing 76,636 workers. Rounding out the leading five states was Texas with 529 department stores, Illinois with 453 department stores and Pennsylvania with 444 department stores.

During 2010 department stores constituted 31.6 percent in market share with sales of about $59 billion. However, discount department stores accounted for 54.2 percent of the market with sales that exceeded $480 billion. What the industry considered non-discount department stores captured 14.1 percent of market share while generating nearly $63 billion in sales. On average, department stores employed 107 workers with sales estimated at $90 million per store.

Part of the early allure of department stores was their atmosphere and decor, making the shopping experience a form of entertainment. At one time, these stores were the fashion monitors of the day and led the way with new trends in retailing. They were the first to provide consumer credit and to create mass-produced clothing, and they became the home for national fashion designers.

By the first decade of the twenty-first century, department stores had lost their cutting-edge appeal to specialty shops and brand-specific stores that could move in and out of fashion trends quicker and more efficiently than departments stores. Department stores were also steadily losing customers to big discounters, especially Wal-Mart and Target. By 2006, department stores' market share had steadily eroded for the previous 15 years, and management teams were scrambling to reinvent their stores to attract and retain new customers. Several mergers and acquisitions in the mid-2000s, such as the merger of Sears and Kmart and the acquisition of May Department Stores by rival Federated, in addition to easier Internet access and industry re-focus on niche marketing, were set to revive the struggling industry. Department stores did see some improvement in 2006 as September sales that year increased 8.4 percent over September of the previous year, but sustaining such positive strides would prove difficult.

During the late 2000s department stores continued to lose more and more customers to big discounters like Wal-Mart and Target, especially when the economy sank into one of the worst economic downturns in recent history that began in late 2007. While the 10 largest department store chains combined had sales totaling $110 billion in 2008, Wal-Mart bolstered $440 billion. Mall-based department stores were hit the hardest as stores began to shut down as sales dwindled. By February 2009, department store sales were expected to fall in the double digits.

Most operations began as a single store located within a downtown district. When customers moved to the suburbs, so did the department stores, and soon branch outlets appeared throughout the country. Ownership of most department stores reverted to publicly held conglomerates. Many of these companies also owned or held interest in discount retailers or general merchandisers.

Organization and Structure

Department stores, along with other retailers, were quick to embrace advanced computer technology. The ability to centralize operations, have a complete and up-to-date status of inventory, and get an exact reading of items purchased are but a few examples of information that can be generated by computerized point-of-sale systems. Computers also allowed retailers to reduce paperwork and lead time in updating stock.

The use of computer technology has moved from a luxury to a necessity in order for any retailer to survive in the competitive market characterizing the 2000s. Included in this technology is Internet retailing. Federated Department Stores bought Fingerhut Companies Inc., a catalog retailer, in spring of 1999 in a multi-billion dollar deal. The purchase allowed to ease Federated into a multi-distribution platform on which it could handle Internet sales, warehousing, and shipping.

Retail establishments primarily selling merchandise for personal or household consumption played a major role in the U.S. economy by providing nearly 20 percent of all jobs in the private sector in the late 1990s. Department stores had always held a leadership position among "traditional" retailers. However, with discount mass merchandisers chipping away at market share, department stores saw increasing competition. The very definition of department stores changed within the industry as well, as many stores eliminated some individual departments. The new definition covered the traditional department stores, and included the "multi-department soft goods stores with a fashion orientation, full-markup policy, and operating in stores large enough to be a shopping center anchor," Penny Gill stated in Stores. Such stores included Lord & Taylor, Neiman-Marcus, and Saks Fifth Avenue.

Changes in how merchants sold products and in how consumers shopped led to the creation of a new division of retailers--discount mass merchandisers. This category included superstores and price clubs, which cut into the market share of traditional retailers. Also known as off-price retailers, these stores featured a specialized merchandise line at discount prices. Superstores were large retail establishments offering discount prices on a limited product line with extensive complementary merchandise. Examples of superstores included Toys 'R' Us and Wal-Mart. Price clubs were a new type of superstore with more retail floor space and a more extensive line of merchandise at more deeply discounted prices.

Background and Development

The department store became one of the most durable creations of modern American life. Created in the heart of emerging business districts, department stores gradually became part of the landscape. The first department stores opened as early as 1846 in New York City. Although they primarily catered to the city's elite, early merchants also wanted to make themselves accessible to women of all classes. So instead of keeping goods behind the counter, they openly displayed merchandise on the floor to encourage browsing.

Stores with elaborate decor and fancy window displays created a new variety of entertainment for the masses. Even if people could not afford to buy the merchandise, they still came to the department store to peer in the windows to see what they might attain someday. Traditional department stores sold "soft goods," such as apparel and linens, as well as "hard goods," including furniture, appliances, and housewares. The now defunct "notions aisle"--the place for buttonhooks, thread, sewing needles, linens, laces, and silks--was the original foundation of the department store. Notions first were sold by peddlers, who traveled on foot through the rural South and Midwest. Eventually these peddlers obtained a horse and buggy then graduated to a small storefront, the prototype department store.

Another innovation that emerged in the late nineteenth century was the budget floor. Filene's obtained legendary status with its Automatic Bargain Basement--selling cashmeres salvaged from a fire at Neiman-Marcus and Schiaparelli and Chanel gowns evacuated from Paris showrooms at the start of World War II. Credit began in 1911, when Sears Roebuck offered payment plans to farmers for large mail-order purchases. By the 1920s, "layaway" installment plans were common. The introduction of department store charge plates encouraged customer loyalty since that was the only form of consumer credit available at the time.

From the earliest days, merchants catered to women. By 1915, nearly 90 percent of all department store customers were female. Women also began to take the place of men on the selling floor, offering fashion advice and fittings.

Department stores were considered a fantasyland for toy vendors and children alike. Stores became famous for elaborate Christmas decor. No one knows exactly when Santa Claus began to show up on the scene, but in 1939, Montgomery Ward started to give away a book featuring a character first called Rollo, then Reginald, and finally Rudolph, a reindeer with a red nose. Gene Autry recorded Rudolph's signature song in 1949, and the famous reindeer became a Christmas icon.

Department store managers also influenced other major American holidays. In the past, Thanksgiving was held on the last Thursday in November. In 1939, the holiday fell on the 30th, leaving only 24 days for Christmas shopping. Ohio merchant Fred Lazarus Jr. led a campaign to move the holiday to the fourth Thursday in November. President Franklin D. Roosevelt complied, and Thanksgiving has remained on that day ever since.

After World War II, department stores began expansion into the suburbs, following the flight of their customers. By the 1950s, most department stores turned to upscale clients and merchandise, doing away with the low-end, bargain basement sales. This decision opened the way for discount operations like Kmart to enter the market. Customer loyalty quickly dissipated as the arrival of bank credit cards in the 1960s allowed consumers to shop on credit virtually anywhere. In due time, the costs of suburban expansion coupled with the lack of experience or interest on the part of third- or fourth-generation family members drove many department store owners to sell their operations.

By the 1980s, many department stores were in fairly poor shape. Although consumer spending was up, the stores found fierce competition from discounters, specialty stores with numerous outlets, and mail-order houses, which sent out 14 billion pieces of mail annually. In an attempt to lure back customers, department stores engaged in competitive price-cutting. The result was a frenzied period of leveraged buyouts (LBOs), mergers, and acquisitions. Of the eight companies that composed the Standard and Poor's index at the beginning of 1986, four were acquired or taken private, while a fifth company undertook major restructuring. One negative fact hanging over the industry--as well as the rest of the retail market--was that for the previous 25 years, the amount of retail space per person in the United States increased by 450 percent.

By the mid-1990s, department stores changed the product mix somewhat. "White goods"--appliances such as stoves and refrigerators--were less emphasized to make room for more apparel items. Sears adopted the slogan, "Come see the softer side of Sears," emphasizing that power tools and lawn equipment were not the only items shoppers would see in the store. J.C. Penney upgraded store merchandising, also emphasizing more apparel.

However, the departure of the shop-weary consumer continued to hurt department stores' sales. In sharp contrast to the retail heyday of the 1980s, consumers in the 1990s became thriftier. Feeling financially strained, people tried to maintain their lifestyles on a smaller budget. Since consumer confidence remained relatively low, many retailers kept markups just high enough to maintain market share. As general economic conditions improved in 1996, confidence and consumer spending increased.

Changes in demographics in the early 1990s also posed challenges to department store retailers. The rate of household formations slowed dramatically in the early 1990s, and the percentage of young adults was projected to decline during the next two decades. The baby boomers, who "shopped till they dropped" during the 1980s, reached middle age by the year 2000. In addition, the American population that included those 65 and older continued to grow quickly. This group tends to spend more on health care and leisure activities and less on goods like apparel.

To top it off, research indicated that consumers no longer considered shopping "fun." According to the Lieber/Yankelovitch Monitor, the number of consumers who described shopping for clothes as fun dropped 4 percent in the early 1990s. Shopping was regarded as time consuming and frustrating. As economic conditions improved, interest rates moved downward, and personal income slowly rose, however, more shoppers extended themselves on credit. The key for retailers during the 1990s was the ability to attract new customers, regain old customers, and make existing operations more productive. Creative merchandising and keeping up with the fashion trends of the day was a crucial component to gaining sales.

There was finally a break in 1996, when department stores saw the business environment improve. The department stores placed more emphasis on sales of women's clothing, which was always important to the increase of store sales. The combination of better quality, higher fashion women's wear, and increased demand due to improved economic conditions helped spur sales for department stores. Most large department stores also placed more emphasis on meeting the new purchasing trends in apparel, jewelry, and quality home furnishings that had a more important share of department store sales than the home improvement hard goods and home electronic products did in the past. Many department store retailers were also emphasizing their own private label brands, which had significantly improved in quality and marketing. On the operations side, these companies generally had taken advantage of improvements in retail automation that made merchandising, accounting, inventory, and logistics functions more efficient and accurate.

In the late 1990s, department stores had to face the rising popularity of discount mass retailers. For example, Sears was ousted from its number one position in sales by Wal-Mart, which had more than three times more revenue than Sears in 1998. Department stores continued to see increases in sales and profits, although many factors deterred those increases from being even larger. The Internet, mass discount retailers, specialty retailers, and catalog shopping were competing with traditional department store for consumer loyalty. Chain Store Age reported in October 1999 that "The department store sector continues to be hot for some chains and cold for others." Federated Department Stores, Dillard's, and May saw increases in same-store sales, while J.C. Penney saw a slight decrease in sales and Sears remained stagnant.

Using computer technology, such as inventory management systems and point-of-sale bar code scanning, provided a tremendous advantage for stores trying to regain their competitive edge. Many stores gathered data from scanners at the point-of-sale (POS), which identified peak selling periods and allowed managers to better shape work schedules. This data also showed managers exactly what products were selling, which helped in keeping the stores fully stocked and in forecasting upcoming selling trends. For example, J.C. Penney implemented a state-of-the-art, automated merchandise replenishment system. This computerized program triggered orders based on projected sales demand, which ensured that stores were constantly stocked with basic merchandise items. Orders were processed every week instead of every two to four weeks. J.C. Penney also operated an information network based on seven large mainframe computers and 120,000 terminals, which processed about 700 million retail transactions annually.

With that technology in place, most industries, including the retail industry, came face to face with the pressures of the Internet. J.C. Penney made its catalog available for online shopping, Sears offered many products available on its Web site, and the May Company offered gift-card purchase on its division's Web sites.

Retail information technology professionals have become more in demand as well. POS systems, as well as other computer systems, needed to be updated to handle foreign currency and tax issues. In a news release from PR Newswire, J. Roger Friedman, CEO of Lebhar-Friedman, commented: "We began the 20th Century with quaint downtown shops and we finish it with huge shopping malls, e-tailing and international chains featuring uniform quality standards and high customer service."

To keep existing market share and boost sales, many department stores adopted new ad campaigns, revamped stores, focused on high margin profit mixes, and began online retailing. Montgomery Ward, for example, updated the floor plans of its existing stores and focused on higher end merchandise. Sears, with its "softer side" campaign, targeted a younger, trendier crowd with its apparel line. Although this line had a negative effect on profits from 1996 to 1998, sales in 1999 began to show signs of life. Sears also jumped aboard the Internet wave and began to sell appliances and tools online. offered home furnishings and lawn and garden products, and consumers could request repair service online.

Consolidation has also been a trend in the department store sector. Proffitt's, a Birmingham, Alabama-based company, purchased Parisian in 1996, and made a successful bid for Saks Fifth Avenue in August 1998. Dillard's was successful in its bid for Mercantile Stores, an Ohio-based department store chain, in 1998. Elder-Beerman took over Stone & Thomas as well. This trend has left the department store industry with a handful of larger, powerful competitors whose focus in the late 1990s was growth through acquisition.

National department store chains (without considering discount chains) had total revenues of $92.3 billion in 2001, down from $97.4 billion in 2000. Department stores were already struggling with an economy that was moving toward recession when the terrorist attacks of September 11, 2001 occurred.

With large discounters beating them on price and trendy specialty shops beating them on up-to-date fashions in the early 2000s, department stores began trying to remake their image and revamp their offerings. Dropping prices to compete with discounters largely failed, as many stores compromised on quality. To start, department stores began to focus less on "departments" and significantly more on brands and fashion, particularly as mall shopping continued to fall.

As of 2005, department stores had seen a decline year over year since the turn of the century. According to NPD Group, a market research organization, department stores lost a collective $2.5 billion in sales to discounters and specialty retailers.

While many department stores anchor enclosed mall locations, retailers began to push stores away from the mall in the mid-2000s. J.C. Penney built 18 stores in 2005, the most for the company since 1997, and the majority were in stand-alone locations. Aside from location, technology was an important element for J.C. Penney. It invested $1.4 billion in point-of-sale terminals linked to the Internet so transactions would be faster and also so that if a customer is unable find something in-store, the clerk can order it on the Web site at the checkout counter. The third-largest department store chain, J.C. Penney is the leader in Internet sales, hitting $1 billion in 2005 and expecting to reach $2 billion by 2008. J.C. Penney derives 15 percent of revenue from online and catalog shopping compared with less than 2 percent for most department stores.

Overall, the 8.4 percent increase department stores experienced in September 2006 compared to September 2005 was the biggest jump for the industry in nine years. October 2006 was strong as well, in particular for Federated, which posted a 7.7 percent increase in same-store sales. In 2007, Federated changed its name to Macy's Inc.

The upward trend continued into 2007, especially for upscale department stores. Same-store sales for Saks rose 11.1 percent in December 2006 from the previous year, 11.4 percent in January 2007, then escalated to 24.7 percent in February 2007. Additionally, Nordstrom reported a 12.2 percent operating margin for the last quarter of 2006, and Neiman Marcus reported a 9.9 percent margin for its last quarter of 2006.

Macy's stores in New York were looking for an increased market share for holiday shopping in 2007, opening seven stores 24 hours per day in the week leading up to Christmas. In another aggressive move, Macy's announced in 2007 that it teamed with Tommy Hillfiger to sell the design wear exclusively through its department stores beginning in the fall of 2008. Kohl's made some ties of its own in 2006, carrying Food Network-brand home goods and new apparel lines by designer Vera Wang and skateboarder Tony Hawk.

Current Conditions

Department stores went from the opening of new stores in the mid-2000s; to store closures and mass lay offs as early as 2008. Macy's alone was cutting 2,300 management positions as the company executives focused on consolidating three of its regional divisions in an effort to trim costs by $60 million in 2008 and about $100 million per year thereafter, a reflection of a struggling economy. That followed with the announcement of another 7,000 layoffs in February of 2009 that would save Macy's about $400 million annually by 2010. Upscale department stores Saks and Neiman Marcus also announced layoffs after double digit declines in sales. Saks was trimming nine percent of its workforce, while Neiman Marcus planned to cut 2.3 percent of its employees.

Although department stores were struggling through one of the worst economic downturns, one industry authority, Paco Underhill suggested department stores need to concentrate on "the stuff we wear Monday through Friday" cited from The Denver Post in February 2009, adding that "They also need to answer why their sweater costs $162 and that one costs $29. The reason can't be the label on the inside." That may be part of the reason J.C. Penney and Kohl's were giving Macy's a run for their money.

Once department store executives realized the recession wasn't going away anytime soon they began to take note of their overall operations. From the number and size of their stores, to the merchandise they carried, department store executives were making changes. For example, some department stores began to offer a "good-better-best mix of brands" targeting every type of potential shopper who walks into their store. Additionally, effective monitoring of their online stores became more prevalent, since a large majority of shoppers weren't necessarily looking at labels or even storefronts, they were shopping for the best price.

One industry analyst, Wendy Liebmann CEO and "Chief Shopper" of WSL Strategic Retail summed up exactly what department stores were up against in the October 2010 issue of Beauty/Fashion magazine and stated that "When affluent women now shop big box discounters´┐Ż,when access to information and customer service is now only a click away, when the new global department store is called Amazon and the new designer fashion store is called Net-A-Porter, US department stores still have much to do to provide real value and justify their existence,"

Department store sales began to rebound during the first quarter of 2010, however, according to Macy's CEO Terry Lundgren, "It's about taking market share from others" and not sales gains that will make a difference throughout 2010, David P. Schultz noted in Stores magazine in June 2010. In fact, over the past five years, sales from department stores exclusive lines, especially when it came to women's apparel market share increased eight to 41 percent, according to market research firm NPD.

While Nordstrom was known for its superior customer service, the company was planning to equip each employee with a mobile device allowing for even greater customer service by the fall of 2011. During a conference call, Blake Nordstrom noted that "Having [the WiFi] technology in place gives us the flexibility to further enhance the customer in-store experience." The $69 million price tag for this latest technology positions an employee with the capability of delivering customers with an even greater shopping experience, such as a customer being able to contact his or her sales professional via phone or text right from the fitting room if they needed a different size. Nordstrom is the only retailer behind Home Depot to implement this type of technology.

Industry Leaders

Sears, Roebuck & Co.
Headquartered in a Chicago suburb, Sears, Roebuck & Company was largest department store retailer in the world in the mid-2000s. In 2004, the company reported sales of $36 billion, more than a 12 percent drop from 2003. In March 2005, Sears merged with Kmart, another struggling retailer. The companies hoped that the merger would combine the best of each company--Kmart brands are more appealing to women, and Sears brands are more appealing to men, for example--and give new life to the stores' tired images. In addition, the company planned to emphasize the Sears Grand stores, which are located away from traditional malls, as well as the tool and appliance departments. Sears, now a subsidiary of Sears Holdings, reported revenues of $30 billion in 2006. The company grew its revenues to $46.7 billion by 2009 before falling to $44 billion in 2010 with 322,000 employees.

By the time of the merger with Kmart, Sears had 870 mall stores, 1,100 stores in other locations, and 245 hardware stores. Kmart had emerged from Chapter 11 bankruptcy in 2003, and had revenues of $19.7 billion in 2005, a 15 percent drop from the previous year. The merged company had a combined 3,470 stores.

Richard Sears opened R.W. Sears Watch Company in 1886 in Minneapolis. The following year, Sears moved his business to Chicago and joined in a partnership with Alvah Roebuck, another watchmaker. In 1893 they created the corporate name Sears, Roebuck and Co. Sears began as a mail-order company, primarily providing farmers with low-cost goods delivered via the railroads and postal service. In 1895, Chicago clothing manufacturer Julius Rosenwald bought the company, and in 1906 Sears went public.

Sears' customers soon began to move from the farm into the city, so in 1925 the company opened a retail store. Robert E. Wood, then a vice-president of Sears and later president and chairman of the board, became known as the father of Sears' retail expansion. He started with one store located in a Chicago mail-order plant and by 1927 had 27 stores in operation. Company records indicated that during one 12-month period in the late 1920s, Sears stores opened at an average rate of one every other business day. Soon Sears began selling merchandise under its own brand names, creating the still popular brands of Craftsman, Kenmore, and DieHard.

In 1931, the retail side accounted for 53.4 percent of Sears' total sales, topping mail order for the first time. Sears continued to open stores during the 1930s despite the Depression. By the start of World War II, more than 600 stores were in operation. During the 1940s and 1950s, Sears expanded internationally with stores in Cuba, Mexico, and Canada.

In 1931, Wood also launched Allstate Insurance Company as a wholly owned subsidiary of Sears. At first, Allstate operated only by mail, but by 1933 Allstate sales booths were installed within Sears stores. In 1973, Sears completed its new headquarters in Chicago--the world's tallest building at 110 stories and 1,454 feet tall.

To combat declining market share in the 1980s, Sears initiated a restructuring of its retail division. The company acquired the 405-store Western Auto chain in 1988, introduced a new pricing policy, and added non-Sears brands in 1989. Sears also announced it was relocating from the Sears Tower to a northwestern Chicago suburb in 1992. In January 1993, Sears announced another major restructuring program to streamline its Merchandise Group. The company discontinued its U.S. catalog operations, closed unprofitable retail and specialty stores, and offered early retirement to employees. Completed in early 1994, the restructuring improved the company's net income by $300 million annually, increased cash flow, eliminated roughly 16,000 full-time and 34,000 part-time positions, and positioned Sears to compete with its discount rivals.

J.C. Penney Company.
In 2007, J.C. Penney operated 1,065 department stores in all 50 states and Puerto Rico. The company started off the twenty-first century by cutting costs, including closing more than 100 underperforming stores. Sales for the company reached approximately $19.9 billion in fiscal 2007. By 2009, revenues fell to $18.4 billion and $17.5 billion in 2010 with 154,000 employees.

In 1902, after working for many years as a sales clerk for the Golden Rule Mercantile Company, James Cash Penney opened his first store as part owner and store manager in Wyoming. Buying out his two partners in 1907, Penney launched his own Golden Rule stores. To consolidate operations, Penney established headquarters in Salt Lake City in 1909. Although Penney moved his headquarters to New York the following year, the company's growth continued in the western United States.

J.C. Penney exploded into a nationwide organization from 1917 to 1929, growing from 174 stores to 1,395, while sales skyrocketed from $14.9 million to $209.7 million. By the 1930s, a J.C. Penney store could be found in nearly every town with more than 5,000 people, and the company continued to expand from the west to the east coast. By 1951, a J.C. Penney store existed in every state, and sales passed $1 billion for the first time.

The company entered the catalog business in 1962 and built its volume primarily through catalog sales centers located in stores. J.C. Penney Financial Services was created in 1967, including an acquisition known today as the J.C. Penney Life Insurance Company. The J.C. Penney National Bank was created in 1983 with the acquisition of the First National Bank of Harrington in Delaware.

During the 1980s, J.C. Penney closed many downtown locations or moved them to suburban malls. Stores were classified as metropolitan or geographic for those located outside metro areas. The company's real estate strategy produced hundreds of well-located stores in regional shopping centers throughout the United States.

In 1983, the company announced plans to spend more than $1 billion to modernize stores. To accommodate these changes, J.C. Penney eliminated auto service, major appliances, paint and hardware, lawn and garden merchandise, and fabrics from its stores. Upon completion, J.C. Penney began to focus on better serving the fashion needs of its customers--especially women, who accounted for more than 70 percent of apparel purchases in its stores. The composition of 1992 sales for the department store was 42 percent in women's, 29 percent in men's, 15 percent in the home division, and 14 percent in children's. The department store group accounted for nearly 75 percent of sales.

The J.C. Penney Company moved its headquarters to Dallas in 1988. J.C. Penney Telemarketing also was created that year to take catalog phone orders and provide telemarketing services for other companies. This network became the largest privately owned telemarketing system in the United States. At the start of the 1990s, J.C. Penney continued to expand stores and catalog services and also ventured into international markets such as China.

Department store sales generated 73 percent of 1995 sales and 18 percent came from catalog sales. The company acquired Kerr Drug Stores and Eckerd in 1996, which placed the total number of drug stores at 2,600, accounting for approximately one-third of total company sales. The drug stores were sold in 2004. About 12 percent of pre-tax income comes from insurance and banking subsidiaries. It is estimated that women comprise 80 percent of the firm's customer base. Sears, Wal-Mart, Kmart, and Kohl's have tried to attack this base by enhancing their own private label apparel brands. With the increased use of online retailing by people using the Internet to go shopping, the catalog business was made available online for Internet shoppers.

Macy's Inc.
Macy's Inc., formerly Federated Department Stores, operates more than 800 stores nationwide following its acquisition of rival May Department Stores in 2005. The May Department Stores Company owned regional department store companies that operated more than 500 stores, including Lord & Taylor headquartered in New York; Filene's in Boston; Hecht's in Washington, D.C.; and Foley's in Houston. In 2004, the company purchased Marshall Field's chain. Macy's Inc. reported sales of almost $27 billion in fiscal 2007. Macy's total number of employees fell from an estimated 180,00 in 2008 to 161,000 by 2010 as the company went through a period of consolidation and cost structuring during the economic downturn in an effort to boost sales. Revenues fell 5.6 percent to $24.8 billion in 2009 compared to previous year and again in 2010 to $23.4 billion before rebounding to $25 billion in 2011.

Kohl's Corporation
Kohl's became a formidable player in the department store field by the mid-2000s, growing from 150 stores in 16 states in 1996 to 929 stores in 47 states in 2007, with plans to operate 1,200 stores by 2010. Its fiscal year 2006 sales reached over $15.5 billion, up 16 percent from the previous year. The Wisconsin-based company started in 1962 but experienced significant growth and expansion with its acquisition of 26 Main Street stores in 1988; at its initial public offering in 1992, the company maintained 76 stores. Kohl's value-priced product mix is dominated by women's apparel, followed by men's apparel, home goods, and children's apparel, including both national brands and private labels. Kohl's Corporation reported revenues of $17.1 billion in 2010, up 4.8 percent compared to $16.3 billion in 2009.


With the multiple mergers and acquisitioins of the mid-2000s, approximately 9,600 department stores operated throughout the United States in 2005, down from approximately 10,400 in the early 2000s. Many of the industry's employees were under the age of 25 and worked part-time, evenings, and weekends. More than 47 percent of the people employed by department stores were cashiers and retail sales associates--the people who "worked the floor," selling merchandise. Administrative support personnel were the next-largest group with 23 percent of total employment. These employees provided general office skills and bookkeeping tasks, in addition to working as customer service representatives. No formal training was required for most sales and administrative support positions, although a high school education was preferred.

Management positions in department stores made up just over 2 percent of total employment. These positions included department managers, buyers, merchandise managers, store managers, and retail chain store area managers. A college degree became increasingly important for management positions, especially with large department stores. Companies preferred to hire people who earned a bachelor's degree in marketing or business to join management training programs.

Hourly workers in department stores earned two-thirds the average pay of all workers in private industry. This lower wage might be due to the high proportion of part-time and less-experienced workers. Few employees belonged to a union, and those who did generally received the same pay as nonunion workers. The department store industry as a whole employed almost 1,444,000 people in 2005, down from more than 1,657,000 in 2003. According to the U.S. Census Bureau, there were 8,813 department stores operating in the U.S. with industry-wide employment that totaled nearly 1.3 billion workers in 2008.

America and the World

Most department stores had plans for some sort of international expansion by the mid-2000s. "Going global", as retailers call it, is an important issue in international commerce, especially as technology increases and trade barriers are broken.

Canada became an increasingly attractive market after The T. Eaton Co. of Toronto collapsed in the fall of 1999, leaving only Sears Canada and the Hudson Bay Co. in that market. Some stores entered Mexico, and both J.C. Penney and Dillard Department Stores had anchor malls in Mexico City, Monterrey, and Guadalajara, Mexico. The Mexican malls were designed in a similar style to American malls, and Mexican retailers occupy nearly half of the rental space. Sears also entered the Mexican market with its Homelife furniture stores.

Another possible entry into the international arena is expected through catalog sales and telemarketing. In this scenario, merchandise would be sold through a partnership with a third-party national. A special catalog would be created targeting international markets, and operations would be set up similar to catalog service companies in the United States. A licensed catalog sales program would place U.S. goods in foreign markets through a licensee with little risk to the American company. All sales would be concluded domestically, with the licensee responsible for transporting goods across borders. J.C. Penney began such a program in Bermuda and Aruba, and negotiations were ongoing in Russia, Iceland, Brazil, Panama, and Argentina for additional licensed catalog sales.

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Department Stores Set for Decade-Long Tumble
Australasian Business Intelligence; December 11, 2017; 323 words
...sector is currently valued at $A17.5 billion. Morningstar predicts that sales earned by "bricks and mortar" department stores will decline by two per cent annually between now and 2027, while the number of physical stores will fall by 26...
Sailing Ships, Department Stores Inspire Uneven First Novel; FICTION: Competition between Two Window Dressers in New Zealand Leads to Catastrophe
Star Tribune (Minneapolis, MN); December 17, 2017; 700+ words
...writes in his acknowledgments that the inspiration for this first novel, a historical fiction, was sailing ships and department stores. That combination results in a wacky two-pronged plot, at times moving, often entertaining and exuberantly told...
Hudson's Bay/WeWork Deal Might Point to a Solution for Struggling Department Stores
National Real Estate Investor (Online Exclusive); November 2, 2017; 700+ words
...currently occupied by old world department stores. WeWork will move its corporate...shockwaves to come Urban flagship department stores are increasingly scarce. The...opening by about one year. Department stores located in the heart of gateway...
Tucson's Department Stores Ruled the Roost before Online Options
AZ Daily Star; October 7, 2017; 257 words
Ah, the memories of mothers moving through the department stores with kids in tow. Today's click-shopping eliminates the drudgery for kids but is also changing city landscapes.In Tucson...
Research and Markets Adds Report: Global Department Stores & Other General Merchandise Stores Market Briefing 2017
Entertainment Close-up; July 14, 2017; 625 words
...the addition of the "Global Department Stores & Other General highlights include: Department Stores & Other General Merchandise...they need to assess the global department stores & other general merchandise...

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