By Brian Sozzi
When I think of the word special thoughts of great experiences arise. Could be memories from a family trip or that first date as a teen. What are not being viewed as special any longer by consumers are specialty retailers. Let's run down a list of potential reasons:
1. Prices are higher than most major department stores.
2. Department stores have done a significantly better job at getting the latest styles in the door more often, beating specialty retailers at their own game.
3. Department store customer service has improved. When has a half clothed male teen at Abercrombie & Fitch (ANF) guided you through the store to find a size?
4. Most specialty retailers don't offer one-stop shopping experiences. For instance, Ann Taylor (ANN) displays a limited number of shoes in its stores. The customer therefore is left to buy a dress in that store and trek to a department store in the hopes of finding a pair of pumps that match the Ann Taylor "look." Major headache. Why not consolidate trips with gas above $3.50 per gallon by visiting a department store initially, which once again are no longer stodgy places to shop and where a complete outfit could be purchased.
The allure of specialty retailers was always to buy a piece of the lifestyle, but in the process a higher price would have to be paid. Now, department stores have become larger specialty retailers, creating boutiques inside that showcase outfits that can be had for cheaper than a trip to Banana Republic. If you doubt me on this, check out the winners from second quarter earnings season: Nordstrom (JWN), Macy's (M), Kohl's (KSS), and Saks (SKS). The losers in my opinion were relegated to the specialty retail sector. Share shift is underway.
Comments from Gap (GAP) CEO Glenn Murphy:
"I would say the people who are getting the traffic right now are probably benefiting by their multiple categories that they offer and they are taking share. So that would be the department stores."