Departments fight back against specialty stores

As baby boomers age, Canada's department stores and mass merchants are facing a conundrum: how to zero in on the nitpicky youth demographic, without turning their backs on their core middle-aged female shopper.

As baby boomers age, Canada’s department stores and mass merchants are facing a conundrum: how to zero in on the nitpicky youth demographic, without turning their backs on their core middle-aged female shopper.

Regardless of inherent difficulties in doing so, they have to strive to connect with both groups, claims David Howell, VP at Toronto-based market research firm NPD Group Canada. That’s because while there are about 275,000 women around the age of 44 in this country, there are only 200,000 female 17-year-olds and 150,000 newborn girls.

‘When you compare them, the market is getting smaller and smaller,’ he warns. ‘While retailers need to focus on youth to ensure longevity, they also have to make sure they don’t turn their backs on the boomers right now, because the new market can’t sustain the square footage that these retailers have.’

The biggest thorn in the side of these chains has been the specialty segment – the Gaps of the world – which has been particularly alluring to younger shoppers.

According to NPD Group, department store market share in dollars for Eatons (now defunct), The Bay and Sears has plummeted in the last five years, from 25.8% in 1998 to 21.7% in 2002. Meanwhile, mass merchants Wal-Mart, Zellers and Winners have seen their collective market share remain relatively flat – it inched down from 22.7% to 22.1% for the same period. Two channels are gobbling up their losses – specialty and ‘all other outlets,’ including food, drug and sporting goods.

David Strickland, SVP of marketing at Zellers is aware of the trend and says the retailer’s current strategy is to achieve ‘specialty appeal with lower prices because that’s what moms are looking for.’

Indeed, during the busy back-to-school period, the chain promoted its clothing brand Request as an edgy option for tweens, via a new TV spot and Web initiative, both designed by Toronto-based AOR Leo Burnett.

For instance, a ‘cool’ commercial supporting Request got play on specialty networks MuchMusic, YTV and Teletoon, while at the Interactive Change Room kids could mix and match fashions, plus e-mail their chosen outfits to their pals for approval.

Says Strickland: ‘The strategy is clear – make sure we have the clothing that kids think is cool. The product has to be right first, and then we tell them about it through image-based advertising, and find neat and interactive ways to get them engaged.’

Of course, many would think youth wanting to be perceived as stylish wouldn’t be caught dead in Zellers, but they’d be wrong, according to Strickland, who reports that Request is performing extremely well.

‘Despite the fact that tweens do aspire for a lot of the specialty brands, they still like the mass channel as a place to shop… because of national brands of accessories and makeup at everyday low prices. It’s not like they have an aversion to Zellers; they just have a desire for things that are cool and fashionable.’

A 28-page ‘New Clothes’ kids’ fashion insert, which ran in publications like Chatelaine, Today’s Parent, Canadian Living and Coup de Pouce, rounded out the back-to-school effort. The CD-shaped booklet has a retro feel; within its pages are images of children having a gay ol’ time in Zellers attire. On the back of the insert is a coupon for 20,000 bonus points for mom’s HBC card, in order to drive traffic.

‘We’re still measuring, but certainly we’ve had success with it, as people have brought thousands [of the booklets] to the store,’ says Strickland. ‘If nothing else, it was trying to change perception around our styles.’

Most kids love animals and Zellers is also reaching out to tykes through a sponsored area at the Toronto Zoo. After the retailer’s media department did an analysis on the property, Zellers Splash Island got the green light because it was a great fit from a ‘mom-store standpoint,’ says Strickland. ‘Eighty per cent of the people [who go to the zoo] are local and they want a family experience. It’s all positive in terms of imagery and values.’ In the future, the venue may be tied into other Zellers properties, such as the HBC loyalty program.

Zellers foe Wal-Mart Canada is also beckoning to the tween market; earlier this year, it imported its Mary-Kate and Ashley apparel brand into Canada for girls 6-14. (The line is named for the Olsen twins who star in the TV series So Little Time and also contributed to the animated show Mary-Kate and Ashley in Action!)

‘Wal-Mart has been injecting more fashion lately,’ observes NPD’s Howell, who believes that, in the case of both rivals, the strategies are sound.

‘Zellers was more fashion forward than Wal-Mart for some time, but now Wal-Mart is starting to show signs of life. You get to that tween that really relates to the Olsen girls and that draws in the young customer.’ (Interestingly, the mass merchant has also recently instituted gas stations at two Canadian stores to ‘provide a one-stop shopping experience,’ according to spokesperson Andrew Pelletier.)

Not to be outdone, Sears showcased ‘c*me,’ a new cosmetics collection from Vancouver-based manufacturer Caboodles in a recent back-to-school flyer, which promised a free makeup bag with the purchase of any two products.

The glittery makeup, contained in nifty, transparent packaging, is for 12-21s, but Vincent Power, Sears’ director of corporate communications, says tweens would pick it up as well. ‘It allows a customer to start at Sears, then she can graduate and see the rest of what we have to offer,’ he says.

Of course, Sears’ older consumers aren’t being ignored; a new campaign, created by Toronto-based BBDO Canada, promotes various private label brands, such as Jessica, Nevada and Kenmore, and carries the tagline ‘Put a little Sears in your life.’ One spot, for women’s clothing label Jessica, depicts a woman who literally stops traffic when she crosses the street, presumably because she is so well-groomed.

Power says that the retailer is putting more emphasis on broadcast in 2003 – 30% of the chain’s ad budget will be spent on TV and radio, compared to 10% on broadcast in 2001 – in an attempt to ‘brand Sears and brand its private labels.’

‘We are trying to make a point of differentiation between us and our competitors,’ he says. ‘Our apparel brands Jessica and Nevada have increased in customer recognition over the last few years.’

Sears’ travel service has also been more heavily endorsed lately, even in TV advertising. ‘We just wanted added exposure,’ explains Power. ‘The target is a woman with a family who likes to shop at moderate prices – the same as the Sears shopper.’

Be that as it may, NPD’s Howell also suspects Sears’ current emphasis on distinct offerings, including travel and private label brands, is due to the fact that it has been moving furniture and appliances out of its core locations. Ditto for The Bay. In the case of Sears, for instance, there are currently 40-odd stand-alone Sears Furniture, Appliance and Home Improvement stores with more on the way, while The Bay has about 38 Home Outfitters units to date.

‘That has probably impacted store traffic,’ explains Howell. ‘Both of them have freestanding furniture stores. Now there’s a necessity to replace that strategy.’

The Bay, he adds, has done an aggressive job of picking up exclusive lines; in May the firm announced it was ushering in eight private brands from New York-based Federated Department Stores, including INC and Style & Co. for women.

INC is currently showcased in shop-in-shop formats at nine Bay locations, while Style & Co. will be displayed in a similar manner this month in 35 stores. ‘It allows us to offer something different,’ says VP marketing Gord Sonnenberg. ‘We’ve bought these brands from Federated, because they have a great resource base to develop product. It’s styled right, it’s well priced and we’re pleased to offer it.’

Displaying the brands in their own in-store boutiques is part of The Bay’s repositioning tactics to promote ‘ease of shopping,’ he adds. In August, the company also unveiled renovations at its Montreal St. Catherine St. flagship, including a larger cosmetic and jewelry department, complete with nail bar, a top-20 fragrance wall and plasma TVs delivering messages about ‘what’s new in the cosmetics and fragrance world.’

Part of the reason for the overhaul is that The Bay is now competing against Les Ailes de La Mode in Montreal; the Boucherville, Que.-based chain landed in the nearby Eatons space this summer and is a different standard of department store, with a daycare, theatre and other services that are above-and-beyond the norm.

‘We wanted to put our best foot forward in that marketplace,’ admits Sonnenberg, adding that some of the elements, like central cash and centralized fitting rooms, have been rolled out across the country.

As for marketing, ‘Everyone knew that something was happening at The Bay,’ because of a campaign featuring its traditional, primary colours on light-boxes in Montreal’s Metro system and on banners outside of the store, as well as newspaper advertising announcing the changes. As well, 30 events were held at the flagship to draw visitors, such as appearances by Olympic figure skating gold medallists Jamie Sale and David Pelletier.

For his part, NPD’s Howell believes the renovations are a step in the right direction, but says department stores still need to invest heavily in customer service if they plan to catch the specialty sector. Simply put, ‘People are looking for warm bodies in the store that can help them,’ he says.