It's not exactly breaking news that off-price merchants are cutting into the sales of department stores. The likes of Marshalls, T.J. Maxx and Ross Stores have found a niche serving consumers who want the same items sold in department stores, but not at the prices charged by those businesses.
"Right now, customers are looking for name brands at a value price and these retailers have what the customer wants," Mark Montagna, retail analyst at Avondale Partners, told Dow Jones Newswires.
"Department stores are disadvantaged due to the focus on the domestic consumer, their relative maturity, the promotional models which they have propagated and the continuing pressure of share shifts to other channels," Macquarie analyst Liz Dunn told MarketWatch.
Department stores, recognizing the attraction these chains have with consumers, have responded, in part, with own-name outlets (e.g., Nordstrom Rack) as a means of moving excess merchandise while trying to keep shoppers from going elsewhere for deals.
While some point to J.C. Penney, Sears and others to promote the idea that department stores are going the way of the dinosaur, there are other examples such as Macy's and Nordstrom that show nimble, consumer-centric operators are able to thrive despite the off-pricers.
How effectively have department stores responded to competition from off-price chains?