Holiday shoppers favor department stores

Her 2-year-old daughter and a bright red shopping bag in tow, Asiya Budden emerged victorious recently from a holiday shopping excursion at Macy’s in downtown Seattle.

With an afternoon of shopping under her belt, Budden estimated that she’d saved more than $80 on children’s clothing. Her total bill: just $47.64.

“I love Macy’s,” she said. “Macy’s always has the best deals.”

Budden is in many ways typical of this year’s holiday shopper. As the gift-buying season moves into its frenzied final days, analysts say shoppers are favoring department stores such as Macy’s or JCPenney and may be less inclined toward some specialty retailers, including The Gap.

Overall, the nation's retailers got an early holiday gift as sales rose 1 percent in November, the largest amount in four months. Department stores and other general merchandise stores posted a 0.4 percent rise, a rebound after a 0.3 percent fall in October. However, sales at specialty clothing stores were unchanged in November.

This year’s shoppers appear to be relentlessly seeking out the best deal, although that may not translate into a holiday boon for discounting giant Wal-Mart. In general, however, analysts say big discounters such as Target remain a popular shopping choice.

The move toward department stores marks a turnaround from just a couple of years ago, said Michael Niemira, chief economist with the International Council of Shopping Centers.

“(2006) is really just a turning point where you saw a sector that had been struggling for a while really coming to life,” he said.

He attributes the change to a number of factors, including consolidation among department store companies, a rise in personal income, and improvements in the quality and mix of products such stores are offering.

Some experts say another reason department stores are doing better this year is that they have been aggressive about offering — and advertising — steep price cuts and special deals.

“Department stores this season are acting like discounters, rolling back items that you typically never see through the year be discounted that much,” said Kathy Grannis, spokeswoman for the National Retail Federation.

NOVEMBER SAME-STORE SALES A look at November same-store sales, or sales for stores open at least one year. — Federated Department Stores Inc.: Up 8.5 percent — Target Corp.: Up 5.9 percent — Wal-Mart Stores Inc.: Down 0.1 percent — Gap Inc.: Down 8 percent

The strategies appear to be paying off. Macy’s parent Federated Department Stores Inc. said same-store sales, or sales for stores open at least a year, rose 8.5 percent in November. The Cincinnati-based company estimates that December same-store sales will rise 5 to 8 percent over the year-ago period.

Federated spokeswoman Sharon Bateman said the company has benefited in part from a decision two years ago to group its regional stores under the Macy’s brand name. That’s allowed the company to more effectively — and inexpensively — advertise its products nationally.

This year, she said popular gift items include cashmere clothing and accessories, luggage and fashion jewelry.

In contrast to the department stores, Niemira said some specialty retailers have had a tougher time this holiday season. Gap Inc., in particular, has had trouble getting shoppers to its Gap, Old Navy and Banana Republic stores. The San Francisco retailer reported an 8 percent drop in comparable-store sales for November.

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