Department store perks rival some online retailers

Department stores may be falling out of favor with today’s younger consumers, but there’s a reason older shoppers keep coming back.

Whether it’s a more generous return policy, promotional events or deep discounts, “knowing the benefits your store offers creates a better experience,” said Marshall Cohen, chief retail advisor at market research firm Circana.

For example, if a salesperson doesn’t have the item you want in stock, they’ll often get it for you and ship it to you for free, Cohen said. “That’s a huge perk,” Cohen said.

Despite this, he says, the psychology of young shoppers is that they “don’t want to shop where their mothers shop.”

surely, Macy’s For example, new data from Consumer Edge shows that the majority of customers at the company and its subsidiary Bloomingdale’s are over 45 years old.

According to a March Capital One report, baby boomers are much more likely than Gen Z, or those born between 1997 and 2012, to say that shopping in-store is their most common purchasing method.

“The younger generation grew up online,” Cohen said. “The challenge for department stores is to break out of that paradigm.”

TD Cowen retail analyst Oliver Chen added that social media plays a big role in how young consumers buy. This is a trend he calls the “TikTokization of retail.”

But while shopping primarily online may seem fast and convenient, it comes with extra hassle.

This may mean relying on a practice known as “bracket trading,” or ordering multiple items in different sizes or colors with the intention of keeping some and returning others, making each transaction more time-consuming and costly.

As online retailers seek to curb returns, most have introduced stricter policies, including charging restocking fees and restocking fees, according to a 2023 report from returns management company Happy Returns.

But some department stores still stick to their older, more generous policies, such as extended return periods and free shipping, and they’re paying big dividends when it comes to building brand loyalty.

Edgar Dvorsky, founder of ConsumerWorld.org, says, “There are some savings opportunities that you can get when you shop in person that you probably won’t get online.”

Bloomingdale’s has shortened its return period to 30 days from 90 days last year, but shoppers appreciate other perks, said Nancy Quinn, a personal stylist at the New York City flagship store.

“The biggest thing that Bloomingdale’s offers is customer service, and that’s really where we shine,” Quinn said.

Quinn meets customers, mostly women between the ages of 45 and 70, by appointment and helps them find clothes for everyday or special occasions. She said she often waives shipping fees or sends purchases via Messenger to her Manhattan location for free. If the customer was local and had time constraints, they would sometimes hand deliver the product as a free service.

“These are things we try to do to let people know how much we appreciate this business,” Quinn said. Many high-end department stores have personal stylists working on a contract basis, and their assistance is free to customers.

Quinn reservations fill up especially quickly when Bloomingdale’s holds promotional events such as “Friends and Family,” and many brands typically offer a 25% discount.

Still, Ms. Quinn says younger customers are less likely to shop with her.

“It’s a generational issue,” Quinn said. “Many young people are shopping online.” Or, “The women I’m meeting are ready to invest in themselves and their wardrobes.”

It’s true that U.S. department stores have been in a recession for years. Retailers like J.C. Penney and Macy’s are struggling to compete with online retailers and smaller brick-and-mortar stores that are better able to adapt to changing consumer tastes.

“Because the Internet levels the playing field, the new, smaller brands that are emerging have just as much marketing power,” said Circana’s Cohen.

But department stores aren’t dead yet.

Last year, Macy’s announced it would close some of its namesake stores and open more Bloomingdale’s stores. The company’s quarterly report said Bloomingdale’s performed well because of its focus on luxury brands that appeal to high-income shoppers.

TD Cowen’s Mr. Chen said “select luxury stores” are outperforming the competition, in part because “low- and middle-income consumers are disproportionately negatively impacted by rising prices for essential goods.”

Macy’s CEO Tony Spring told CNBC in an interview last month that despite concerns about tariffs, consumers remain resilient and continue to spend on new items and fashion.

The challenge for department stores is to attract shoppers, even as inventory and prices become increasingly difficult to manage, Chen said. “Ironically, everyone loves stores and humans want connection.”

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