Report: Department Stores Not Meeting Consumer Needs

San Francisco Consumers continued a six-year trend of steering away from department stores during the holiday season, but the struggling economy was not entirely responsible, according to the Ninth Annual National Shopping Behavior Study.

The study found that some department stores are not meeting consumer needs, including having desired items in stock, fair everyday pricing, easy return policies and helpful employees.

Consumers answered questions that showed how the current economic environment affected what motivated them to shop, where they shopped and what mattered to them most when making a purchase.

While the conventional wisdom is that consumers had less to spend this holiday season, the report said that department stores’ way of doing business also has less appeal to consumers.

“It appears that it is not the department store business model that’s broken, it’s the current execution,” said John Rittenhouse, chairman of Cavallino Capital, sponsor of the study. “The issues are directly related to management not following customers’ ‘rules.’ Shopping at stores that carry overpriced branded merchandise, use hi-lo pricing, coupons and loyalty programs have limited appeal, according to consumers interviewed in the study.”

When analyzing where consumers’ spent the most money during the past six holiday shopping seasons, department stores’ share declined from 11% to 6%.

The appeal to core affluent customers is also on the decline. These customers are moving their shopping to catalogs and the Internet to find the selection they want.

The study also found that nearly 20% of consumers spent more than a year ago, while 54% reported spending less

Meanwhile, for the first time in the nine-year history of the study, the primary driver was price over selection as the reason for why customers changed the store where they purchased.