Strong Showing for Retail Stores in September

A number of department stores posted strong gains for the month of September, outperforming other retails segments.

For example, Neiman Marcus reported that its same store sales rose 4.7 percent during the month against the same period last year. Jewelry, women’s shoes, handbags and men’s clothing saw big sales gains. Stores in California, Texas, the south-east and New York were the top performing for the period.

Saks reported a 6.5 per cent increase in same store sales, highlighting strength in a similarly broad range of categories. Nordstrom said its same store sales rose 7.5 percent and that transactions at its main stores had increased for the 13th month in a row.

Mid-market retailers also did well for the month. Macy’s same store sale rose 4.8 percent, JC Penney was up 5.1 percent and Kohl’s increased 3 percent in September.

Teen and youth retailers also delivered a generally strong month, with same store sales at Abercrombie & Fitch up 13 percent.

Survey: Ultra-Affluent Consumers are Spending Less at Luxe Department Stores

Barneys New York flagship store

Barneys New York, Nordstrom, and Bergdorf Goodman emerged as the top three luxury department store destinations among those with annual incomes of at least $250,000, according to a recent survey by Unity Marketing. However, a look back at the previous year shows ups and downs among ultra-affluent patronage of these retailers:

* Barneys New York, which currently attracts some 22 percent of ultra-affluent consumers, has weathered two quarters in the past year when patronage dipped as low as 16 percent. 

* Nordstrom ranks as the second most popular destination, however, its share of purchase among ultra-affluents dropped by more than 5 percentage points from the fourth quarter 2010 to first quarter 2011. 

In fact, among the seven leading luxury department stores included in Unity Marketing's luxury tracking survey, only one—Saks Fifth Avenue—captured a larger share of ultra-affluent shoppers this quarter as compared with last quarter, according to the survey titled, “The Luxury Report 2011: Ultimate Guide to the Luxury Consumer Market.”

Luxe department store patronage among ultra-affluents is down after peaking in third quarter 2010. The survey from the Stevens, Pa.-based luxury market research firm defines ultra affluents as those with annual household incomes of $250,000 and above, the wealthiest 2 percent of U.S. households who spend the most in the consumer economy.

Even more striking is the decline in the percentage of ultra-affluents shopping in these luxe department stores overall, said Pam Danziger, Unity Marketing president. While the percentage of ultra-affluents shopping in luxury department stores peaked at nearly 75 percent in the third quarter 2010, it has declined since, leveling off at about 70 percent. She says that relatively small declines in patronage on a percentage basis translate into big drops across the market. Regardless of ultra-affluents' favorite luxe department stores, it is clear that nearly a third of these wealthiest Americans are not passing through any of their doors each quarter.

“These top retailers—who are known for being destinations for the wealthiest customers—can serve as both a model and a cautionary tale for others who would like to operate in this space,” Danziger said. “While the popularity of each store waxes and wanes quarter-to-quarter, the overall trend is that ultra-affluents are slowing their pace of shopping in the luxury department store sector. If the downward trend among ultra-affluents continues, each of these stores may have to rethink their approach if they are to remain a compelling and attractive destination for the wealthy.”

Luxury Brands Report Strong Sales in March

Luxury retail sales continue to be the bright spot in an otherwise fragile U.S. retail sector that is balancing on a number of internal and external factors.

In March, luxury department stores reported sales increases for stores open more than a year. Among them are Saks Fifth Avenue (up 11.1 percent) Neiman Marcus (up 8.8 percent) and Nordstrom (up 5.1 percent). Victoria’s Secret, the high-end lingerie store owned by Limited Brands reported a 19 percent increase in same store sales.

Meanwhile, Limited-owned GAP, a mid-market brand, reported a same store sales drop of 9 percent. Other mid-market and low-end stores were disappointing, as well, including Target (down 5.5 percent), Dilliards (down 1 percent) and Kohl’s (down 6.5 percent).

The International Council of Shopping Centers said comparable sales at chain stores increased 2 percent in March, year-over-year. The retail organization said a late Easter impacted year-over-year sales data.

“Sales for the month of March were on the high side of our expectations despite the negative impact of the Easter-date shift and less than favorable weather conditions in parts of the country,” said Michael P. Niemira, chief economist and director of research for ICSC. “This gain, in the face of somewhat adverse factors, was encouraging and reflected a solid underlying trend in consumer demand.”

Bergdorf Goodman Earns Top Ranking Among Luxury Consumers

For the second consecutive year, Neiman Marcus' Bergdorf Goodman subsidiary earns the top ranking among eight luxury retailers in the 2011 Luxury Consumer Experience Index survey of wealthy shoppers conducted by the Luxury Institute. Respondents rated retailers on store personnel, the shopping environment and whether the overall experience resulted in complete satisfaction.

Brooks Brothers earns the second highest overall LCEI score but ranks first for completely meeting wealthy customers' needs. Nordstrom receives the third highest LCEI score, and remains the most popular luxury shopping destination, visited by 38 percent of wealthy shoppers in the past 12 months. It is also earns the highest loyalty, with 98 percent of shoppers planning to come back.

“The top-tier brands of luxury with resources are now focused on becoming customer-centric global enterprises,” says Milton Pedraza, CEO of the Luxury Institute, a New York-based market research firm specializing on high net-worth consumers, which does the LCEI survey. “The only way to achieve this is to create establish a self-reinforcing culture of service to your associates and your customers. The work is extremely hard but the financial returns can be dramatic.”

Survey participants had minimum household income of $150,000, with average income of $271,000 and average net worth of $2.4 million.