Department stores make their comeback, with style

Upgraded fashions are catching the eye of department-store shoppers.
NEW YORK (AP) -- That stylish atmosphere that once defined America's department stores is making a comeback.
Racks of marked-down clothes that turned the big stores into Wal-Mart imitators are disappearing, replaced by trendier styles and new affordable fashions from designers like Calvin Klein and Michael Kors. Stores that looked worn and tired are brighter and less cluttered.
The changes are evident at Lord & amp; Taylor's flagship Manhattan store, where women's clothes are displayed in a more airy, open layout. There are fewer "20 percent off" signs. And there's a new restaurant run by well-known New York chef Larry Forgione.
A similar transformation at retailers across the country has given the department store industry -- which includes merchants such as Bloomingdale's and Nordstrom -- its best sales performance since 1997, a relief after several years of declining business.
"They seem to be turning a corner," said Carl Steidtmann, chief economist at Deloitte Research, who only a year ago was pessimistic about the department store sector's prospects.
Part of strategy
A big part of the retailers' strategy has been differentiating themselves from one another -- shoppers are less likely this season to find the same Liz Claiborne or Tommy Hilfiger fashions in every department store in every mall. And stores are relying more on their own exclusive private labels.
The merchants are also getting help from some external factors, including consumers' renewed interest in the dressy clothes that department stores have long been known for, and an improving job market that's made the retailers' core middle-class customers feel better about shopping.
Still, as Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates, cautions, "it's too premature to declare victory." He said department stores need to maintain their sales momentum through the fourth quarter.
The big stores have struggled in recent years because they effectively abandoned their market niche. They tried to compete with discounters on price, and ended up losing their fashionable image. They also moved away from unique, stylish clothes and brought in merchandise that was often identical to what their competitors sold. Service and store appearance became less of a priority.
Still some problems
Candace Corlette, a principal at the retail consultancy WSL Strategic Ltd., thinks department stores are doing better at creating a distinctive fashion look. "That's raising customers' expectations but when you get into the stores, there are more closed registers than open, and sales help is scarce," she said.
Part of the problem, Corlette said, is the retailers are focusing on improving their flagship stores, but "the rest of the country is experiencing old mall stores."
For the first three months of the year, the department store sector averaged a sales increase of 5.4 percent, compared with a 4.9 percent decline in the year-ago period, according to the International Council of Shopping Centers-UBS sales tally.
The tally is based on what the industry calls same-store sales, or sales open at least a year. They're considered the best indicator of a retailer's health.
That was the best performance for department stores since the December 1996 to February 1997 period, which averaged a 9.2-percent gain, according to Michael P. Niemira, chief economist at the International Council of Shopping Centers.