Y COVER STOR DEPARTMENTDEPARTMENT STORESSTORES BY TIMOTHY DENMAN RIS’ unIQUE ANALYSIS REVEALS VALUE-BASED DEPARTMENT STORES NOW DOMINate THE SEGMENT WITH TWO BIG EXCEPTIONS RIS News unveils the results of its Top 10 Department Stores ranking, a deeply researched list compiled through the examination of seven hard-data metrics that span customer loyalty, so- cial initiatives, employee satisfaction, CEO rating, and financial performance. As the number of publically-owned department store chains has shrunk over the years, those left standing have had to redefine the category to keep pace with the evolving retail landscape. Half of the department stores in the Top 10 are committed to offering name brand merchandise at dis- counted prices. The performance of the value-conscious retailers is not surprising, but it is certainly interesting. During the economic downturn shoppers flocked to the off-pricers in search of bargain pricing and stayed loyal to the brands even as the economic landscape improved — creating a sea change in the segment. The Top 10 Department Stores ranking is the second in a series of Top 10 retailer lists RIS News will publish throughout 2014 — next up is apparel retailers in the summer and e-tailers in the fall. Congratulations to all of the members of the Top 10 Department Stores ranking. SPONSORED BY: RIS NEWS.COM M AY / J U N E 2014 17 13.Top10_ris0514_v4.indd 1 5/13/14 9:47 AM TOP 10 DEPARTMENT STORES TJX Companies years, Nordstrom has been on a mission to improve its corporate culture and further employee engagement. Executives from Nordstrom visited The off-price department store chain finished in first place more than 40 companies that are known for fostering positive employee in three categories — profit change, W-Score and social relationships to uncover what works and what doesn’t, and invited its strength — helping propel it to the top spot. TJX Compa- own employees to tour Nordstrom headquarters to provide feedback on nies operates the T.J.Maxx, Marshalls, HomeGoods, Sierra Trading Post ways to improve the company. The retailer made significant changes to and HomeSense brands and is universally praised for its well-run orga- its operations, founding an innovation lab, a customer experience center, nizational structure and smart capital allocation. Over its 36-year his- and a tech talent recruitment initiative — powering the brand to number tory, TJX has only endured one year of comparable store sales decline, one finishes in both CEO rating and employee satisfaction. and enjoyed double-digit increases this past year in all three financial metrics examined: stock price, revenue and profit. TJX was late to the online game, acquiring e-tailer Sierra Trading Post in December 2012 Macy’s and launching T.J.Maxx e-commerce in 2013. Despite its late arrival, TJX has a solid online presence, finishing in first place in the social Macy’s is a leader in the department store space and its score metric thanks in no small part to the ability of shoppers to Like, inclusion in the top five is no surprise. What is surprising Tweet and Pin their favorite merchandise. is that the trailblazer of the omnichannel revolution didn’t stand out in any particular category, earning its number four ranking through middle-of-the-road performance in five of the seven metrics ex- Stein Mart amined — the retailer did turn in fourth place finishes in both stock price and social strength. As other American institutions like Sears and Like TJX in the top spot, second-place finisher Stein Mart JCPenney struggle to keep pace in the modern retail environment, Ma- is an off-price department store. But unlike the treasure- cy’s has thrived. Stock price increased nearly 30% year-over-year and hunt like adventure at TJX’s brands, Stein Mart provides its has produced new lifetime highs driven by steady earnings growth and a customers with a more refined in-store experience. Custom- commitment to continuous innovation. Macy’s builds and maintains its ers converged on the chain during the economic crisis in relationship with customers through a mix of traditional and new-age search of lower prices, but got hooked on the brand and never community building efforts including sponsoring the annual Thanksgiv- left — confirmed by Stein Mart’s second-place finish in the ing Day Parade in New York City and producing a web-based reality show meeting-customer expectations metric, W-Score. It is not that prominently promotes the brand. just shoppers that are high on the Jacksonville-based depart- ment store chain — investors are downright giddy over Stein Mart’s amazing 71.9% increase in share price year-over- Stage Stores year. Despite being publically traded, the retailer exudes a family atmosphere that starts at the top with chairman and The retailer operates five brands: Stage Stores, Bealls, CEO Jay Stein, the grandson of the founder. The Stein’s Goody’s, Palais Royal and Peebles. Its 850 stores, like have run the business for over 100 years and have built a many of the retailers in this ranking, offers nationally rec- strong relationship with their employees — evidenced by ognized brands at moderate prices. The department store a second place finish in employee CEO approval and a chain suffered through a disappointing holiday shopping season and saw third place finish in overall employee satisfaction. same store comps fall by 3.4% year-over-year. Sluggish sales helped con- tribute to a 5.1% dip in stock price, but solid guidance for 2014 includ- ing comp projections in the plus 2% range helped push share prices Nordstrom back into the mid-20s. Long-term investors have little to complain about considering shares have increased four-fold over the past five years, and Nordstrom scored in the lower third in all three could continue to rise should the retailer meet its 2014 projections. De- financial metrics — stock price, revenue and profit spite slumping stock performance, the company’s other financial bench- — but was a leader in the other four categories marks are solid and the chain continues to invest in its infrastructure, examined helping propel the department store to embarking on a multiyear POS rollout that will be introduced at 800 a third place ranking. For the past two and a half stores and over 4,300 checkout lanes. 18 MAY/JUNE 2014 RIS NEWS.COM 13.Top10_ris0514_v4.indd 2 5/13/14 9:48 AM STOCK PRICE REVENUE PROFIT GLASSDOOR CHANGE CHANGE CHANGE SOCIAL GLASSDOOR EMPLOYEE RANK SPECIALTY RETAILER W-SCORE FINAL SCORE YEAR-OVER- YEAR-OVER- YEAR-OVER- STRENGTH CEO RATING SATISFAC- YEAR YEAR YEAR TION RATING 1 TJX Companies 29.3% 11.6% 16.1% 88.7% 77.9 74 2.9 21 2 Stein Mart 71.9% 4.7% 11.7% 77.7% 75.4 86 3.1 27 3 Nordstrom 14.7% 3.4% 2.2% 73.7% 76.9 89 3.5 39 4 Macy's 29.8% 4.9% 4.5% 70.9% 76.3 65 2.9 46 5 Stage Stores -5.1% 8.9% 12.0% 57.3% 74.6 67 3.1 48 6 Burlington Stores* 18.7% 7.1% 8.0% 77.5% 75.2 49 2.6 53 7 Canadian Tire 44.0% 3.1% 6.4% 39.9% 61.3 86 3.3 55 8 Sears Canada 66.8% -7.2% -6.9% 76.9% 75.7 60 2.9 58 9 Ross Stores 19.6% 13.3% 14.5% 62.6% 43.3 48 2.6 62 10 Belk 27.1% 7.0% 6.6% 44.3% 65.8 48 2.8 69 * Stock price examained from October 3, 2013 (IPO date) to March 31, 2014 of Canadians shop the chain at least once a year, the retailer finished in Burlington Stores last place in W-Score and second to last place in social strength indicat- ing an inability to fully engage with its broad customer base. The retailer The retailer has evolved from strictly an outerwear mer- might struggle to build an emotional connection with shoppers, but it chant to a one-stop shopping destination, and prides it- excels at creating a rewarding work environment. It finished in second self on name-brand merchandise marked to 70% below place in both CEO rating and employee satisfaction thanks in part to its the competition. Customers count on a large assortment health and wellness programs, career advancement initiatives and com- of designer brands, and Burlington routinely meets those expectations petitive salaries. coming in third place in the W-Score rankings. The once-troubled de- partment store chain has pulled itself out of the post-recession mire, with sales on the rise and a $200-plus million IPO under its belt. The Sears Canada off-price department store chain went public in October 2013 and share prices hovered near opening day pricing with little activity until jumping Sears Canada, like big brother Sears Holding Company, has nearly 20% in mid-March on the heels of encouraging 4% comp store been struggling. Revenue and profits are in the red prompting increases in Q4. store closings and the sale of prime real estate holdings over the past year. The real estate sell off has been a boom for sharehold- Canadian Tire ers as profits have been redistributed in the form of nearly $5 dividends, which contributed to a surge in stock price — a double win. Although a As its name implies, Canadian Tire started off as an au- great short-term way to infuse cash into the struggling enterprise, selling tomotive parts, accessories and service retailer. Over its off assets is not a sustainable business plan.