The Department Store Lure

The press on department stores over the past few years has been almost universally negative: outdated, understaffed, poorly positioned, over-priced, offline, fading into oblivion.

Customers are reportedly scathing of service levels, commentators derisive of sluggish moves online.

In this article, though, we’d like to look at what department stores do bring to the table. How are they performing as anchors and who do they attract to shopping centres?

In-centre interviews with 2,000 department store customers reveal a unique demographic profile and a valuable contribution to expenditure patterns in regional centres. Amongst regional shopping centre customers, 23% still visit Myer and 22% visit David Jones.

When comparing these customers to Directional Insights’ Regional Shopping Centre Benchmarks, we find that visitors to department stores are older, wealthier, live in smaller household sizes, and are more likely to be female, in employment, employed in managerial and professional roles, and living in SINK/ DINK households.

How do they shop?

Department store visitors are far more likely to be Leisure shoppers than the average regional shopping centre customer. They also spend a lot more time in centre. While Regional Shopping Centre customers spend on average just under 80 minutes in-centre, shopping trips by visitors to David Jones and Myer average 109 and 116 minutes respectively.

Leisure shopping, time in centre, and high household income are all predictors of higher expenditure: visitors to David Jones spend $138 in centre; those who visit Myer spend $128. Compare this to the Regional Centre average of $86 and the value of these customers begins to become clear.

And while the apparel spend of these customers is very strong, as you would expect, they exhibit a higher average spend on all commodity groups except for Food Retail – and even this sits just under the Benchmark average. Not bad for customers who are clearly focused on discretionary shopping!

That there is a trickle-down effect in this expenditure can be seen by looking at the retail services category, which includes all hair, optician, film processing, dry cleaning, and repair spending. In a good example of anchor functionality, visitors to both the major department stores spent strongly in this category, averaging between $9 and $13 more per shopping visit than Benchmark figures for all shoppers.

Cross-visitation patterns also tell a story. Of those customers visiting Myer, 27% also visited BigW, 29% visited Kmart, and 31% visited Target. Clothing stores received even greater patronage, attracting 41% of Myer customers. Sitting beyond Myer’s mid-range position, David Jones still shared strong cross-visitation with clothing, accessories and discount department stores. The strong apparel spend of department store customers, then, was not confined to the anchors.

Food catering visitation amongst department store visitors was also stronger than average, with David Jones customers particularly attracted to cafes and restaurants. Again this is related to time in centre, spending capacity and shopping mode.

Customer interviews, then, suggest that department stores are fulfilling key aspects of their anchor role. The customers they draw to centres are valuable, spending well and widely. If the grand old anchors which drove the early development of suburban Regional Centres in Australia can revive their personal fortunes, they may yet last another turn of the retail wheel.