Six Retailers Capture Nine of 10Apparel Dollars in Department Store Sales

In 1998, six department stores controlled90 percent of all apparel sales in this channel, up from 66 percent in 1995, andconsolidation in the U.S. retail market has made the nation’s largest retailers morepowerful than ever before, according to the findings of a new report from the NPD Group.While this merger mania raises the stakes for manufacturers – which now must deal with asmaller retail base wielding more clout – it should help retailers prepare to support thecontinued growth of on-line selling.

The study reports that the top sixdepartment stores, not in order of size, are now Belk Stores, Dayton Hudson DSD,Dillard’s/Mercantile Stores Co. Inc., Federated Department Stores Inc., May Co. and Sak’sInc. And the big are getting bigger across other retail channels as well. In fact, thenation’s largest purveyors of apparel, including national chains, mass merchants anddepartment stores, have increased their market share by more than one-third since 1990. Inthat year, the top 10 names in apparel retail commanded 35 percent of industry sales,while in 1998, they captured 47 percent.

Commenting on the trend, Kathaleen Mercer,vice president of NPD, explained: “With decelerating growth in apparel sales,opportunities for building business are limited. And because we are already overstored,with one-third more retail space than a decade ago – adding doors isn’t the way to go.Therefore, the strategy of choice has been to buy out competitors.”

Greater market share, expanded size andincreased capital also could help traditional brick-and-mortar retailers gear up for whatpromises to be stiff competition in the increasingly important world of the Internet, aswell as make it easier to establish – and maintain – a presence in cyberspace. (NPDestimates that as much as $13 billion or more of apparel could be sold on-line by 2003.)

However, with fewer retailers controllingmerchandising, the potential for greater uniformity in stores increases. On the otherhand, the report argues that retailers could use their new muscle to take more risks, suchas experimenting with fashion-forward styles and adding more excitement to the shoppingexperience.

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