LYCOS RETRIEVER 
May Department Stores: Markets
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After World War II, department stores began expansion into the suburbs, following the flight of their customers. By the 1950s, most department stores turned to upscale clients and merchandise, doing away with the low-end, bargain basement sales. This decision opened the way for discount operations like Kmart to enter the market. Customer loyalty quickly dissipated as the arrival of bank credit cards in the 1960s allowed consumers to shop on credit virtually anywhere. In due time, the costs of suburban expansion plus the lack of experience or interest on the part of third- or fourth-generation family members drove many department store owners to sell their operations.
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Tom Tashjian, NationsBanc managing director, notes that the sector's stores-within-a-store presentation of both their own private labels and specialty brands gives department stores a competitive advantage. "This format has been taking share from the specialty store sector, which had seen market share growth during the late 1980s and early 1990s," he says.
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[T]he departure of the shop-weary consumer continued to hurt department stores' sales. In sharp contrast to the retail heyday of the 1980s, consumers in the 1990s became thriftier. Feeling financially strained, people tried to maintain their lifestyles on a smaller budget. Since consumer confidence remained relatively low, many retailers kept markups just high enough to maintain market share. As general economic conditions improved in 1996, confidence and consumer spending increased.
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Not all players in the department store arena are growing. For example, Chicago-based Montgomery Ward, which claims a 4 percent share of the department store market, recently received approval from a U.S. bankruptcy court to close 47 of its stores in a cost cutting move, according to published reports.
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