Insight Flash: CE data shows a large growth gap between Full-Line and Off-Price Department stores. Where are the differences most pronounced and who might be benefitting?

Off-price department stores have recently and meaningfully outpaced their full-line counterparts, driven by both unit expansion and same-store sales outperformance. In the most recently reported quarter, BURL (Burlington Stores), ROST (Ross Stores), and TJX (The TJX Companies) all reported comp increases of +4% or more, while DDS (Dillard’s), KSS (Kohl’s), and M (Macy’s) all saw same-store sales declines. In today’s flash, we explore where the growth disparities are most pronounced and which industries are gaining wallet share at the expense of full-line department store companies. 

CE data reveals that among all income groups, the biggest gaps between these subindustries is among those making $100k-$150k as well as cardholders in the 25-34 age bucket. Additionally, the travel sector was one of the main beneficiaries of full-line department store customer churn.

Department Stores Spend Growth by Income

While off-price department stores grew faster than full-line across every income group in the May-July period, the difference was most pronounced in the $100k-$150k cohort, suggesting that customers in the second-highest income group could be trading down to manage through inflationary pressures.

Full-Line vs Off-Price Department Store Spend Growth by Age

Drilling down into different age groups, the largest growth gap occurred in the 25-34 age cohort, driven primarily by a sharp decline in spend at full-line stores. Monitoring trends in CE transaction data could reveal whether those companies can recoup some share in that important group in the years ahead, with the goal of attracting long-term loyal customers.

Full-Line Department Store Customers Share of Wallet Change

Lapsed customer is defined as a cardholder who made at least 2 purchases at a full line department store from January 1, 2022 – July 31, 2022 and 0 purchases at a full line department store from January 1, 2023 – July 31, 2023.

Travel-related categories appear to be some of the main beneficiaries of full-line department store weakness. Looking at customers that made at least 2 transactions at a full-line department store during the first seven months of 2022 and made no purchases in the first seven months 2023, Airlines, Online Travel Agencies, and Cruises saw some of the highest gains in wallet share, with Online Retail – Broadlines, Insurance, and Media categories also in the top 10. Notably, these lapsed full-line department store shoppers already allocate a greater share of their spending to travel-related categories compared to the overall CE panel, so any further retrenchment in the department store space could translate into further gains for them.

Consumer Edge is the leading provider of alternative data for consumer spending behavior, and the only provider of global revenue signals. If you’d like to benefit from using Transact US or other products for restaurants, retail, and other industry data year-round to track trends and dynamics like these, reach out to insights@consumeredge.com.

Michael Gunther is the VP Head of Insights for the CEIC. Explore more of his insights here and follow him on LinkedIn.