Department Stores

Led by Nordstrom’s double-digit advance in comps during the first quarter of this year, department store sales are showing improvement. For the spring, U.S. department stores as a group saw same-store sales rise 5.3 percent, best among all retail segments, according to research by Thomson Reuters.

Still, Macy’s CEO Terry Lundgren doesn’t foresee a big increase in consumer spending propping up sales in this segment in 2010. “I’m not counting on everyone winning,” he told investors. “It’s about taking market share from others.”

Nordstrom’s momentum carried over from the end of last year, when its focus on proprietary and exclusive merchandise that command full markons helped earnings double. The company is “very encouraged by our business and how we’ve adapted to the changing environment,” co-president Blake Nordstrom said at the time, adding that “our business is in a stronger position than it was going into the recession.”

Nordstrom isn’t the only player exploiting the appeal of exclusive merchandise. Macy’s signed deals with Sean “P. Diddy” Combs and Madonna, as well as designers Ellen Tracy and Tommy Hilfiger. This fall, J.C. Penney will unveil its first exclusive collection of apparel by Liz Claiborne, while Kohl’s boasts Dana Buchman and Simply Vera by Vera Wang. Dillard’s exclusives include Reba from country singer and TV star Reba McEntire.

Women’s apparel is not the sole domain of exclusives, which can extend to menswear, children’s clothing and housewares, home décor and furniture. But it is apparel, primarily women’s apparel, that makes or breaks most department stores’ bottom line, and it is here where private and exclusive brands have increased share of sales from 8 to 41 percent over the last five years, according to market research firm NPD.