SIC 5311 Department Stores


SIC 5311This category includes retail stores carrying a general line of apparel, such as suits, coats, dresses, and furnishings; home furnishings, such as furniture, floor coverings, curtains, draperies, linens, and major household appliances; and housewares, such as table and kitchen appliances, dishes, and utensils. These stores must carry men's and women's apparel and either major household appliances or other home furnishings. These stores have 50 or more employees.Establishments that sell a similar range of merchandise with less than 50 employees are classified in SIC 5399: Miscellaneous General Merchandise Stores. Establishments that do not carry these general lines of merchandise are classified according to their primary activity.NAICS CODE(S)452110Department StoresThe apparel, home furnishings, and housewares sold in department stores are normally arranged in separate sections or departments with accounting on a departmentalized basis. The departments and functions are integrated under a single management. The stores usually provide their own charge accounts, deliver merchandise, and maintain open stocks.INDUSTRY SNAPSHOTPart of the early allure of department stores was their atmosphere and decor, making the shopping experience a form of entertainment. At one time, these stores were the fashion monitors of the day and led the way with new trends in retailing. They were the first to provide consumer credit and to create mass-produced clothing, and they became the home for national fashion designers. They also were influential in the development of many American holiday traditions still celebrated today.By the early 2000s, department stores had lost their cutting-edge appeal to specialty shops and brand-specific stores that could move in and out of fashion trends quicker and more efficiently than departments stores. Department stores were also steadily losing customers to big discounters, especially Wal-Mart and Target, as well as to specialty retailers. During the early 2000s, department stores' market share was steadily eroding, and management teams were scrabbling to reinvent their stores to attract and retain new customers. By 2005, several mergers and acquisitions, such as the merger of Sears and Kmart and the acquisition of May Department Stores by rival Federated, as well as an industry re-focus on niche marketing and the destination shopping experiences, was set to revive the struggling industry.Most operations began as a single store located within a downtown district. When customers moved to the suburbs, so did the department stores, and soon branch outlets appeared throughout the country. Ownership of most department stores reverted to publicly held conglomerates. Many of these companies also owned or held interest in discount retailers or general merchandisers.ORGANIZATION AND STRUCTUREDepartment stores, along with other retailers, were quick to embrace advanced computer technology. The ability to centralize operations, have a complete and up-to-date status of inventory, and get an exact reading of items purchased are but a few examples of information that can be generated by computerized point-of-sale systems. Computers also allowed retailers to reduce paperwork and lead time in updating stock.The use of computer technology has moved from a luxury to a necessity in order for any retailer to survive in the competitive market characterizing the early 2000s. Included in this technology is Internet retailing. In Chain Store Age, Stephen Finn, an Ernst & Young partner, commented that "For sure, the Internet is changing how retailers will distribute their goods and services and interact with customers." The department store sector of the retail industry is taking this issue seriously, with Internet sales projected to increase to more than $40 billion by 2002. For example, Federated Department Stores bought Fingerhut Companies Inc., a catalog retailer, in spring of 1999 in a multi-billion dollar deal. The purchase was expected to ease Federated into a multi-distribution platform on which it could handle Internet sales, warehousing, and shipping.Retail establishments primarily selling merchandise for personal or household consumption played a major role in the U.S. economy by providing nearly 20 percent of all jobs in the private sector in 1998. Department stores had always held a leadership position among "traditional" retailers. However with discount mass merchandisers chipping away at market share, department stores saw increasing competition. The very definition of department stores changed within the industry as well, as many stores eliminated some individual departments. The new definition covered the traditional department stores, and included the "multi-department soft goods stores with a fashion orientation, full-markup policy, and operating in stores large enough to be a shopping center anchor," Penny Gill stated in Stores. Such stores included Lord & Taylor, Neiman-Marcus, and Saks Fifth Avenue.Changes in how merchants sold products and in how consumers shopped led to the creation of a new division of retailers—discount mass merchandisers. This category included superstores and price clubs, which cut into the market share of traditional retailers. Also known as off-price retailers, these stores featured a specialized merchandise line at discount prices. Superstores were large retail establishments offering discount prices on a limited product line with extensive complementary merchandise. Examples of superstores included Toys 'R' Us and Wal-Mart. Price clubs were a new type of superstore with more retail floor space and a more extensive line of merchandise at more deeply discounted prices.BACKGROUND AND DEVELOPMENTThe department store became one of the most durable creations of modern American life. Created in the heart of emerging business districts, department stores gradually became part of the landscape. The first department stores opened as early as 1846 in New York City. Although they primarily catered to the city's elite, early merchants also wanted to make themselves accessible to women of all classes. So instead of keeping goods behind the counter, they openly displayed merchandise on the floor to encourage browsing.Stores with elaborate decor and fancy window displays created a new variety of entertainment for the masses. Even if people could not afford to buy the merchandise, they still came to the department store to peer in the windows to see what they might attain someday. Traditional department stores sold "soft goods," such as apparel and linens, as well as "hard goods," including furniture, appliances, and housewares. The now defunct "notions aisle"—the place for buttonhooks, thread, sewing needles, linens, laces, and silks—was the original foundation of the department store. Notions first were sold by peddlers, who traveled on foot through the rural South and Midwest. Eventually these peddlers obtained a horse and buggy and then graduated to a small storefront, the prototype department store.Another innovation that emerged in the late nineteenth century was the budget floor. Filene's obtained legendary status with its Automatic Bargain Basement—selling cashmeres salvaged from a fire at Neiman-Marcus and Schiaparelli and Chanel gowns evacuated from Paris showrooms at the start of World War II. Credit began in 1911, when Sears Roebuck offered payment plans to farmers for large mail-order purchases. By the 1920s, "layaway" installment plans were common. The introduction of department store charge plates encouraged customer loyalty since that was the only form of consumer credit available at the time.From the earliest days, merchants catered to women. By 1915, nearly 90 percent of all department store customers were female. Women also began to take the place of men on the selling floor, offering fashion advice and fittings.Department stores were considered a fantasyland for toy vendors and children alike. Stores became famous for elaborate Christmas decor. No one knows exactly when Santa Claus began to show up on the scene, but in 1939, Montgomery Ward started to give away a book featuring a character first called Rollo, then Reginald, and finally Rudolph, a reindeer with a red nose. Gene Autry recorded Rudolph's signature song in 1949, and the famous reindeer became a Christmas icon.Department store managers also influenced other major American holidays. In the past, Thanksgiving was held on the last Thursday in November. In 1939, the holiday fell on the 30th, leaving only 24 days for Christmas shopping. Ohio merchant Fred Lazarus Jr. led a campaign to move the holiday to the fourth Thursday in November. President Franklin D. Roosevelt complied, and Thanksgiving has remained...

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