Department stores want younger shoppers

Department stores are aging — and so are their customers.

For over a century, the stores won over multiple generations with a promise to sell shoppers a wide variety of everything. For many Millennial and Gen Z consumers, that hasn’t been enough — especially as they discover items on social media and specialty retailers, big-box stores and online players steal away sales.

Department stores like Macy’s, Kohl’s and Nordstrom face an existential crisis, as they try to persuade investors to bet on their futures while sales slow and their core customers age. Harsh scrutiny from Wall Street has contributed to a fresh attempt by Nordstrom to take the company private, and a bid by activist investors to take over Macy’s and turn it into a private company. Kohl’s, too, has been the target of activist investors in the past few years.

Oliver Chen, a retail analyst at TD Cowen, said attracting younger customers has become more urgent, since the retailers have “lost so much ground already.”

“When you’re a department store, you need to — and you should — be catering to younger and older,” he said.

Customer data illustrates the challenge for the retailers: At Kohl’s, 40% of customers are Baby Boomers, according to Numerator, a market research firm that tracks retail trends and sales patterns with a panel of 150,000 U.S. consumers that’s balanced to represent the population. At Macy’s, more than a third of customers — 36% — are Boomers. (Macy’s data includes just its namesake stores and website, not Bloomingdale’s and beauty chain Bluemercury.)

Baby Boomers are age 60 or older, according to Numerator’s definition. The firm defines Gen X as between ages 43 and 59. Numerator puts Millennials in the age 29 to 42 range, and Gen Z between 18 and 28, since it only collects data from consumers 18 or older.

Nordstrom is the only one of the three that has a larger base of Millennial and Gen X shoppers than Baby Boomers, with Boomers accounting for 25% of its customer base. Its customer data includes both its namesake stores and its off-price retail chain, Nordstrom Rack, which has been known to draw in younger, fashion-forward customers hunting for deals.

All three department stores have announced plans to woo new customers — including younger ones. Yet they have shared weak outlooks for the fiscal year, calling for little, if any, year-over-year sales growth.

Chen said the retailers are paying more attention to the problem, since Macy’s and Kohl’s both have new CEOs and all three are trying to improve their private brands. The lines can help a retailer stand out because they are exclusive and often priced lower than national brands.

Aging customers isn’t department stores’ only hurdle. The chains, like other retailers, have struggled with foot traffic and sales as consumers spend less on clothing, bedding and other discretionary items while more of their money goes toward everyday items because of…