MERCHANDISING AND STRATEGY CHANGES
A glance at retailers that are restrategizing
Posted June 2004
Retailer spotlight: A new look pays off for Bon-Macy's
Buying on the cheap is popular these days. So popular, in fact, that across the nation, an array of department stores are losing market share to discount chains.
Recent efforts by Federated-owned Bon-Macy's, however, demonstrate not only the company's agility, but also the capability of a department store to rise to the challenge. The company has been adding upscale brands, expanding its private-label collection, simplifying its pricing model and installing televisions outside fitting rooms to enhance the customer's experience.
Specifics include an apparel line called H by Tommy Hilfiger (a Federated exclusive); a men's collection through its private label, INC (International Concepts); later this year, a Calvin Klein for men and Michael Kors lines for men and women; scaled back offerings of some of the brands that are sold through other retailers; advertisements that reflect actual sale prices rather than the percent a customer can save; hand-held computers for employees working in shoe sales that allow for instant inventory checks and requests for inventory to be brought to the sales floor (select locations); price scanners; clearer signs; and remodeled fitting rooms.
The changes appear to be working, since last year Bon-Macy's reported a slight increase in total sales while its parent reported a minor decline during the same period. The Seattle-based chain has also seen a decrease in returns, which is attributed to more time spent in the dressing rooms.
It won't stop here. Bon-Macy's, which operates a total of 50 stores in five states, will soon see its home-buying division move to New York as part of an overall shift by Federated this summer. The new central division will buy home goods for all of Federated's stores. And as department stores continue to work at distinguishing themselves from the discounters and specialty shops, changes are likely to remain a key part of making sure there are customers walking through the door.
Best Buy traded its product-focused approach for a more customer-centric ideology. After testing the concept with a successful 32-store pilot last year, the company decided to invest about $50 million in capital expenditures to implement the consumer focus at up to 110 additional U.S. stores. The changes will affect locations in Arizona, California, Nevada, Oregon and Washington and are anticipated before the holiday season.
Circuit City set plans in motion to acquire InterTAN, a Canadian consumer-electronics retailer. The transaction, which involves InterTAN's 980 stores and dealer outlets, is expected to close during the second quarter of 2004.
Fred Meyer will sparkle on Amazon.com. A deal between the companies will allow Fred Meyer to sell jewelry and watches on Amazon.com's new online jewelry store, which launched in late April.
Home Depot announced plans to acquire Home Mart, the second-largest home-improvement chain in Mexico. The move means an increased presence for Home Depot in Mexico City, as well as entry into seven new markets. A total of 20 new Home Depot stores will be added, bringing the company's presence in Mexico up to 39 locations. The company has been doing business in Mexico since June 2001, when it acquired the Total Home chain. In other news, The Home Depot also acquired White Cap Construction Supply, Inc., a distributor of specialty hardware, hand tools and safety equipment. The deal bolsters the company's ability to increase business with construction builders.
Kmart confirmed that its relationship with Martha Stewart Living Omnimedia is a good thing; the company withdrew its lawsuit for royalties, deepened the companies' distribution agreement and extended it for another two years. The agreement between the companies lasts through 2009 and solicits more Martha Stewart products, including a new ready-to-assemble furniture line.
Wal-Mart entered into a partnership with Dunkin' Donuts, allowing the donut retailer to set up full-service shops in 10 of its stores. The first location opened in Connecticut by mid-May and will be followed by several other similar openings.