Best revamps into store-driven jewelry, hard lines specialty chain - Best Products; catalog showroom - Discount Stores Annual report - company profile

Discount Store News, July 4, 1988

Best Revamps Into Store-Driven Jewelry, Hard Lines Specialty Chain

RICHMOND, Va. -- Best Products has changed-it ain't what it used to be.

Once a premier catalog showroom chain, the company has reshaped itself into a unique niche merchant, a jewelry and hard lines specialty discounter that aims to be the dominant retailer in the five broad areas it merchandises.

As executives sum up the new Best, the company now is a customer-directed, store-driven retailer, rather than a catalog-oriented merchant.

At the same time, Best is probing new merchandising directions like expanding its Best Jewelry specialty store chain; developing direct mail operation to leverage its catalog and flier experience and mailing lists; probing electronic retailing through instore information kiosks; and teleshopping via participation in one cable system's interactive test marketing of goods from mini-catalogs from about 50 different retailers.

Within its 194 stores, Best now targets five key categories--jewelry, home goods, consumer electronics, leisure and juvenile--positioning the chain between full-line discounters, which play up a limited offering of a broad mix of hard goods, and specialty retailers that feature a deep assortment in just one category.

Jewelry, of course, remains Best's dominant category and the chain's growing success in merchandising diamonds, watches and gold items is responsible for the decision to expand the Best Jewelry chain. While no new Best showrooms will be opened this year, 15 to 20 Best Jewelry units are due, almost doubling the size of that 22-unit chain.

Jewelry last year accounted for 18.2 percent of sales, up from just 15 percent a few years ago, and 65 percent to 70 percent of profits. The company made money on all categories, except toys, last year.

Overall, Best's marketing focus is on trend setting and growth classifications like home office, home furnishing, development toys, home and office electronics, and ready-to-assemble furniture while retaining its position in such core areas as jewelry, watches, sporting goods, juvenile furnishings, housewares/appliances, and seasonal items.

Hardware and auto accessories, two minor categories where Best never established a dominant position, have been trimmed and melded into the leisure mix while the toy assortment (except for development toys) is set to be sharply cut back and featured mainly as a holiday seasonal offering. A major portion of Best's sales drop last year was due to reduced toys volume.

In reshaping itself, Best has fined tuned its merchandising to emphasize everyday low prices to meet or beat competitors on non-promoted items, eliminate redundant and slower-moving, lower-end items at opening price points, and augment its offering of new and higher-price goods.

Fewer Catalogs Distributed

The catalog, meanwhile, is now viewed as just one among a number of media used to communicated with shoppers. Cut about 67 percent to 300 pages in 1987, only about 7 million copies of the same-size book will be distributed this fall--4 million via mail and the rest through the stores--down from a total of about 12 million copies last year.

The catalog shows about 6,000 sku's, or just under half of the 13,000 items merchandised in a typical showroom.

The savings from distributing fewer copies of a smaller main catalog will be used to increase print and radio advertising expenditures. The goal of the promotional shift is greater exposure of Best's assortment through more frequent promotions to a large customer base, particularly in key buying periods.

The transformation, which began to be phased in during 1986, paid off last year when Best made an impressive turnaround. It saw $25.6 million in red ink on $2.1 billion in sales in 1986 switch to $30.5 million in net earnings on just over $2 billion in volume.

The company expects about a 2 percent sales growth, rebounding to about $2.1 billion.

Best's new merchandising and promotional effort helped boost gross margins, which went up 7.4 percent last year to reach 27.5 percent, the highest in the past five years.

A concurrent continuing reining in of expenses resulted in a 5.1 percent reduction in selling, general and administrative costs (as a percentage of sales) to 19.5 percent.

A key role in engineering Best's turnaround was played by William F. Costello, who had been executive vice president and chief financial officer. In March, he was promoted to president and chief operating officer, a post vacant since February 1987 when Robert E.R. Huntley, then president, was advanced to chairman and chief executive officer.

PHOTO : Best Products' probe of electronic retailing includes testing Best Notes, an informational

PHOTO : interactive video terminal.