Tough competition knocks Venture from top 20 - top 20 discount stores - Annual Industry Report, part 2

Discount Store News, July 18, 1988

Tough Competition Knocks Venture from Top 20

O'FALLON, Mo.--Buffeted by tough Midwest competition, Venture saw its operating income sag 12.5 percent last year on a modest 7.1 percent sales growth. 1987 sales of $1.2 billion caused Venture to slip out of the top 20 rankings on DSN's list of leading discount chains.

Earnings slipped to $70 million in 1987, from $80 million in 1986 and same store sales gained 0.9 percent.

Venture attributed the $10 million decline in operating earnings to a change in LIFO inventory accounting.

Return on sales slipped to 5.8 percent last year from a robust 7.2 percent in 1986. Venture's return on beginning net assets fell to 19.1 percent from 23.6 percent in 1986.

"We deployed a significant amount of Venture's organizational bench strength to Caldor," said parent May Company. Last year May was "able to replenish the organization in a qualitative manner."

In the case of its executive vice president, Marc I. Balmuth, lost to Caldor in February 1987, where he became president, it took May almost a year to replace him with Richard Rein. Effective Jan. 25, May transferred Rein from Macy's California, where he was senior vice president and general merchandise manager. He serves as executive vp, hard lines at Venture.

At the same time, May brought back Maxine Clark as executive vp, soft lines. Previously an executive vp at Venture, Clark left in 1985 for May's Famous-Barr department store division and most recently was at Lerner as vice president and gmm.

In expansion last year, Venture opened six of its new size stores, 80,000 square feet, and closed one of its 105,000-square-foot stores, for a net gain of five. It ended the year with 70 stores in seven states.

In March, it opened two of four stores planned for this year--in Bridgeview and Belleville, Ill. The other two are slated to open later this month in South Bend, Ind.

In an effort to improve sales per square foot and cut store operating costs, Venture is whacking the size of its stores. Five years ago, Venture was building 116,000-square-foot stores. It built some at 100,000 square feet and 90,000 square feet before settling on an 80,000-square-foot prototype.

Smaller Stores Experiment

In an experiment, Venture opened a 65,000-square-foot store last July in Oklahoma City. Venture added spines to gondolas to push displays to 84 inches high from its traditional range of 54 inches to 66 inches. Above the 84-inch mark, Venture stores goods, allowing smaller units to offer the same assortment of goods, even if in smaller quantities.

The chain is also hoping that the smaller prototype will enable it to compete in smaller markets as well as improving sales per square foot.

In a merchandising step, Venture closed all of its remaining auto service centers, starting with 20 in the Chicago market last August, and the balance of 25 in February.

The service centers were profitable, said a former Venture auto service executive. "But the May Company is soft lines oriented, and the return on auto service isn't proportionate to that on soft lines."

Moreover, Venture president Julian Seeherman is "a big idea man. Auto service was just a small part of Venture's business, and [he] won't put a lot of emphasis on a small part," the source said.

To use the service bay space in about 27 stores, Venture has been leasing it to various tire centers. In several stores where leases were expiring, Venture let the space revert to the landlord.

On the technological front, Venture has gone chainwide with scanning, a move it began in mid-1987.

Table : Venture