Execs reveal key strategies at DSN's Power Retailer Confab - Discount Store News conference

Discount Store News, August 21, 1995 by Teresa Andreoli

NEW YORK -- One chain seeks the advice and wisdom of a bunch of teens to keep the company cool and hip. Another rewards its frequent buyers with gifts for the home. A third found a way to boost business by differentiating markdown policies in stores located in resort areas.

These are just a few of the ideas shared at the Discount Store News "Power Retailers 95" conference held here late last month.

Retailer conference speakers who spoke about successful measures they have taken at their companies included Joe Ettore, president and ceo of Ames; Bob Stevenish, executive vp and coo of Hills; Cal Turner Jr., chairman of Dollar General; John Urie, executive vp of Zellers; Jack Bush, retired president of Michaels Arts and Crafts Stores; William Anderson, president of Oshman's Sporting Goods; and Marcy Syms, president of Syms (off-price apparel).

Other speakers at the show included Cynthia Cohen Turk, partner, Marketplace 2000; Shawne Mastronardi, Kurt Salmon Associates; and Michael Gade, partner, Coopers and Lybrand.

Among the highlights of the conference:

* Ames: Ettore noted marketing and merchandising changes that have boosted business for the Northeastern regional discounter.

"Micromarketing is the key to the future," Ettore said, outlining how the chain has strengthened and redefined programs geared toward the geographic location, age and ethnicity of its customers.

"We weren't taking advantage of the difference of our 70 resort/community locations," Ettore said for example, each year summer apparel is marked down chainwide on June 15--but not at the resort stores this year. "We found customers were still buying swimsuits, sand toys and each towels well past June 15," the ceo said. The chain is complementing the resort locations' business with commercial accounts, such as volume discounts to hotels on sheets, pillowcases and pillows.

"It's hard to see a real result so early in the game [six weeks], but so far resort stores are doing 3% to 6% better than the rest of the chain," Ettore added.

Ames hopes to better capitalize on the Back-to-School business at college towns, and Ettore said it has improved its offering of cosmetics and H&BC supplies to stores located in African American and Hispanic areas.

The discounter has adjusted to the unexpected degree of success of its 55 Gold program. Designed to draw consumers aged 55 and older by offering a 10% discount on any item (including sales goods), the one-day-per-week campaign has turned Tuesdays into the third best sales day of the week, Ettore said.

* Oshman's: Anderson spoke about the sporting goods chain's bounceback. Bigger, more entertaining superstores, coupled with a marketing campaign targeted toward a more hip audience are two ways the chain intends to maximize its profits over the next five years.

"We're talking about a transformation, not a turnaround," the former Ames merchandising senior vp said.

The San Antonio-based, sporting goods merchant is in the midst of melding its two formats into one chain, concentrating on the growth of the 65,000-sq.-ft. Supersports USA Megastores.

"Our plan is to roll out the megastores, reduce the number of traditional stores and continue tight control of overhead," Anderson said.

By the end of this year, the chain will operate 126 stores, of which at least 17 will be megastores. This format, developed in 1990, is often characterized by a built-in basketball court, synthetic ice arena, rollerblading lanes, and archery and golf-playing areas. In '94, the chain's 12 megastores (9% of the chain) earned 32% of its retail sales and had a 39% direct store contribution.

The transformation to a more in-store fun experience is designed to procure a trendier image for the chain. Consumer research showed that Oshman's was perceived as "jockish," uncool, expensive, upscale and narrow, Anderson said. "But the new image we want to achieve will be young and hip, and our mission is to get that without offending either the Baby Boomers or Generation X."

Hiring Houston Rocket NBA star Hakeem Olajuwon as a corporate celebrity spokesman was one attempt to keep on the cool and hip side of retailing, switelling to a photo-based circular (from its previous line-art form) was another.

* Zellers: Urie spoke about battling the fleet of 130 Wal-Mart stores that opened last year in Canada, in addition to a slew of other U.S.-based retailers inching upward.

"The challenges exist but none are insurmountable," Urie said. The 294-unit, Montreal-based chain intends to continue pushing Club Z, its frequent-buyer rewards program, as one way to hold onto its leading discounter status.

In order to strengthen the customer participation rate of Club Z--already at 75%--Zellers introduced a store-label credit card called More as another means of rewarding loyal consumers. As it stands, Urie said, one of five Canadian consumers has already received free gifts from Zellers.

"Our strategy is to continue print dominance," he explained, pushing distribution of circulars from 8.4 million tabs per week (reaching three-quarters of the Canadian population) to 8.9 million per week. "The goal is to reach 86% of the Canadian households. We also intend to maintain a voice in electronic media," he added, after showing a string of serious-teaser televised ads for the credit card.