Positioning Pamida - Apparel Merchandising Supplement - Company Profile - Cover Story

Discount Store News, Sept 5, 1994 by Jeffrey Arlen

Omaha, Neb., where its executive offices are headquartered, is much too big for Pamida.

When it comes to trading areas, the 178-unit chain thinks small. In the future--smaller.

Pamida's ceo Steve Fishman understands the big picture. He knows that even his new prototypes--in excess of 40,000 sq. ft., up from an average store size in the 28,000 sq. it. range--will have a great deal of difficulty competing with the huge nationals. So, he's rolling out stores in markets that are simply too small to support a 100,000-sq.-ft. Wal-Mart or Kmart.

"We're opening stores in trading areas of 15,000 [people] or below. Most of the locations where we face the national chains are in population areas of 20,000 or above," says Fishman, who has spearheaded a rejuvenation of Pamida since he joined the company in April 1993.

"We don't face as many Wal-Marts as we did 12 months ago, and we won't face as many 12 months from today. We were in direct competition with 48 Wal-Marts a year ago. Today we face them at 36 locations and by the end of the year fewer still," says Fishman, a retail executive with experience at Caldor and the now defunct Gold Circle. Recently, Pamida, which plans to erect 17 new prototypes by the end of the year, not only opened rural stores miles from the nearest national, but also closed 13 stores that competed head on with them.

But adopting the position of primary retailer in small-town America--or running from Wal-Mart, it all depends on your point of view--is just one piece of the Pamida strategy. An essential element of the plan is to develop and strengthen its apparel businesses.

Says Fishman, "Soft lines offer us a big, big, opportunity for volume growth for several reasons: one, because in the past we were so under-developed; two, there is great margin opportunity in ready-to-wear; and three, because it gives us a method of differentiation. We are not going to be totally insulated from the national chains no matter how we try."

Pamida's new stores, like the 44,200-sq.-ft. branch the company opened this summer near the Kentucky border in Georgetown, Ohio, reflect apparel's newfound status at the chain.

Occupying nearly 40 percent of the selling floor, clothing has come a long way since Fishman and his team joined the company. At that time, a little more than a year ago, clothing accounted for only 22.5 percent of sales.

As might be expected, the apparel assortment at Pamida, which operates in 15 Midwestern, North Central and Rocky Mountain states, is decidedly casual. However, it wasn't always that way.

"It cost us a lot of money to get out of the dresswear business," says Don De Laura, Pamida's vice president, divisional merchandise manager in charge of men's and boys' wear, accessories and shoes, referring to the elimination of dress shirts and ties from the merchandise mix. "But turn was unbelievably slow. We had no business being in those businesses," he continues.

Instead, casual apparel like jeans, workwear and licensed goods are star players in the Pamida men's and boys' lineup.

Other merchandising changes have been made throughout the store. The buying staff was revamped, and a coordinator was hired to "help communicate our message to the stores," De Laura explains.

De Laura and his colleagues have also developed a buying format that not only brings continuity to assortments on the selling floor, but is also cost effective.

In men's wear, for instance. rather than utilizing buyers on a classification basis, De Laura has merchants who are responsible for different fashion concepts. There's a traditional buyer, a contemporary buyer and a licensed sports merchant. Each is responsible for tops and bottoms within his or her respective category.

Women's wear is bought in a similar fashion and is well-developed at the store. Plus sizes has been given the royal treatment and generates 16 percent of apparel sales. Shoes, an area that the company had formerly sold through leased J. Baker departments, is also given significant floor space.

Pamida's executives are for the most part satisfied with the way the store's new soft goods strategy is progressing. However, one important area of the apparel business still lacks vigor.

"We definitely have an opportunity in the children's business, and it's under developed," says Fishman. "We're just not happy with the way the children's area came off. You've got to have better kids. We've got a long way to go, and we know it," continues Fishman, referring to the category in the new prototypes.

Another potential pitfall in the Pamida plan centers around the store's customers. How will a consumer accustomed to shopping in Pamida and Fisher's Big Wheel--Pamida took over 15 former Fisher's locations when that regional shuttered its doors last year--for motor oil and fishing tackle react to Pamida's new apparel emphasis?

Apparently well. "When these stores [the new prototypes] are ready, the soft line percentage of sales is much higher than the chain as a whole," De Laura says.

The Pamida staff has gone out of its way to nurture strategic partnerships with key vendors to ease its transition into soft lines.