What's in a name? Closeout chain says new name conveys bargains - Pic 'N' Save changes name to MacFrugal's Bargain Closeouts

Discount Store News, Nov 4, 1991

What's in a Name? Closeout Chain Says New Name Conveys Bargains

DOMINGUEZ, Calif. - Pic |N' Save, the nation's second largest closeout chain, expects no trouble from McDonald's, the fast food chain, over the new name it has pic'd for itself, MacFrugal's.

McDonald's employs a patent infringement para-legal, Rhonda Erbik, whose sole job is going after other retailers who try to trade on its name by using the pre-fix "Mc" in their own names. Erbik refused to comment on whether "MacFrugal's" would draw any response. McDonald's media relations department declined to respond to requests for comment.

In the month since MacFrugal's popped into the public eye, with 61 store fronts changed over to the name MacFrugal's Bargain Closeouts, McDonald's has taken no action, said Eileen Hupp, assistant vice president for marketing.

"We're in a different business and we spell our name |Mac,' rather than |Mc,'" Hupp said. Next spring, Pic |N' Save will change the names on about 60 more stores and the corporate name to something that includes the word MacFrugal's, Hupp said.

"There's a clear differentiation between us," Hupp said. "Our lawyers researched the name, and we don't think it's an issue."

Pic |N' Save began converting to the name Oct. 1 for stores in Texas and Louisiana that used the names Pic |N' Save and The Wow! In early October, it opened its new 1.1 million-square-foot, $65 million distribution center in New Orleans, with the name MacFrugal's painted on the side.

The name change stems from the company's failure to register the Pic |N' Save name, Hupp said, when it began using it in 1954.

Since at least 1956, the National Merchandise Corp., Jacksonville, Fla., began licensing the name Pic N' Save to "related entities" for what now is a chain of 40 discount department stores in Florida and Georgia averaging 70,000 square feet, said Jim Miranda, director of personnel and company spokesman. In 1968, it registered the name and owns the rights to it, National Merchandise said, in a prepared statement from its lawyers.

The closeout chain in California settled a lawsuit by agreeing to drop the name except in southern California, National Merchandise said.

As part of the settlement, Pic |N' Save gets to continue using the name for 60 stores in south California out of a total of 194.

The Pic N' Save vs. Pic |N' Save dispute is similar to that between AutoZone (formerly calling itself Auto Shack) and Radio Shack. The automotives parts chain changed its name in 1988 to settle a lawsuit that Radio Shack brought over using "Shack" in its name.

Putting the best face on the oversight, Hupp said the change actually will help the chain reintroduce itself to customers in the Southeast - a fairly new market - and convey a sense of what the company is about. "MacFrugal's conveys bargains," she said. "Customers in Dallas actually confused us with a grocery store chain called Sack N Save." Others confused it with Pay |N Pak, a home center chain, she said.

The new name, MacFrugal's, was the winner in a company-wide new name contest that drew 7,500 entries, Hupp said. A clerical employee in corporate offices submitted the winning name, Hupp said. She left the company after winning, but still collected the grand prize, a one-week vacation for two in Cancun, Mexico.

The new name appears to be an instant hit with customers, Hupp said. Saturday, Oct. 5, 200 to 250 customers waited in line at Texas stores holding their grand reopenings as MacFrugal's, Hupp said. For its second quarter ended Aug. 4, 1991, Pic (soon to be Mac) reported sales rose to $116.4 million from $112.7 million a year earlier. Operating results turned around to $9.4 million in operating income from $12.5 million in operating losses.