Value City embodies the old doctrines of discounting - Value City Department Stores Inc. succeeds by emphasizing displays, bargains, service - Editorial

Discount Store News, Nov 18, 1996 by Tony Lisanti

"Hello, Columbus," proclaimed the banner headline in the business section of a major New Jersey daily newspaper on Nov. 8. It was referring to the debut of Columbus, Ohio-based Value City's newest store in Paramus, its fifth in New Jersey and 93rd overall.

It conjured a sense of nostalgia and a realization that this quiet, sometimes overlooked retailer is flexing its muscle as a major regional player.

The off-price department store chain has rebounded from a tough year in fiscal 1995 when it saw operating profits plummet almost 62%. But this year could prove to be its best year, with nine new stores opening in several new markets. For the 12-month period ended Aug. 3, Value City posted a sales increase of 9.4% to $954 million, while net income increased 64% to $21.7 million.

Since 1991, Value City has grown steadily and may yet have its most explosive growth spurt ahead. Over the past five years, sales have grown by more than $300 million while 25 stores were added.

The 80-year-old company, founded by E.L. Schottenstein and now run by his grandson Jay, is another example of a retailer that embraces many of the old, simple principles of retailing that so many others have abandoned. Consider the following: * Create excitement for thy customer. The new 140,000-sq.-ft. Paramus store, a former Steinbach location, incorporates better visuals, displays and signage than most off-pricers. In particular, the Market, a coordinated home decor area, blends decorative items, gifts, candles, housewares and gourmet foods. Offset within a black, red and white checkered design, The Market created an ambiance that was different than the typical discount department; it was fun and really stimulated the impulse to buy. * Know thy customer well. Through its analysis of demographics, Value City effectively mircomerchandises its stores to serve the needs of the local area. * Provide value to thy customer. This is what Value City is truly all about. Every display or focal point communicates a bargain on name brands ranging from the high end to mass market basics. For example, the choice ranges from Cerrutti 1881 men's suits valued at $1,500 for $499 to Haggar pants valued at $19.99 for $9.99. * Serve thy customer as you would like to be served. Value City is a welcome reminder that service is necessary, and possible to provide, even in a so-called self-service environment. * Search the world for opportunity. A strong, experienced team of merchandising execs, headed by president George Iacono, understands its customers and knows where to find good deals. Value City realizes it can't set the fashion trends, but like a traditional discounter, it can effectively follow them.

Despite the many Chapter 11 filings, mergers and acquisitions in what can be characterized as another turbulent year for the retail industry, there is always a bright spot and a little good news. And that's Value City. This venerable chain embodies the spirit of growth, opportunity and survival.