New-tier retailers: survival of the fittest? - Apparel Merchandising

Discount Store News, March 4, 1996 by Jeffrey Arlen

Evolution is defined by Webster as "a process of continuous change from a lower, simpler or worse to a higher, more complex or better state." Apparel marketers are hopeful that the dramatic changes in the mass marketplace fall within that definition.

Regional merchants that desperately need to carve new niches are beginning to think of themselves as a new retailing species. These stores, which made their initial moves because of the overwhelming presence of Wal-Mart, are beginning to take the initiative in recreating themselves, a strategy that will undoubtedly serve them better than a crisis-by-crisis defence.

The ultimate judge of these plans will, of course, be consumers. Will apparel shoppers embrace another retailing alternative? Do they really need another kind of store?

Consumer research lends a certain degree of credence to the idea. In fact, apparel dollars appear to be up for grabs as consumers break away from traditional apparel outlets like department stores. Over a five year period, from 1989 to 1994, department store customers shifted their relative apparel expenditures to other retail channels, according to data collected by The NPD Group of Port Washington, N.Y. In 1989, 41 percent of their women's apparel dollars were left in department stores. Five years later only 37 percent had dropped into department store coffers. In addition, the relatively recent apparel success of Sears shows that shoppers are willing to buy clothing in non-traditional apparel locations.

Sears' success has in large part been credited to the vision of the chain's leadership, and fresh, strong management will be responsible for the success or failure of the ongoing evolution at the regional mass market level.

Shortly after Robert Wildrick joined O'Fallon, Mo.-based Venture, the company distributed a video outlining the new president and ceo's business plan.

"In the future," this former executive vice president of Belk Stores tells viewers of the video, "we need to change the kind of retailer that we are."

On the tape, and in numerous sessions with analysts, vendors arid journalists, Wildrick makes it clear that small adjustments at Venture--pummeled in recent years by competition from Wal-Mart and Target--won't be enough to turn the 26-year-old operation around.

Wildrick's plan for a new Venture means eliminating or downplaying many general merchandise categories while rejuvenating (achieving "category dominance" in Venture's parlance) several merchandise areas, most notably apparel.

To achieve this goal, Venture is actively seeking well-known apparel labels. Most of the brands on the Venture hit list currently limit their distribution to department, specialty and off-price stores.

Wildrick's newly positioned Venture, which debuts its reformatted stores this month, serves as but a single example of the radical retailing changes sweeping across the selling floors of mass merchandisers. Numerous other retailers are also leaping into new mercantile territory.

* Since becoming chairman and ceo of Bradlees in December 19945 Mark Cohen, the transplanted head of Lazarus Department Stores, has been singing in perfect harmony with Wildrick. Following his arrival at the Braintree, Mass.-based operation, Cohen has focused on upgrading apparel and other soft lines departments and eliminating noncompetitive merchandise while making a concerted effort to distance his 134 stores from Wal-Mart.

* For some time, Green Bay, Wis.-based ShopKo has quietly been buying merchandise from brands such as Nike, Reebok and Adidas, as the regional mass marketer attempts to leave its pure discounting roots in the past. * Pamida with stores in small towns in the Midwest, has begun to change the tenor of its operations so that its assortments don't simply overlap with the merchandise found in the stores of national discounters.

Clearly, the concept of a homogenous tier of retailing dubbed "discounting" that's made up of "discount stares" is no longer an adequate or accurate paradigm.

Maybe it never was. But the retailing situation today, with one company--Wal-Mart--dominating the "traditional" discounting level, has pushed a substantial portion of the industry (only Target has stood up to the Wal-Mart onslaught) to re-evaluate its dynamics and create what amounts to a new type of store.

The success of these evolving retail formats, which blur traditional selling tier definitions, will be contingent on a myriad of factors. Obviously, consumers will have to find these born-again and start-up chains compelling shopping venues that meet or exceed their expectations in terms of merchandise mix, service, ambiance and price. In addition, marketing efforts must be precisely on target, captivating consumers and appealing to the psyches of destination apparel shoppers.

But without the help of the vendor community, stare efforts will undoubtedly fail. The new breed of mass merchants will have to woo the right brands into their stores. Some of these labels are currently restricted to so-called "upstairs" distribution, and it will be the job of merchants at the emerging stares to convince manufacturers--through their efforts on the selling floor and through creative marketing messages--that their operations will support the value of longtime vendor franchises.