Ames' new store reflects discounting the old-fashioned way

Discount Store News, March 18, 1996 by James Mammarella

LOWELL, MASS. -- Ames Department Stores opened its first new store of the year on a chilly Feb. 29, but received a warm welcome from the working-class denizens of this original New England mill town.

"Keep the prices low, and we'll keep coming back," said a 60-year-old man wearing a baseball cap and steering his crammed shopping cart into the checkout area. His remark was directed to Ames president and ceo Joe Ettore, who plunged right into a quick response. "You'll see, we don't fool around," he assured the customer, one of the first visitors to this 55,000-sq.-ft. former Stuarts Department Store, once the best-performing unit in the now-defunct 20-store discount chain.

Ettore and company will repeat the scene April 18, when nine recently acquired former Jamesway stores in three states re-open under the Ames banner. Ames bought 10 Jamesway sites in a bankruptcy auction in late January. The sites are in Catskill, Chester, Liberty, Monticello and Napanoch, N.Y.; Flemington, Sussex and Wrightstown, N.J.; and Brodheadsville and Stroudsburg, Pa.

Among the latest tweaks to the Ames format:

* A stronger Coleman presentation in camping gear;

* Fully merchandised Fisher-Price toys;

* A new planogram for the crafts department;

* Still more real estate for the plus-sizes area;

* New presentations in intimate apparel;

* The introduction of the Cool Blues private label denim in men's, boys' and girls'.

Ettore reported a brisk pickup in sales volume during February. He pointed to strong early trade in lawn & garden by winter-weary Northeastern patrons, adding that "anything new" in apparel moved quickly.

The Ames philosophy under Ettore and executive vp, merchandising Denis Lemire hews to traditional discount merchandising, steadfastly refusing any attempt to "trade up" the customers. Instead, the stores trumpet "special buy" at every turn, and shoppers must navigate aisles stocked with opportunistically acquired goods from paper towels to knit shirts.

However, Ames doesn't shy away from business strictly on a price basis. Testimony to this were $229 tents by Coleman and a $299 black metal futon sofa bed new to the RTA department.

At the front of the store, a powerful Easter presentation, including baskets, home decor, party goods and candy, showed off the chain's knack for seasonal merchandising. In another sign of timeliness, a cordon of Disney's Toy Story action figures, card games and related toys greeted shoppers at the entrance.

The store manager, a holdover from the Stuarts regime, led his floor platoons in an "A " cheer just before the official 9 a.m. opening. The Smile/Greet/Meet/Thank You credo they chanted is part of a program Ames launched last fall to increase customer service effectiveness, which rewards associates and store managers with A points.

Rich Carter, senior vp, human resources, said that much of the program, which includes a Captain A costume for store managers, was dreamed up by the clerks, rather than imposed from the top. Carter added that Ames has increased product knowledge training for associates in consumer electronics, jewelry and crafts.

One Ettore-led initiative, the Gold 55 senior discount program, has reached 1.2 million members. Ettore is negotiating with service providers and vendors such as Visa and American Greetings to create ways to capitalize on this core database.

The opening of this store and of the recycled Jamesway locations next month is the flip side to the tactic of closing 17 underperforming stores. The one-time closing cost of about $20 million will be charged to fiscal 1995, and Ames paid $2.8 million for the former Jamesway stores and their fixtures.

Earnings for the year were not available at press time, but Ames reported a drop of 1.0% in revenues (to $2.12 billion) and same store sales (to $2.09 billion) for 1995.

For efficiency within its merchant structure, Ames has reduced the divisions in hard lines from three to two and in home lines from five to four. Apparel was unaffected. With the store closings, Ames cut more than 1,000 positions from its workforce and reduced its inventory needs.

While the company is likely to finish below its financial plan for 1995, Ettore said that these aggressive capital and strategic moves won approval from his key banks and could improve the chain's position later this year when negotiations begin to renew its $300 million credit facility, which expires in May 1997.