The big squeeze

Discount Store News, May 5, 1997 by Jeffrey Arlen

Upper-tier retailers are able to present their apparel assortments with aplomb because they possess a luxury item not afforded to the mass market apparel merchandiser--space.

The Polo shop is filled with wood and leather appointments, Donna Karan is afforded a prominent space of its own and men's furnishings ramble through an expansive tract on the main floor.

Department store merchants and their suppliers are expert at romancing the selling floor. Mid-tier operators such as JCPenney and Sears also spread their national and private brands liberally across their stores, accentuating product and point-of-view.

The costs involved in creating and maintaining displays of this nature are in many cases beyond the financial structure of value-oriented retailers. But it isn't dollars and labels alone that make these presentations prohibitive; mid- and upper-tier retailers are able to present their apparel assortments with aplomb because they possess a luxury item not afforded to the mass market apparel merchandiser--space.

It is massive apparel acreage that allows departments store retailers not only to utilize extensive and attractive display techniques, but also to have a breadth of assortment that runs the gamut from hosiery to haute couture.

As the discount industry celebrates its 35th year, merchants is the tier have no such option. With apparel departments that range from less than 10,000 sq. ft. to close to 50,000 sq. ft. at the most super of supercenters, doing more with less is a basic tenet of mass market retailing.

"You can't try and pack a soup-to-nuts apparel assortment into the space you have to work with. If you try, you become fragmented," says Mark Minsky, senior vice president and general merchandise manager of Caldor.

For many years, the splintered selling floors Minsky refers to defined the mass market apparel business. But that scenario has been changing as discounters attempt to become more established apparel resources in the minds of their customers.

With the help of apparel manufacturers who rely on mass market outlets for enormous percentages of their volume, retailers have for the most part dropped the scatter shot approach and instead are working toward a disciplined assortment that maximizes space, yet remains closely aligned with consumer perception and expectations.

Those assortments vary tremendously from retailer to retailer, but the merchandise strategies all have one thing in common--generating the greatest productivity in the smallest amount of space.

Analysts agree that Target, with its tight, timely, trend-right assortments, is the best mass merchant when it comes to working with their apparel areas. "They are light years ahead of other stores in their ability to plan and flow," says a senior executive at a large apparel company.

Often thought of as The Gap of the discount store world. Target's success in maximizing its apparel space is based in large part on its advanced product development team and that works closely with merchants and planners.

"Target has a great system of their own. Internally, they have excellent analytical capabilities," says Martha Dally, executive vice president of Sara Lee Personal Products.

Kmart and Wal-Mart have made great strides in getting the biggest bang out of their apparel departments, but they tend to draw more heavily on the resources of their primary vendors to ensure productivity than does Target.

Companies such as Sara Lee and VF Corp., as well as many others, devote a considerable amount of their substantial resources to maximizing retail sales and scrutinizing product on the selling floor.

"What we bring to the party is additional analysis," notes Dally. "To help customize, we have developed the ability to measure sell-throughs by sku, by store and even by day. That's one giant way that we participate in productivity, and there is no going back."

Automatic replenishment systems, demographic insights, feedback from focus groups and in-store merchandising programs, of course, are now considered essential pieces of a vendors' sales bag.

But even the best systems won't make up for a lack of clarity on the limited apparel pads of most mass merchants.

To refine its apparel statement, Kmart, for instance, is still consolidating and editing its product categories and branded position. The initial goal of the process, which has been in full swing for more than a year, is to maximize sales of "consumables" such as socks, intimates, underwear, fleece, seasonal basics and jeans.

"We have to do a better job in basics," Warren Flick, Kmart's coo and president of U.S. stores told AM. "In fact, our goal is to be perfect in that regard."

To accomplish this task, which entails taming Kmart's formerly far-flung assortments, Flick and senior vice president Stephen Ross have taken a category management approach. Most industry observers believe that such a strategy is the beginning of a turnaround. In fact one vendor pays Flick this large, yet ironic, compliment: "He's the Bill Fields of Kmart," Referring to the former president of Wal-Mart Stores.