At Montgomery Ward, browsing for a new niche Makeover: 126-year-old retailer Montgomery Ward has seen changes at other big chains and decided it's time to join them.

July 02, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Sears Roebuck and Co. has shown its "softer side." J. C. Penney Co., too, has undergone a successful makeover.

Now Montgomery Ward, the 126-year-old mail-order catalog pioneer trying to emerge from bankruptcy, hopes to win shoppers over with a fresh merchandising mix and redesigned stores -- the first of which will be completed this year in Maryland and two other states.

New store prototypes will be unveiled by late August or early September at Towson Marketplace in Towson, in Las Vegas and in Bloomingdale, Ill., a Montgomery Ward spokeswoman said.

The 144,000-square-foot Towson Wards will anchor a former enclosed mall being transformed into a regional, 675,000-square-foot center of category killer retailers such as Bed, Bath and Beyond, Sports Authority and Pet Smart. Co-anchor Target will open July 26.

Unlike the Wards familiar to most consumers -- known more for plain vanilla presentation than for pizazz -- the remodeled store is expected to become a shopping destination in itself, as are the center's other "big box" stores, said Jim Schlesinger, chief executive officer of the Talisman Cos., the center's Florida-based owner and developer.

"There is a place for this kind of store, and although the renovation is not complete, it looks to be a well-merchandised, nice-looking store," he said. "Ultimately, the challenge for Wards is their ability to communicate to the public that they're different and improved from what they had. People don't change shopping patterns overnight."

While still unfinished, the store's first level, devoted to men's, women's and children's apparel, shoes, fine jewelry and accessories, has taken on the brighter, more streamlined appearance of a more upscale department store, with new carpeting, high ceilings, contemporary teak and chrome fixtures and hip-looking displays highlighting brands such as Lee and Bugle Boy.

"They're trying to pull a Sears, Roebuck," said Kurt Barnard of Barnard's Retail Trend Report, a forecasting firm based in Upper Montclair, N.J. "I think Montgomery Ward has seen the tremendous success of 'the softer side of Sears [advertising campaign],' and they decided to say 'me too.' "

"Sears had a five- or six-year head start, so [Wards] has to invent something that is not just a me-too strategy but is clearly evident and visibly distinct from what Sears is doing."

For Chicago-based Wards, the new look comes amid a reorganization strategy that has the company closing dozens of stores, focusing on affordable fashion and appliances and targeting women aged 30 to 55 with middle-class incomes and conservative tastes.

Wards, the nation's largest privately owned retailer with 294 stores in 37 states, filed for bankruptcy court protection last July after watching its customer base erode year after year. The company, with $5.3 billion in sales last year, reported a $1.16 billion loss in 1997, its largest ever.

The bankruptcy filing, which allows the company to plan a financial recovery without the threat of creditor lawsuits, had been hailed as a positive step by General Electric Co.'s GE Capital Services division, which owns half of Montgomery Ward.

Analysts say the financial troubles stemmed from the retailer's inability to keep up with shifting consumer patterns, in which shoppers have increasingly been drawn to either high-end retailers, discounters or trendy, low-priced concepts such as Old Navy.

"The problem is the rest of the industry has changed, and they're still mired in the '70s," said Kenneth Gassman, a retail analyst with Richmond, Va.-based Davenport & Co. "The stores are flat; the lighting is flat, the colors are flat; the presentation is flat. There's nothing that says 'Buy me.' "

Roger Goddu, who took over as Ward's chairman and chief executive in 1996, is trying to change all that. For one thing, the chain has announced the closing of 65 stores, including locations in Lanham and Gaithersburg, leaving 15 stores in Maryland. Last year, the chain launched its first image-oriented advertising campaign in a decade, hoping to convince consumers it stands for fashion as well as affordability. And in its latest annual report filed for the year that ended Jan. 3, the company said it would leverage areas of merchandising strength -- major appliances, fine jewelry and furniture -- to improve profits and capture additional market share.

Goddu has said the company is striving to fill a retail gap that exists between mass discounters, such as Wal-Mart and Target, and department stores. Such a gap, he reasoned, has become more pronounced in the wake of product upgrades and less reliance on catalog sales by Wards' traditional rivals, Sears and J. C. Penney.

If the chain is able to find that niche, it should place apparel pricing somewhere between Target and the Hecht Co., said Peter Chapman, president of Bankruptcy Creditors Service Inc., which has monitored the company's reorganization process but has no measure of how well the new strategy is working.

Retail experts say Wards' biggest challenge will be finding a niche. Some questioned how much of a retail gap actually exists.

"It's hard for me to see what that concept would be," said Peter Schaeffer, a senior vice president with Warburg Dillon Read & Co. "I honestly don't know where Montgomery Ward fits into the broad spectrum of merchandising. Do people want Penney merchandise at a lower price or Wal-Mart merchandise at a higher price?"

Pub Date: 7/02/98

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