Sunday, March 9, 2003

Federated seeks a makeover of stores


Merchandizing, shopper service key

By Randy Tucker
The Cincinnati Enquirer

Behind the gloss of their shiny counters, department stores have been roughed up in recent years by a struggling economy, discount competitors and low consumer confidence.

Almost two weeks ago, Cincinnati-based Federated Department Stores circled its corporate wagons into a new management structure led by new chief executive Terry Lundgren, 50, who was promoted from chief operating officer.

NEW VICE CHAIRMEN
• Thomas G. Cody, 61, who has served as executive vice president/legal and human resources since 1992. As vice chairman, he will continue to be responsible for legal and human resources, as well as internal audit, external affairs and the company's philanthropic activities.
• Tom Cole, 54, who currently serves as chairman of Federated Logistics & Operations, which includes store design and construction; the Federated Systems Group and the company's Financial, Administrative & Credit Services divisions. Cole will continue to be responsible for these support operations as vice chairman.
• Janet Grove, 51, who has served as chairman of the New York-based Federated Merchandising Group (FMG) since 1998. She will maintain responsibility for FMG, which encompasses the company's merchandising, private brand and product development operations.
• Susan Kronick, 51, who has been group president for regional department stores since April 2001. Under the new management structure, she will be responsible for all of the company's department store divisions - Macy's East, Macy's West and Bloomingdale's, as well as Burdines, The Bon Marche and Rich's/Lazarus/Goldsmith's.
Lundgren replaced James Zimmerman, 59, who will continue as chairman until his contract expires in February 2004.

As part of the new structure, four new corporate vice chairmen were named to join existing vice chairman Ronald Tysoe, 49, in helping Lundgren run the company.

Only one of the new vice chairmen, Susan Kronick, 51, added new responsibilities along with her new title.

But company officials say naming the new vice chairmen is more than symbolic.

The move underscores the need for cohesiveness among managers as the company struggles out of a slump that has seen annual sales drop $1 billion in the past three years to $15.4 billion in fiscal 2002.

"The (vice chair) titles basically are intended to telegraph to people that what you have here is a team process,'' said Thomas Cody, 61, who has served as executive vice president/legal and human resources since 1992.

As vice chairman, he will continue to be responsible for legal and human resources, as well as internal audit, external affairs and the company's philanthropic activities.

"Forget about the titles,'' Cody said. "The goal that all of us have ... is to service the customer by providing the product to the customer, and as a net result of it over time, we return value to our shareholders.''

Like most of its peers, Federated must find a way to excite department store shoppers and reverse the trend of declining sales at its more than 450 department stores, including Lazarus, Macy's and Bloomingdale's.

To that end, the company has handed Kronick - who has been group president for regional department stores since April 2001 - the reigns to all of its department stores, including Macy's and Bloomingdale's.

The 51-year-old merchandising guru, whose father ran Federated's former Abraham & Straus department stores, said she and Lundgren are "on an identical wavelength'' when it comes to their strategies for reviving sales.

Both she and Lundgren have made merchandising and enhancing the department store shopping experience their top priorities.

"Clearly, making the merchandise exciting and distinctive is a mandate from our customers,'' Kronick said. "But one thing without the other doesn't work. We want to do them both, which is to provide distinctive merchandise and an improved experience at the same time.''

Retail executives commonly tout their commitment to their customers, but Federated officials already have demonstrated that such talk is more reality than rhetoric from them.

Federated began making inroads into improving the shopping experience in September with the announcement of its "reinvent the department store'' strategy, designed to make its stores more convenient and appealing.

The firm already has remodeled or begun retooling more than 40 stores, including Lazarus at Kenwood Towne Centre, with Internet kiosks, high-visibility directional signs, shopping carts and price-check devices.

"What reinventing is really about is experimenting and changing lots of things we do in the stores as we look for the formula for things that (the customer) wants,'' she said.

E-mail rtucker@enquirer.com




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