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Doing More for the Customer

BY CSA STAFF

Jim von Maur

President, Von Maur

HEADQUARTERS Davenport, Iowa

TYPE OF BUSINESS Department store retailer

NUMBER OF STORES 35 in 11 states (27 Von Maur stores, eight Dry Goods stores)

Seventeen years ago, in the January 1996 issue of Chain Store Age, Jack Arth, who at the time was president of Von Maur, explained how the circa 1928 department store retailer set out to differentiate itself from competitors such as the then hugely influential Federated and May chains.

“One, we had to do some things [the majors] don’t do,” Arth said in the article. “And two, we had to leave downtowns for regional malls. But that’s not all. It was important that we do more for the customer.”

Although Arth moved on from Von Maur more than a decade ago, the changes he described would ultimately define who the retailer is today. What once was a downtown Iowa concept has evolved into a 27-store, customer-centric and fashion-forward department store leader — one that is expanding and entering new markets while some others are reducing their portfolios, one that is bolstering sales forces while those others cut staff. The family-owned company opened its second location in the Atlanta metro area last fall, and is set to make its Alabama debut this November, at Riverchase Galleria, in the Birmingham suburb of Hoover. It will enter Oklahoma in late 2014, at Quail Springs Mall in Oklahoma City.

Von Maur is also growing its young women’s specialty-store format, Dry Goods. Launched in 2010, the brand has opened eight locations to date. A national expansion plan is in place.

Chain Store Age senior editor Katherine Boccaccio talked with president and fourth-generation family leader Jim von Maur about the evolution of Von Maur, and how the company has managed to stay its course through the years.

Given Jack Arth’s comments in 1996 about what it would take for Von Maur to succeed, what changes played the biggest part in the company’s continued strength?

What really allowed the chain to survive and thrive was a move that Von Maur made in the mid-1990s or so, which was to change our merchandising philosophy by eliminating home goods, which comprised about 15% of our business.

The thinking was that the store needed to be more exciting and needed to represent fashion; in fact, it needed to become a destination for the latest fashions. After a lot of intense discussion, we decided to nix home goods, and sales increased significantly.

Another change that benefited us was one that my grandfather was particularly outspoken about — that of not playing the pricing game with the customer. My grandfather felt that tiered pricing strategies insulted customers’ intelligence. So we implemented a simple, one-price philosophy, which opened up dollars to do other things like providing free gift wrap and interest-free charge cards.

How difficult was it to eliminate interest fees on your credit cards?

That was another agonizing decision because of the amount of profit lost — department stores made most of their money through the interest charges on their credit cards.

We lost a lot of revenue on the interest side when we eliminated the fees, but we more than made up for it by selling our goods at full price.

How important has the store’s look been through the decades?

Interestingly, Jack Arth’s wife was the impetus behind the signature Von Maur store design that you see today. She thought it would be nice to have an open floor plan that allowed shoppers to see where they were at all times; in other words, a store with no walls.

The powers-that-be thought it was a great idea, and today all of our stores are open.

Do you have a set store prototype?

Yes. Although each store is designed differently according to the space and the parking and the number of levels — and it can take a lot to address the nuances — we maintain a certain prototype with our central court, the atrium piano, the wide aisles and the residential feel. That’s all part of the prototype.

What adjustments, if any, did you make in response to the most recent economic tightening?

We are like the fabled tortoise: When things were on fire, and everyone was booming, we stuck to our plan and stayed disciplined and plodded along. When things got tough, we were able to stay on our path. We don’t feel the economy here; our sales have grown every year, profitability gets stronger and we keep opening stores. If anything, the economic tightening allowed us to pick up additional locations.

Who is your target customer, and has that demographic altered at all as you have marched the concept forward?

Our customer is the whole family. We want the kids to come to us for back-to-school, and men to shop us for clothing. Of course, 80% of our store caters to women so that would be our major demographic. We want to be known for shoes and accessories and the latest fashions. We don’t really have a set targeted age, and I don’t see that changing. From layette to more mature women customers, we want them all to come to us.

Regionalized inventory has long been a strength; does that become more challenging as your stores enter new and unfamiliar markets?

Yes, in terms of the learning curve. As we venture into the South, we have had to learn that there is a different way to merchandise down there. Fabrications are different, colors vary, merchandise transitions at different times. But in terms of buying by store, we’re still able to do that.

What sets Von Maur apart from its competitors?

The first thing is service. When people walk in, they feel welcome, and that is due directly to the people we have in our stores. Next is that we have the most exciting selection available anywhere. We make sure that we are offering the latest fashions; in fact, that is what we drive home with our suppliers — that we want to be delivered first, and that price is second.

And finally, our stores are so completely different from the competition in that we don’t have the vendor posters and the 30%-off signs in our stores. Instead, we have a clean and open feel, so that customers feel relaxed and not bombarded by all these images and messages.

Who in your life has most impacted how you lead?

My dad. He’s kept me grounded in the fundamentals, particularly in terms of merchandising and how to manage. In the merchandising area, he taught me to make sure to have the newest fashions, and to be fair to the customer. And, in terms of managing people, he taught me to always remember that you are there to help and to teach and to support. That’s the best way to lead, and he has led me by example.

How would Von Maur associates describe you?

I would hope they would say that I’m fair and reliable, have integrity, and that I’m leading them in the right direction.

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Hointer Is High-Tech, High-Feel

BY CSA STAFF

Robotics and smartphone app power Amazon vet’s retail start-up

A Seattle-based retail start-up with an in-store backend robotic system and a smartphone app that rivals the convenience of an online shopping cart is generating big buzz these days. Founded and headed up by Nadia Shouraboura, former head of supply chain and fulfillment technologies for Amazon.com, Hointer combines the best of online and brick-and-mortar retailing to take the hassle out of shopping.

The pilot store, in Seattle’s University District, features the latest in designer jeans and has a hip vibe that befits its high-tech underpinnings. Shouraboura describes her concept as "the micro-warehouse with mobile control." At press time, a location was set to open at Stanford Mall, in Palo Alto, Calif. Two more stores are slated to open by summer, in downtown Seattle and Las Vegas.

Here’s how Hointer works: Before shopping, customers download the Hointer app. As they walk around the store, they scan the QR codes on the merchandise tags with their smartphones. As customers select an item and the proper size and color via the phone app, the product is dropped into a virtual shopping cart. All of the clothing on display is hung from the ceiling, making items easy to scan and to examine.

Once the customer is finished selecting merchandise, he clicks the "try on" feature on the app and is sent to a designated fitting room. The app sends a message to the stockroom, where a robotic system (from Germany) finds the requested items and "delivers" the goods to the appropriate fitting room. The company isn’t revealing any of the details of how this process works. But it is designed to take 30 seconds or less.

Using the app, the customer can request a new size or style directly from the fitting room, with the requested merchandise delivered promptly. Passed-over merchandise is discarded into a designated bin, and it is automatically removed from the virtual shopping cart. (There are two chutes, one for items in and one for items out.)

The app allows Hointer to track everything in real time and also lets customers rate clothing. Brands can then access that data via Hointer’s portal to find out such information as what items customers are trying on but not buying.

Shouraboura earned a Ph.D. in mathematics from Princeton University and worked for several start-ups before joining Amazon, where she spent eight years. She has big plans for Hointer, which features such brands as Ben Sherman, 7 for All Mankind and True Religion. Initially, the selection was weighed heavily to men’s denim, but the mix has been expanded to include some accessories and women’s items, with more on the way.

In addition to expanding Hointer to more locations, Shouraboura is also looking to share some parts of its technology with others.

"We can now report that in the pilot store we have reduced our footprint, eliminated piles and avoided shrinkage, but the best part is that most customers told us that they loved the experience and had fun shopping," Shouraboura wrote in an open letter to retailers on the company’s website. "We have started to work with several exceptional retailers, using our technology to reinvent their stores."

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Worth Watching

BY CSA STAFF

Here are several pure-play online retailers that are venturing into the physical space — or thinking about making the leap:

Rent the Runway, which rents high-end designer gowns, dresses and accessories to women for weddings and other special events, will use a recent infusion of $24.4 million in financing to build showrooms where shoppers can try on the frocks and consult with stylists. The popular online destination reportedly has Chicago next on its agenda.

Fab, best known for its “everyday design” philosophy and amusing, irreverent attitude, is reported to have its sights set on brick-and-mortar. The site, founded in 2010 as a social network, has evolved into one of the Web’s fastest-growing and hottest retailers, with a massive selection of design-focused goods that include kitchenware, food, furniture, art, clothing, accessories, kids’ items, novelties and gadgets.

Initially dismissed by some as too hipster and edgy, Fab now counts more than 11 million registered customers across 26 countries. Sales grew by more than 500% in 2012, with one-third coming from Fab mobile apps.

According to founder and CEO Jason Goldberg, 90% of the product featured on Fab is not available at any other major store, including Amazon. (Soon-to-launch lines of Fab private-label goods will only cement its positioning.) In interviews, Goldberg has made no secret that Fab, which closed a $105 million financing round last summer, is thinking about brick-and-mortar.

“Just like Apple reinvented the retail experience for computers, we think we can reinvent the retail experience for design,” Goldberg told Mashable.com in July. “Expect to see Fab stores in the future.”

BaubleBar opened its first physical location in New York City last year, in part to monitor buying trends and data culled from face-to-face interactions with shoppers to inform its merchandising strategy.

Called “The Bar,” the bright and cheery shop combines baubles from the trendy jeweler’s online site with in-store-only offerings. It also rents itself out for “Girls’ Nights Out” and other special events.

Kiddicare, the U.K.’s top online baby gear shop, has announced plans to open 10 baby superstores throughout the country. The shops will give customers “a true multichannel experience,” promised the company, owned by British grocer Morrisons.

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