Mass Chains Tuning Stocks Store by Store

NEW YORK -- Micro-marketing is not just for upscale stores.<BR><BR>So say a group of leading mass retailers, who contend they can successfully tailor apparel assortments to the specialized needs and tastes of local markets around the...

NEW YORK — Micro-marketing is not just for upscale stores.

So say a group of leading mass retailers, who contend they can successfully tailor apparel assortments to the specialized needs and tastes of local markets around the country.

Merchandising that is geared to specific markets includes the following:

  • More petite sizes in areas where there is a high Hispanic or Asian population.
  • Brighter colors and fancier children’s apparel in Hispanic areas.
  • Western-theme merchandise in Western stores.
  • More women’s accessories in areas with a concentration of African-Americans.
Generally, the mass merchant will first categorize stores according to certain consumer demographics, then bring local store management into the product development and buying processes.

Kmart has implemented several micro-marketing strategies in apparel, according to Rick Pellino, divisional vice president of women’s wear for the discounter.

For example, Kmart divides its 2,200 stores into such market-based groups as retirement-area stores, beach-area stores and Western locations, Pellino said.

“We have a position known as ‘area merchandise marketing coordinator,’ or AMMC, whose job is to improve communications between the buying staff and the store-level managers and help shape mixes to special needs,” he said. “For example, we may find that we have only 150 stores that can sell a traditional western shirt, so we would end up carrying the shirt in those stores.”

Other examples are that stores near ski resorts carry ski jackets and ski pants, neither of which are part of the retailer’s regular assortment. More small sizes are carried in markets with a large Asian customer base, particularly in Southern California.

“For our Puerto Rico market, we have assigned a buyer to supplement our core products with appropriate merchandise for the local market,” Pellino said. “The buyer considers climate as well as cultural differences when making a buy.”

While this system has been in place for several years, Pellino said Kmart has recently been increasing its number of coordinators, so they can devote more attention to fewer stores. Currently, there are 15 apparel coordinators, each responsible for 150 to 200 locations. He added that information technology now available to retailers allows Kmart to make appropriate merchandising shifts more quickly and accurately than ever. The ability to assess particular market conditions has speeded stock replenishment, keeping hot sizes and colors on the floor.

Target’s micro-marketing efforts are based on the results of a study it conducted last fall to determine how a few factors — age, climate, small-town community and African-American, Hispanic or Asian heritage — can affect consumer buying decisions. The study revealed that Target should make some significant merchandising shifts to meet the needs of local markets.

These included merchandising more dressy children’s clothing in stores with a large Hispanic clientele and more fleece in northern California than in the southern part of the state, according to a Target spokeswoman.

For small-town stores, the company offers a wider assortment of apparel because, the spokeswoman said, there are usually fewer apparel outlets for consumers.

More robes, intimate apparel and women’s hosiery are offered in units that have an older demographic.

To help it implement these changes and micro-market more effectively, Target gives its store managers considerable leeway in assorting merchandise.

“Store managers can now order specific quantities within categories, or choose not to order various items in that category at all,” she said, adding that a computer system installed two years ago enables the retailer to accommodate these specific choices. “Before, if they chose a particular category, they had to take all the items in it.”

“You can make some pretty specific assortment decisions for local markets,” added Gary Vasques, senior vice president and director of marketing with Caldor.

The Norwalk, Conn.-based discounter begins its micro-marketing efforts by grouping stores with similar demographics, like urban, African-American, Hispanic and cooler climate markets. Assortments are developed to suit those profiles. For instance, more dresses and career clothing are carried in urban markets.

At ShopKo, buyers also use input from managers in the field to make buying decisions for local markets — and ShopKo’s store managers can buy merchandise on their own as well. They can make recommendations on specific items from local vendors, referring them to the retailer’s regular buyers, according to Skip Chustz, senior vice president of merchandising.

“The buyers have to approve the vendor, however, so we can maintain our quality standards,” he said.

Arthur Martinez, chairman and ceo of the Sears Merchandise Group, noted in a recent speech the company is also relying more on assortment recommendations from managers in the field.

“Input on decision-making must originate at levels much closer to the customer,” he said. “For the first time, our store managers are looked to for local market intelligence and merchandising input.”

Observers say they’re not surprised that mass merchants are moving away from cookie-cutter assortments.

“Stores have to do micro-marketing today,” said Janet Mangano, retail analyst with Burnham Securities. “A certain percentage of the merchandise must be customer-geared, not even just to the market, but to specific store locations.”

“It’s getting to be a stronger trend,” concurred Edward F. Johnson, director of Johnson Redbook Service, a division of Lynch, Jones & Ryan.

Retailers and analysts agree that micro-marketing efforts generally produce subtle rather than dramatic changes, yet they are important.

For example, ShopKo’s Chustz said, “In our basic jeans program, we have not been running small sizes, but we did put that size range on in our Western stores to accommodate a need.”

Retailers and analysts also agree that because mass chains are so large, the costs involved in adjusting assortments by market tend to be minimal.

“Considering that Kmart has 2,200 locations, our micro-marketing parameters are still pretty big,” said Kmart’s Pellino. “We get the benefit of ordering in big numbers.”

Besides, executives said, any extra costs are more than made up for in improved sales, fewer markdowns on unwanted merchandise and better stock positions.