NEW YORK — Terry Lundgren revealed his mantra on Wednesday: “I am about sales. I am about growing comp-store sales.”
As May Department Stores Co. searches for a new chief executive officer after the resignation of Gene Kahn last week, and other chains struggle with poor sales, Lundgren, the chairman, ceo and president of Federated Department Stores indicated his company plans to sustain its momentum with a simplified pricing strategy, focus on boosting the home-furnishings business, shed all regional nameplates to concentrate on Macy’s and Bloomingdale’s and launch corporately developed national advertising.
Dismissing contentions that department stores are losing their steam, Lundgren acknowledged Wednesday in a speech at the National Retail Federation convention here that the sector “has been a challenging business for as long as I’ve been in it. Trying to break away from the pack is a challenge every day.”
To figure out what to do, Federated, he said, conducted “a tremendous amount of research. We talked to thousands of customers beginning about three years ago. It was not a part of our culture. The reality of the customer changed and we had to change with her.”
Critics contend that consumers are abandoning the malls and department stores in favor of downtown shopping, lifestyle and power centers. But Lundgren asserted, “That’s not true. So many customers are in our stores and in the malls. But there are so many customers that we’re not completely satisfying….She’s looking for affordable fashion. She’s looking for newness, and something that fits her lifestyle.”
Lundgren said Federated developed four priorities. One was differentiating the assortment and sharpening the editing, which has involved intensifying the private label business. “Private brands have been the most successful business in our stores” — including INC, Alfani and Charter Club — which does more volume than any other brand sold at Macy’s, ahead of such powerhouses as Estée Lauder and Ralph Lauren.
The second priority has been to revamp the pricing. While Federated will maintain a “regular and on-sale strategy beat” to its business, everyday low pricing will be linked to about 5 percent of the merchandise this year compared with about 3 percent last year, he said.
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