QUESTROM: SHARPEN SELLING TO PEOPLE OVER 40

Byline: Mark Tosh

NEW YORK--Retailers and designers need to do a better job of merchandising to people over 40, especially women, Allen I. Questrom, chairman and chief executive officer of Federated Department Stores, said here Monday.
Speaking at the opening session of the 84th annual National Retail Federation convention, Questrom said that between the years 1985 and 2000 about 55 million people will have moved into their 40s. This means department stores will have to change their apparel assortments, with more emphasis on larger sizes, and refocus the cosmetics area for an aging consumer.
Questrom, who was part of a panel entitled "The Economic Agenda and What the Future Looks Like for Retailers," also made these other points:
He cited a lack of fashion excitement in women's apparel, but predicted a "pretty good" year for retailing, with a growth rate of 2.7 to 3 percent.
He said he would not be averse to an eventual increase in the minimum wage.
He applauded efforts to open up world trade and said he would not like to see a value-added tax.
He said the department store can withstand the challenge of other types of retailing.
About 2,000 people attended the opening NRF session at the Sheraton New York Hotel. More than 15,000 people are expected to attend the three-day convention, some of whose sessions are at the Hilton Hotel.
"The baby boomer has been aging, believe it or not," Questrom said to a packed ballroom. "What's happening is that we have to make an adjustment to the consumer as they move around the age brackets."
The lack of fashionable merchandise for the older woman also is one of the factors contributing to lackluster apparel sales, Questrom said later during a question-and-answer session.
"People are aging and many designers are not dealing with women who are in their 40s," he said.
He also cited a "buildup of supply" in women's closets and a lack of exciting new fashions as other factors holding down apparel sales.
"I believe there is pent-up demand for female apparel; men's apparel has been very strong," he said.
Questrom said merchandise that is exciting to the consumer can achieve success even if it carries a high retail price. He cited the "phenomenally successful" Wonderbra as one example.
"[The Wonderbra] also brings a focus on shape, which is becoming more and more important versus a loose deconstruction look," he said.
Questrom predicted the retail business will "have a pretty good 1995," despite the pessimism on Wall Street and among analysts. He said Federated forecasts the economy will grow at a rate of 2.7 percent to 3 percent in 1995.
He said one unexpected benefit of the weak retail sales in November and December is that the Federal Reserve may hold off on increasing interest rates that had been expected later this month. Continued increases in interest rates "could bring about a recession," Questrom said.
Asked what advice he would give to President Clinton and House Speaker Newt Gingrich (R., Ga.) if given the opportunity, Questrom said he would encourage the ongoing effort to open up world trade and discourage any effort to enact a value-added tax, which, he said, has not worked in Canada or Europe.
He also said an increase in the minimum wage, which the Clinton administration reportedly is considering, could benefit retailers by putting more money into consumers' hands. Still, he said, the issue is "not something I want to tackle in the next two years."
Questrom also said he believes department-store shopping will remain a favored option of shoppers even as direct mail and electronic options become more readily available.
"There is nothing like touching [the merchandise], seeing the dynamics of people walking around the store and smelling the products," he said.
Another critical area for retailers, Questrom said, is the continued attempt to lower operating costs as a means of providing more "value" to the consumer. Federated had trimmed almost 3 percent from its operating costs over the past several years, he said.
"The reason for the purchase of the Macy organization was to continue to do that," he said, referring to Federated's recent merger with R.H. Macy & Co. "We believe that was essential to continue the pursuit of lower costs."
Joining Questrom on the panel, which was moderated by Tim Russert of NBC News, was Robert E. Nourse, president and ceo of Bombay Co. Inc., William Freund, chief economist emeritus, New York Stock Exchange, and Richard B. Fisher, chairman of Morgan Stanley Group Inc.
Nourse said retailers are "agents of change" and must continue pursuing those efforts. Among the changes that affected retailers in 1994, he said, were a decline in mall traffic and an increase in business at outlet centers and power retail centers.
"I think we will continue to see a floodgate of innovation, of new concepts and new shopping formats," he said. "Our world is going to turn topsy-turvy over the next 10 years. If we're sensitive to those changes and if we develop the retail concepts to take part in them, then I think we are going to be in position to have a very good future."
Freund said he does not expect the Federal Reserve Board to raise interest rates later this month because of the slowdown in retail sales and the economic crisis in Mexico. Freund also predicted the economy will slow toward the end of the year and retailers will end up with sales growth, before inflation, of about 2.5 percent.

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