NEW YORK — Be mindful of macroeconomic forces, nurture the core shopper, maintain a strong brand and be passionate about fashion was the advice of several panelists who discussed the past, current and future state of retailing during a forum sponsored by Financial Dynamics Business Communications, the New York-based business communications firm.

The participants included James Famalette, president and chief executive officer of Gottschalks; Cynthia R. Cohen, founder and president of Strategic Mindshare; Richard Olicker, president of Steven Madden Ltd., and Gilbert Harrison, founder and chairman of Financo Inc.

During the forum, titled “Changing With the Landscape: Surviving and Thriving in a New Retail World,” Famalette discussed how the department store sector has evolved since the early Eighties.

The channel was originally seen as stores offering quality, brands, service, assortment and value, but with the rise of discount and outlet stores as well as big-box retailers such as Wal-Mart and Costco, department stores were challenged on pricing — a war they eventually realized they can’t win.

“Wal-Mart is the only one who will win the price game,” he said.

When specialty stores evolved in the Nineties, department stores were attacked again, but this time on fashion. Taking all the competition into account, “the department store industry sort of picked up its stuff and retreated, and that retreat meant a loss of market share,” said Famalette.

Now, however, department stores are making a comeback. Famalette cited Federated Department Stores as an operator getting back to the basics of retailing while recognizing the importance of offering a variety of desirable brands. Department store retailers also are learning that brands add integrity to a retailer’s own private labels.

“Branded product gives credibility to private label,” he said, noting, however, that Gottschalks strategy is to have its private label business make up 15 percent of the total business.

But Famalette stressed it’s important not to overwhelm shoppers with too many choices. More product doesn’t translate into more sales; rather, a clean approach “allows the assortment to speak for itself.” For example, Gottschalks had positive 6 percent September same-store sales but with 6 percent less inventory.

This story first appeared in the October 18, 2004 issue of WWD. Subscribe Today.

Steven Madden’s Olicker said that in order to thrive, his company has focused on getting product into the stores as fast as possible while keeping a very close eye on how the needs of the company’s core consumers change. Olicker said it’s critical to recognize how much consumers are into technology by embracing cell phones, iPods and instant messaging, products and categories he says Steven Madden competes against.

Recognizing how quickly the company’s target 13- to 30-year-old customer changes her preferences, the firm’s strategy is “to know what [the core customer] likes in the morning and in the afternoon.”

But, above all, Olicker said, companies must be passionate about their business. “Fashion is about passion,” he said, adding that Steve Madden constantly tries to “re-up the passion factor.”

Cohen said it’s important to realize that “one size does not fit all.” Cohen described five generations of consumers, all with different shopping preferences.

She dubs the oldest group as “Grays,” usually conservative spenders who prefer traveling. Meanwhile “Boomers” is the group holding the greatest spending power. In contrast, “Generation X” tends to be “upgraders,” consumers who prefer big-ticket items after “Googling” the Internet for product information and bargains.

Meanwhile, the “Gen-Y” crowd has “disposable income that is spent on entertainment as well as disposable clothing. They buy everywhere and want to be able to do it whenever and however they want to do it. They also have an attitude and are likely to order online and pick it up at the store,” Cohen said.

She also described a group called the “Speeders,” aged 13 and 14, who grew up trained by computers. “Being networked is how they look at the world. They do three things at once,” she explained.

Harrison said to survive and thrive in the current business environment, firms need to understand the forces at work in the market.

“There are several concerns,” he said. “The first is consumer spending, with the elimination of tax rebates, rising gas prices and consumer debt. The second is China, followed by Wal-Mart.”

“When consumers have to spend an extra $10 to $20 for gas for their car, it [becomes] a lot of money that is not going to the consumer directly,” he explained. “The income for the middle market is that it is not keeping up with inflation.”

China, he expects, will have an enormous impact on consumer prices.

“Within 10 years, 75 to 80 percent of textiles and apparel will come from China,” he said. “The balance, from Indonesia and other countries. The costs will decline by as much as 25 percent on garments. If the wholesalers pass this on to the consumer, there will be a tremendous drop in prices. Mexico will be hurt as the dollars and production are being sent to China.”

— Vicki M. Young and Meredith Derby