If there’s a case to be made for the viability of department stores, look to Davenport, Iowa, population 101,000, and the home of Von Maur.
The privately held, family-run Von Maur regional department store chain turns 150 years old next year, which in retail is an eternity.
“We will have all kinds of celebrations for associates, customers, with banners and advertising, and probably a big bash. We are going to do it up,” said Jim von Maur, president and chief executive officer of Von Maur, and the fourth-generation leader of the business.
Von Maur has managed to escape decades of department store attrition by avoiding the traps many retailers fell into, like overexpansion, overpromoting to push volume, or taking on too much debt. Von Maur has outlasted some big retail nameplates that were either gobbled up by larger retailers or went out of business on their own, like Marshall Field’s, Hess’s, Carson Pirie Scott, Younkers, and Abraham & Straus, among others.
According to its CEO, Von Maur, with its 36 department stores and its 70-unit Dry Goods women’s specialty chain, generates about $1 billion in annual volume, and about $200 in sales per square foot.
“We are about profitable selling and not all about volume,” von Maur told WWD. “We’re very content.”
The company has kept a clear course and a clear identity, banking heavily on national brands without the kind of heavy private label buildups seen at other department stores and mass chains. Some key brands at Von Maur are Vineyard Vines, Tory Burch, Kendra Scott, Eileen Fisher and Tommy Bahama. Key brands at Dry Goods include Blowfish Malibu, Lola Grace, Originality, and Thread & Supply.
Von Maur is supported by a loyal clientele in the secondary and smaller markets in 15 states primarily in the Midwest and South where the stores are concentrated, places like Cedar Rapids, Iowa; Livonia, Mich., and Hoover, Ala., where there’s less competition. While Davenport has a small population, von Maur points out that his stores there draw business from a greater Davenport area population of about 400,000.
The company does have stores in a handful of large cities including Atlanta, Indianapolis, Birmingham, Ala., and Columbus, Ohio. Von Maur entered the Atlanta market a decade ago and currently has three stores there.
“We are making gains in Atlanta,” von Maur said, though he acknowledged, “It is hard when [customers] don’t know you as well.”
Von Maur also entered New York State with a store in Victor, which is near Rochester. Von Maur considers its key direct competitors to be Dillard’s, Macy’s and Nordstrom.
“It is incredible when you think about it,” von Maur told WWD, discussing the company’s longevity and why it has been in business for so long.
“I attribute it just to the family sticking to our values and evolving with the times — sticking to core principles of service and great selection at a great price. We have had to adapt over the years. Retail is constantly changing and we’ve done a pretty good job at that.
“But we never got ahead of ourselves in taking on too much debt, or getting into all the trends that are out there,” von Maur added. “A lot of that is because we are family-owned.” His uncle, Charles von Maur, serves as chairman.
“We don’t have the pressures of Wall Street to grow faster. If we were reporting to Wall Street investors, they would be questioning why do we offer all these services. Why are we doing free delivery,” anywhere in the U.S. “Why are we offering free gift wrap. We’ll box and wrap what you purchase for free. Our return policy is very customer-friendly. It’s very liberal and easy to make a return.”
Another one of Von Maur’s key service features is its interest-free charge card with no late fees and no annual dues. The card has been around since 1988.
There’s been management continuity, not the typical revolving door of executives seen at many other retailers. “We’ve had four CEOs over 150 years. That has allowed us to think long term, and not be carried away with all the whims out there,” said von Maur.
“One hundred fifty years is a long time. You know we have a list of all the department stores that are gone. It’s in the hundreds. Every community at one time in the U.S. had a family department store. We are pretty much the last one,” with a few exceptions. There is the Reading, Pa.-based Boscov’s, run by chairman Jim Boscov; the family-owned Beall’s department store based in Bradenton, Fla., run by Matt Beall, and of course, the Seattle-based Nordstrom, a public company controlled by the Nordstrom family.
“Everyone talks about customer service, but we really deliver,” said von Maur. “We are pretty intense about it and we need to be because we don’t compete on private label and big sales. That’s just not what we are about. Our stores are clean and bright, and the aisles aren’t cluttered. They’ve always been that way. We are not throwing around sales racks. There’s a very residential environment. We still have pianos and live music, and we spend a lot of money reinvesting in our stores. Our selling payroll is significantly higher than other retailers, almost double what a typical store would have, which drives our finance department crazy.”
Associates have a personal touch, continuing to send hand-written notes to customers. “They let them know when something new has arrived to the store, or if something is marked down,” said von Maur. “And we spoil our associates. We are closed on all the major holidays — Easter, Memorial Day, the Fourth of July, Labor Day, Thanksgiving, Christmas and New Year’s Day, and we close early on the eve of Thanksgiving, Christmas Eve and New Year’s Eve.”
While markdowns are taken, “We don’t have any ‘true’ sales events unless it’s vendor specific — no promotions,” von Maur said, explaining, “If, for example, Under Armour for Thanksgiving is doing 25 percent off, we go along with it. We don’t do a storewide event. We don’t think it’s fair. We don’t like to play games with the customer. We do permanent markdowns so everybody has a chance at that price. It’s not going to fluctuate. When you have fresh new goods coming in, why would you promote?
“We are more profitable because we are selling goods at full price,” von Maur added. “When something is selling well we keep it at its original retail and order more. If the selling slows down, we take the markdown really quickly. If a customer doesn’t respond to an item immediately, and we know it’s not going to sell, we mark it a third off right away. That’s why vendors love us so much because we are not constantly promoting their product.
“We are known for what we stand for — a nice appealing look. We are also updated. We have a traditional selection but we are not afraid to be fashion-forward. We find lines that you are just not going to find at another department store. Before the pandemic we were bringing in a lot of lines from Great Britain. We will have mainstream vendors, recognized brands, and we will seek smaller ones you’re not going to find anywhere else.”
The company has been evolving its home offering and could be characterized as a fashion department store. In prior years, there were sofas and draperies, though recently, the emphasis is on artwork, small chairs, mirrors, ornaments and other decorative items.
“Our gift department is carrying a lot of home goods,” said von Maur. The company is working out what home products make financial sense to offer and a lot of that has to with Von Maur’s free shipping service.
Von Maur is cautiously opening new ones. Two are slated for 2022: a two-level, 122,000-square-foot department store in Rochester Hills in north Detroit scheduled for March, and a one-level, 85,000-square-foot department store in Madison, Wis., in the fall. Von Maur will also relocate its longtime Des Moines store into a newer structure vacated by a former Younkers unit.
Asked what new geographies the company could expand to, von Maur said, “It’s more opportunistic. We’re probably not going past the Rockies or anything like that. There could be something in Denver, and Pittsburgh and Detroit could have more stores. Our area of focus [continues] to be the Midwest and Southeast primarily.
“We want to keep growing at a steady pace, really based on the opportunity that is out there,” said von Maur. “If we continue to find a good deal in a good mall in a good community, we could open up to five stores in one year if we find the locations we like.”
For the past decade, Von Maur has been rolling out 4,000-square-foot Dry Goods specialty stores focused on junior and contemporary women’s apparel, accessories, shoes and gifts with an interior design that has “a SoHo feel like an old vintage store,” von Maur said.
“Dry Goods is on fire,” said the CEO. “In 10 years, we went from zero to 70 stores in 18 states. We have been opening them so fast I can’t keep track. They are extremely profitable.”
In 2020, the company took a break from opening additional Dry Goods units due to the COVID-19 pandemic. In 2021, just one store opened, but back in 2019, the company opened 10 units. On average, the company has been opening five to seven Dry Goods stores each year.
Von Maur said the Dry Goods units each generate $1.5 million to $2 million in sales, while some do as much as $3 million.
Asked if there could be a cap on the openings, “We see no limit there,” von Maur replied. “We will open as many as we can. The productivity on these Dry Goods stores is tremendous.”
There could also be growth with e-commerce.
“Our online business is very developed, though it is not as big of a percentage as some other retailers,” said von Maur. “It was 8 percent of the total in 2091, and has crept up to around the 10 percent range,” with the pandemic. “We are always trying to improve it. We do provide BOPIS,” the buy online, pick up in store service. “I saw the online business certainly going up during the pandemic. When the pandemic started to subside, people were just pouring into the stores, when the lockdowns let up. Mall and store traffic for us was incredible. People love to come to our stores. If they want to buy it online, we will certainly take care of it. I think people love our store environment and the customer service. They want to get out and interact. We make shopping a fun experience and we offer a wide selection.”
By comparison, at Nordstrom, e-commerce accounts for 40 percent of total sales and the goal is to raise it to 50 percent. At Macy’s Inc., online sales accounted for 37 percent of the retailer’s total sales in the first quarter of 2021. Because of the growth of e-commerce, there’s pressure on Macy’s, Kohl’s and other publicly held retailers exerted by activist shareholders to separate the dot-com and brick-and-mortar store operations into separate companies. That’s something Von Maur won’t have to worry about.
Asked if the company has a goal for how much of the company’s total sales e-commerce should represent in the future, von Maur answered, “We are going to let the customer tell us where it should be.”
Von Maur, like the rest of retailing, is confronted by the challenges of COVID-19, supply chain bottlenecks and labor shortages.
Nevertheless, “We’re having a record year. It’s the best of times and the worst of times. Sales and margins are incredible. Stores are so busy, but it’s so hard to find help,” said von Maur. “We’ve added retention bonuses, and thankfully we have a core staff of veterans that have hung in with us and have been able to keep the stores going. They are working long hours and covering a lot of square footage.”
Von Maur currently employs between 3,800 and 4,000 workers though in years past, the headcount stood at about 5,000.
Through the holiday season, “Demand is going to be extremely strong. We’re hoping the goods keep flowing in,” said von Maur. “I think we will have the merchandise we need to get through the holidays. It’s really dependent on the supply chain and I think sales associates will hang in there. We’ve had some huge receipt days these past few weeks. Our distribution center is working overtime. Goods have been coming in. But it is hard to keep up with the demand. Surprisingly, men’s dress shirts and clothing, formalwear and suits have just been phenomenal. It’s because of a combination of all these homecomings and weddings that were put off, and just a lot of special events creating a lot of demand for formalwear. We have a rental program for tuxedos, which has been huge. Shoes are picked over. We need to fill in our sizes. We are getting our Ugg deliveries in.”