JACOBSON’S PUTTING MORE ZIP IN ITS IMAGE
Byline: Sophy Fearnley-Whittingstall
LIVONIA, Mich. — Jacobson Stores Inc., long a bastion of good taste and refinement, is trying to shake off its staid image.
The Jackson, Mich.-based specialty store chain, which traditionally catered to the carriage trade with conservative assortments, is trying to improve sluggish performance by adding more fashion-forward merchandise.
At the same time, it is trying to expand into new regions.
“The focus of our strategic plan is an effort to build sales growth by expanding our existing business and looking for new markets,” said Mark Rosenfeld, chairman and chief executive officer, at a recent interview at the store, here.
Jacobson’s 25 stores in Michigan, Ohio, Indiana and Florida had sales of $403.8 million in 1993. Women’s apparel accounts for 62 percent of Jacobson’s business, Rosenfeld said. The chain also carries men’s, children’s and cosmetics as well as home and gift merchandise.
Here are some of the key changes and improvements Jacobson’s has put into effect:
Six stores are currently being renovated. Changes include better lighting, new fixtures and a reallocation of space. The renovations are due to be finished by the end of the year.
The chain is introducing more fashion-forward merchandise to target a younger, more contemporary customer.
There has been a reallocation of space within stores. Cosmetics and apparel are among the beneficiaries.
Jacobson’s plans to expand into new geographic regions, opening one or two stores a year. A 161,000-square-foot store in Louisville, Ky., is opening this month. A 120,000-square-foot store in Kansas City is scheduled to open next fall.
Jeff Stein, managing director of McDonald & Co., a Cleveland investment firm, said Jacobson’s has been struggling in recent years and losing market share to competitors such as Hudson’s in Detroit; Neiman Marcus, Burdines and Saks Fifth Avenue in Florida, and Parisian, which recently entered the Indianapolis and Livonia markets.
“Now they’re trying to become more distinguishable and develop more unique merchandise,” Stein said.
Fashion is getting a lot more attention at Jacobson’s.
“We want to be the dominant fashion retailer in every area we’re in,” said Jim Fowler, president. The company is shifting away from moderate basic lines into more fashionable lines, but it isn’t backing away from its bridge and designer businesses, which include lines such as Escada, St. John and Giorgio Armani.
“We already have a fairly dominant position in the designer area and in traditional,” Fowler said. “We think there’s an opportunity to pick up market share in more contemporary, faster fashion.”
“There are a lot of customers who want merchandise that’s more fun and exciting,” added Jim Batterson, vice president of sales promotion.
To target a younger, more contemporary customer, the chain added resources such as Anne Klein, Adri, Donald Deal, Melinda Eng, Frances & Rita, David Dart and Max Studio. It also expanded its Barbara Bui and Sophie Sitbon offerings.
Overall, Jacobson’s has tripled the amount of fashion-forward merchandise it carries, while reducing its moderate, conservative lines by about 10 percent, Fowler said.
The strategy has gotten mixed reviews from analysts. Deborah O’Shea, a retail analyst with Alexander Paris in Barrington, Ill., said there is a market for more upscale apparel.
“The [high-end market] may not be as large as the lower-end value market, but if you’re one of the only people doing it you’re going to do well,” she said.
According to Stein, however, the changes have yet to affect Jacobson’s overall performance.
“The jury’s still out,” Stein said, noting that he expects the company to report a decline in new income for the first three quarters with an improvement in profits in the fourth quarter.
Jacobson’s is also taking a more aggressive approach to its cosmetics business. The department’s space has been increased by an average of 50 percent in remodeled stores; new lines by Trish McEvoy and Elizabeth Arden have been added.
To make way for more apparel and cosmetics, furniture was eliminated from all but two stores, which freed up about 3 percent of the floor space. It was redistributed to cosmetics, apparel, bed, bath and table wear.
“We decided furniture wasn’t a business with a future at Jacobson’s,” Fowler said. “Other areas are much more productive.”
Furniture departments were retained at two stores in Saginaw, Mich., and Sarasota, Fla., where the business had historically been strong.
The moves are paying off. Fowler noted that replacing the furniture area with a children’s shop in the Birmingham, Mich., store brought a sales increase of more than 20 percent in the first month.
Renovated stores are generating double-digit sales increases, compared with 1.5 to 2 percent increases in other stores, Rosenfeld said. He also noted that those results understate the stores’ true performance because they have had to absorb the drop from sales that had been generated by furniture.
Overall, Jacobson’s reported a same-store sales increase of 4 percent in the first quarter and 3 percent in the second quarter. The figures exclude sales from the discontinued furniture departments.
The company is expanding to the West and also filling in gaps between its Midwest and Southern stores.
In addition to the Louisville and Kansas City stores, negotiations are under way for sites in Cincinnati and Cleveland. Other locations being considered are Nashville and Memphis, Rosenfeld said.
Jacobson’s would like to add an 11th store in Florida, in Boca Raton, Del Rey or Miami, Rosenfeld said. The chain is also considering growth through acquisitions.
“We might look at some Macy’s stores, but don’t have any formal plans,” Rosenfeld said.
According to sources, I. Magnin approached Jacobson’s to discuss several of its units. Magnin is reportedly considering selling eight of its 12 units before its parent, R.H. Macy & Co., emerges from bankruptcy at the end of December.
Expansion plans have been eased by improvements in Jacobson’s distribution systems, which have resulted in a 20 percent increase in efficiency, according to Fowler.
“We’re processing more units with fewer people,” he said.
The company opened a new distribution center in Jackson, Mich., three years ago, enabling it to serve twice as many stores. Its Winter Park, Fla., distribution center was expanded in 1993 to serve 50 percent more stores. The new systems include automatic replenishment to insure stores are always in stock on staples and basics.