RETAILING : Carter Hawley Joins Outside Buying Firm : Broadway’s Parent to Shut Development Office
Carter Hawley Hale Stores, owner of the Broadway, said Thursday that it is shutting down its New York product development office and will affiliate with Associated Merchandising Corp., a big research and buying organization for Dayton Hudson, Bloomingdale’s, Harrod’s in London and others.
About 25 of the 220 employees of Carter Hawley Hale Market Services will move to AMC’s offices on Aug. 1 and will work with AMC staff members to develop private label products. Carter Hawley Hale already has a large commitment to brands made exclusively for its five department store divisions under such names as Neil Martin, C. C. Courtenay and Cassis.
The company said most of Market Services’ merchandising employees will be offered posts at department store divisions, while many of the 105 support personnel will lose their jobs.
Carter Hawley Hale, which opened its independent product office with some fanfare six years ago, said joining AMC will provide access to AMC’s vast store of market research and greater buying clout.
Philip M. Hawley, chairman and chief executive of the Los Angeles-based company, said that the shift “isn’t essentially an economic decision” and that “the economics are close to a wash.”
$3-Billion Client
Retail sources estimate the cost of running Market Services at $17 million a year. Hawley said expenses for the first two years with AMC will probably average $13 million to $14 million a year. In addition, Carter Hawley Hale will have the costs of closing down the New York office and adding Market Services workers to other divisions.
The addition of Carter Hawley Hale is a big boon for AMC, which through a worldwide network of 26 offices represents groups of retailers in making purchases from U.S. and foreign manufacturers. With Carter Hawley Hale, AMC picks up about $3 billion in business.
Despite widespread turmoil and consolidation in retailing, AMC has managed to boost its income by attracting mass merchandisers. Federated Department Stores, owner of Bloomingdale’s, pulled out of AMC’s domestic operations and reportedly is also considering dropping the organization as its overseas representative.
Hawley disputed the suggestion that Carter Hawley Hale’s move to AMC would lead to more of the “sameness” syndrome that has permeated retailing in recent years. A frequent customer complaint is that department stores carry merchandise that is too similar. Although most house brands tend to be mainstream in styling, they do at least offer some distinction.
“Our private label strategy remains unchanged,” he said, adding that the company still plans for private labels to eventually account for 20% of overall sales. House brands, which generally sell for less than comparable national brands but are more profitable for the retailer, now account for about 17% of volume.
Carter Hawley Hale has 35,000 employees and operates 113 department stores under the names the Broadway, the Broadway-Southwest, Weinstock’s, Emporium Capwell and Thalhimers. Thalhimers, Emporium and H. Capwell were among the founding members of AMC in 1916.
