Wards Puts on New Outfits, New Image
With a new merchandise mix, a new store format model, a new advertising campaign and a new name, the department store chain formerly known as Montgomery Ward hopes to reverse its sagging fortunes.
“We’ve changed everything to change your mind,” the retailer says in television and radio commercials launched this week, the first corporate image ads to substitute the store name Wards for the long-standing Montgomery Ward. Montgomery Ward & Co. will gradually change the name on its store signs.
“We believe the name Wards is more contemporary and customer-friendly,” company spokesman Charles Knittle said.
Wards executives also believe that their new apparel offerings are more contemporary and attractive. That is at least the message in their new advertisements.
However, industry analysts say Wards will have a tough time selling a new image and its merchandise to the more fashion-conscious consumers who have shunned the chain for more than a decade.
“You can change the merchandise mix, but it’s difficult to get new shoppers into a store,” said Richard Nelson, a Chicago-based industry analyst at Stephens Inc. “The odds don’t favor turnarounds in retailing. Turnarounds are very difficult because consumers develop negative predispositions that they don’t drop easily.”
Wards actually acknowledges that image problem in its ads, in which unrehearsed consumers candidly inspect Wards’ merchandise. One commercial features a group of women raving about a selection of new clothing. When asked to identify the seller of the merchandise, the women make guesses until they’re given the correct answer.
“Montgomery Waaarrd!” repeats one of the stumped women.
Wards created its identity problems by making two strategic mistakes in the 1980s. Faced with the rise of discounters such as Wal-Mart and Target, Wards decided to create a cheaper version of itself, adding lower-quality products to its merchandise mix and cutting prices below those of Sears and JCPenney, its chief competitors.
However, Wards couldn’t cut prices low enough to compete with the discounters, and it lost customers who were willing to pay marginally higher prices for better brands and a more attractive shopping environment.
The other misstep was a response to emerging consumer electronics chains such as Circuit City. Wards scaled back its apparel selection to expand its touted Electric Avenue departments with more home entertainment merchandise.
The result: Wards’ apparel sales suffered and the retailer did not make significant market share gains in consumer electronics, a business with thinner profit margins, because it couldn’t match the prices of specialty chains.
Wards filed for Chapter 11 bankruptcy reorganization in July 1997, a year in which it posted its largest loss ever--$1.16 billion. When it reached that financial nadir, many analysts began a death watch.
“Wards erred by trying to be everything to everyone,” said Randall Lambert, a managing director for Los Angeles-based investment firm Chanin, Kirkland, Messina, a Wards creditor.
Wards Chairman Roger Goddu, a former Toys R Us executive hired in January 1997 to engineer a turnaround, agrees.
“We confused the consumer because we didn’t have an identity,” Goddu said. “We recently moved out all the discount merchandise, and we’ve stocked higher-quality merchandise at competitive prices. We want to be known as a value-driven department store.”
Goddu said Wards’ appliance and mattress departments have continued to do well. However, Wards’ core customers--the consumers it also covets most--are women ages 30 to 55 with a household income of $25,000 to $50,000. Those shoppers, Goddu said, are drawn primarily by good values in home furnishings and apparel.
In a bid to reach her, Wards recently expanded its apparel selection 30%. It added national women’s brands and launched Radcliffe, a private label by Sag Harbor, a firm better known for its national brand clothing.
It is beginning to display clothing in a more stylish manner--utilizing some of the techniques of more fashion-forward department store chains. It is using mannequins more often in stores, dressing them in coordinated outfits it hopes consumers will buy.
Apparel accounts for only about 35% of Wards’ sales. The company wants to boost that to 40% soon and 50% eventually, but analysts are skeptical.
“Cosmetic changes can’t transform their clothing into popular brands,” said Doug Hope, publisher of the Atlanta-based Display & Design Ideas, a retail design magazine.
Wards has made other changes. It has been dumping money-losing operations as well as merchandise with thin profit margins. For example, it closed 101 poorly performing stores in 1997 and no longer sells personal computers.
Those changes and some expense reductions helped Wards lower its loss during the first six months of this year to $170 million, compared with a loss of $570 million for the same period a year ago.
The Chicago-based retailer recently unveiled three redesigned stores in Las Vegas; Bloomingdale, Ill.; and Towson, Md. To get people into the stores, Wards mailed videos of the converted sites to consumers in those communities.
Goddu hopes to complete a bankruptcy-ending settlement with creditors by spring so he’s free to use funds to gradually convert the chain’s stores--including its 20 Southern California locations.
The prototypes have a racetrack design in the center of the store instead of the block-like layout of traditional department stores. In the racetrack circle are high-traffic departments such as women’s apparel. The design allows shoppers in the center to more clearly see the various merchandise departments. Goddu said he cannot predict how many stores will be converted until the company measures the effectiveness of the new format.
Meanwhile, Goddu is staking his hopes on the “changed everything” slogan to lure new shoppers.
“There’s a risk in this advertising approach because you don’t want to disappoint,” Goddu said. “But we think we have our house in order.”
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Remaking Montgomery Ward
In a bid to alter its image and rejuvenate sales, Wards has recently dropped some “hard line” products such as computers to make room for more “soft line” goods such as apparel and certain home furnishings. Here are some of the company’s merchandising changes.
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IN: New at Wards
Gloria Vanderbilt (women’s wear)
Starter (women’s active wear)
Harve Benard (women’s wear)
Egyptian cotton towels
230-count sateen sheets
220-count all-cotton sheets
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OUT: No longer available
Personal computers
Bicycles
Electric shavers
Ceiling fans
Camping equipment
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Source: Montgomery Ward
