Who’s Minding the Store at Big Department Chains? : Business: Retailers try new marketing tactics. Debt loads and demanding customers are hurdles in the ‘90s.

If busy executives in Columbus, Ohio, hate to shop or cannot find the time, the Godfry’s men’s store will take its suits, ties and shirts to them.

Nordstrom employees are told: “If it makes sense, do it,” and at least once it made sense to let a customer return a 3 1/2-year-old pair of shoes.

Wal-Mart discount stores give customers who pay by check or credit card $1 if cashiers fail to call them by name and invite them back.

Welcome to the wonderful world of special touches and customer-driven retailing, where shopping is a pleasure, be it at folksy discount stores or service-minded specialty stores.

Unfortunately, a pleasant experience is not what shoppers have when they visit many of the nation’s full-line department stores. Instead, customers often complain of indifferent--even inept--service and uninspired merchandise.

These are fretful times for department stores. Several are slogging through the recession hip-deep in debt. On top of last year’s Chapter 11 filing by the owners of Bloomingdale’s, Burdines and Jordan Marsh, the recent decision by Carter Hawley Hale Stores Inc., the West’s only big department store company, to seek refuge from creditors has renewed concern that department stores might be going the way of the dinosaur. Many retailers, critics say, have become so preoccupied with paying off their debts that they have forgotten about their customers.

“No one has been minding the store,” said Marjorie S. Deane, a New York fashion consultant.

At the same time, thousands of malls nationwide that prospered thanks to department store “anchors” have themselves become rivals--a glorified form of department store for a new generation of shoppers, complete with Santa Clauses, food courts and other diversions that were once the province of individual stores.

Although few observers predict the disappearance of full-line department stores, most agree that major adjustments are needed if they are to thrive in the 1990s.

“The ‘90s are going to be a very unforgiving decade,” said Carol Farmer, a retail consultant in Boca Raton, Fla. “Marginal players . . . will not survive.”

For generations, the department store was the genteel arbiter of fashion and taste for Middle America.

As related in “Everybody’s Business,” a 1982 book of corporate histories, the first department store was started in Paris by Aristide Boucicaut. Called Bon Marche, which means “good bargain,” or just plain “cheap,” the shop sold only fabrics until the 1850s, when Boucicaut began arranging a variety of goods, each in its own department.

French law had prohibited merchants from selling more than one kind of merchandise in a shop. Some respected observers of the day dismissed as “horrible” Boucicaut’s idea of selling handkerchiefs and socks together. He also encouraged browsing, did away with haggling over prices, and occasionally ran sales.

These revolutionary practices inspired U.S. merchants such as Marshall Field, Eben Jordan, Rowland Hussey Macy, Benjamin L. Marsh and John Wanamaker. By the early 1900s, department stores had sprung up in major cities throughout the United States.

The “big stores” had colorful beginnings, with the founding merchants building business on instinct and showmanship. In 1900, a banker named George Draper Dayton, encouraged by the traffic at a Minneapolis corner, bought the lot and started Dayton’s in 1902. To promote the new store, he gave away food and showered state fair-goers from an airplane with a million blue feathers stamped “Dayton’s.”

Macy’s first efforts at the dry goods business in Boston in the 1840s failed miserably. His final entry in an account book read: “I have worked two years for nothing. Damn, Damn, Damn, Damn.” After trying his luck as a Forty-Niner, and with six other doomed retailing ventures, he persuaded an investor to lend him $20,000 for a store in lower Manhattan in 1858. That one took off.

Macy’s and its archrival, Gimbels, eventually became so popular that Hollywood enshrined them in the beloved holiday film classic “The Miracle on 34th Street,” in which the Macy’s Santa Claus sends customers to Gimbels when they cannot find the toys they want. Macy’s turned its annual Thanksgiving Day Parade, started in 1924, into one of the nation’s most enduring habits.

Until World War II, shoppers flocked to these downtown stores for convenient, one-stop shopping in handsome surroundings with high ceilings, crystal chandeliers and extravagant window displays.

Families got dressed up and made a day of it, taking a break from the rigors of shopping in the stores’ elegant tearooms. At holiday time, bright-eyed youngsters lived for a visit to this or that store’s Santa.

“I felt they were like the town square,” said Maryon Lears, a lifelong Los Angeles resident and former chief executive of Silverwoods, a men’s store. “Everybody went to the department store. It was a cultural kind of thing.”

So much for past glories. Just-released sales figures for 1990 provide graphic evidence of shifting customer preferences. Sears, for more than half a century the nation’s sales leader, slipped behind No. 1 Wal-Mart, which posted sales of $32.6 billion, and second-ranked K mart. Wal-Mart’s feat is even more impressive given that in 1979 it was an upstart with $1.2 billion in sales.

Granted, retailing analysts point to a handful of merchants who have devised winning formulas, including May Department Stores, owner of May Co. California and Robinson’s, Dillard Department Stores in Little Rock, Ark., Dayton Hudson Corp. of Minneapolis, and R.H. Macy & Co., owner of Bullock’s and I. Magnin, which has managed to maintain its reputation for savvy merchandising despite a troublesome debt load.

Dayton’s, in particular, has been known as a fashion trend-setter, leading the pack with the Ivy League look in the 1950s, Carnaby Street and Madras in the ‘60s and Mao suits before President Richard M. Nixon normalized relations with China. Twiggy, a British model, visited the flagship store on a U.S. trip.

For the most part, department stores have been criticized for buying the same goods and then merchandising them too similarly. As Lears sees it, the stores have been run “too much by computer printout instead of like the old-style merchant who paced the store with his hands behind his back” to see what customers liked. By attempting to remain “safe,” stores have turned off customers.

Sears, Roebuck & Co. has gone through a well-publicized overhaul without solving its problem of being known primarily as a seller of tools, furniture and appliances. With soft goods such as clothing holding the key to higher profits, the retailer has been unable to change its dowdy fashion image.

Meanwhile, Sears’ leaner Chicago rival, Montgomery Ward--run by the brother of Sears’ chief executive--woke up in the late 1980s and staged a turnaround by moving to a strategy of selling clothing, appliances and home furnishings through specialty stores in a “mall under one roof” format. On the other hand, J.C. Penney has thrived by eliminating appliances, garden supplies and hardware in favor of more fashion-conscious but still affordable clothing.

The fading of department stores has to do with changing societal patterns and demographics as well as management missteps. During the post-World War II boom, when young families began migrating to the suburbs, department stores went too.

The strategy paid off royally for years, with department store chains rolling up fat sales and profit gains. Then, in the 1960s and 1970s, came waves of competition, first from no-frills discount outlets such as K mart and then from specialty clothing chains such as The Limited and the Gap.

With the baby-boom generation waiting to be tapped and women going to work in record numbers, these fast-moving chains wrested sales from department stores that had lost their edge with customers. Shoppers bored by seeing the same cosmetics, shoes and clothes at department stores took to the unusual, private-label goods at the new stores. Customers also found the smaller, more narrowly focused shops quicker and easier to handle than the multilevel department store behemoths.

The 1980s gave rise to the biggest challenges. On one front, Nordstrom, a family-run clothing chain that started as a shoe store in Seattle, began pulverizing the department store competition in California by offering huge assortments of clothing and, more important, stellar customer service.

Sales “associates” went out of their way to earn commissions, making home deliveries and writing thank-you notes. Such pampering dazzled middle-income shoppers used to fending for themselves. Although not a full-line department store, Nordstrom took on the aura of one, becoming a coveted anchor for shopping center developers.

Squeezing at the low-price end were membership warehouse clubs such as San Diego-based Price Club and off-price clothing chains such as Marshall’s and Ross Stores. “Power-format” chains, including electronics and appliance giant Circuit City and Toys R Us, began offering extensive assortments of certain product lines at lower prices. Discounters such as Wal-Mart, shop-at-home television services and mail-order operations also took huge chunks of sales from department stores.

To counteract the price-cutting, department stores began constant markdowns, training customers to wait for sales and making them distrust “regular” prices as artificially inflated.

Then came perhaps the biggest blow, the merger and leverage-buyout craze, as suitors went after big retailing companies for their undervalued real estate and well-known franchises.

Macy’s went heavily into debt in a management buyout. Campeau Corp., a Toronto development firm, bought Allied Stores, owner of Jordan Marsh, and Federated Department Stores, owner of Bloomingdale’s and Burdines. Carter Hawley unloaded its glittery subsidiaries, Neiman Marcus and Bergdorf Goodman, to fend off a takeover by The Limited Inc. Few department store companies escaped unscathed and most were loaded with crippling debt.

Retailers would have been hard-pressed to meet their debt payments in the best of times. Instead, they got rotten times. A rapidly deteriorating economy forced merchant after merchant to liquidate or seek protection from creditors under Chapter 11 of the bankruptcy code.

In some observers’ view, much of the blood bath was avoidable.

“The department stores should be winning the fashion game in America,” said Douglas J. Tigert, a professor of retail marketing at Babson College in Wellesley, Mass. “They have the cheapest rents, the largest space with which to build (the biggest) assortments and the cheapest advertising costs, and they can afford to search worldwide for the best fashions.”

He added: “If there’s anything we have learned, it’s that you can’t run a retail business with high leverage. You need money for refurbishing, because customers beat the hell out of your stores.”

Department stores also must do a better job with customer service, said Bari Lipp, senior editor of Tobe Associates, which publishes a fashion newsletter for merchants.

After Nordstrom’s success, many stores attempted to clone its service orientation. They found it trickier than expected. Unlike most department store retailers, which favor lower costs and temporary help, Nordstrom focuses on hiring well-educated, career-minded employees and encouraging them to earn hefty commissions. Carter Hawley, after a much ballyhooed shift to commission selling in the mid-1980s, was recently forced to eliminate its costly program.

“A lot of retailers will give lip service to service, but few have been able to incorporate it as part of . . . the organizational fabric, as opposed to this month’s effort,” said Carl Steidtmann, vice president and chief economist at Management Horizons, a consulting firm in Columbus.

Service can come in many forms. Often, it means having the right goods at the right time and price. At Gottschalks, a profitable, growth-minded chain primarily in California’s Central Valley farming towns, the secret is stocking merchandise in season, rather than months ahead, as the bigger stores do.

“We try to have merchandise . . . when the customers want to buy it,” said Joseph W. Levy, chairman and chief executive. “We don’t have a full line of swimming suits in January or coats in May.”

At Wal-Mart, employees must recite and practice founder Sam Walton’s “10-foot rule.” Whenever a customer comes within 10 feet, the employee stops what he or she is doing, addresses the customer and offers to help.

Godfry’s, in Columbus, which caters to upscale executives, has shown a 70% sales gain in its Godfry’s custom division, which sends representatives to customers’ homes or offices to let them pick out fabrics for custom-made suits and sport coats.

Macy’s, which has dabbled in opening its own specialty chains, recently announced plans to convert an I. Magnin store in South Coast Plaza into the first Bullock’s men’s store. One analyst, noting that the economic climate is scarcely optimal, described the plan as “an interesting test.”

The Limited, despite a couple of notable stumbles, has emerged as one of the nation’s most adept and influential merchants, letting its stores and clothing styles mature along with its baby-boom shoppers. By teaming up with its cousin chains, such as Express and Victoria’s Secret, The Limited dominates the interior sections of malls.

The Gap, based in San Bruno, has been a rare shining light during the recession, capturing customers young and old with its no-nonsense stores and all-cotton clothing. Despite the economic downturn, it is moving ahead with a five-year expansion plan aimed at doubling sales, to nearly $4 billion by 1995. The company also has an enviable long-term debt of $5 million.

Economist Steidtmann contends that several department stores stand to gain market share in the 1990s, if they can hang in there. As the population ages, he said, the appeal of one-stop shopping may revive.

The secret to survival, Steidtmann said, will be “an ability to be very adaptable.”

Monday in View: a nostalgic reflection on department stores.

Researchers Norma Kaufman in San Francisco and Dorothy Ingebretsen in Los Angeles contributed to this story.