Adamant: Hardest metal
Tuesday, February 4, 2003

Burdines returns to its roots

www.miami.com Posted on Mon, Feb. 03, 2003 BY ELAINE WALKER ewalker@herald.com

The department store hopes Florida-themed merchandise, plus new designs and consumer-friendly tech, will win over more customers.

CURB APPEAL: Plans for the renovation of the Dadeland Burdines include a new street-front facade that will hide a parking garage to be built in front of the store.

The idea of a department store with shopping carts, central checkout lines and price-check scanners may sound strange. But prepare yourself for the Burdines of the future.

These services, typically found in discount stores like Wal-Mart and Target, started popping up late last year in a half-dozen Burdines and Macy's stores around Florida, as well as 45 department stores around the country owned by their parent company, Federated Department Stores.

They're part of a major makeover, which comes at a time when department stores are fighting for their lives amid slumping sales and increased competition. Even a local retail institution like Burdines, whose first store opened in 1898 in downtown Miami, risks being relegated to obscurity if it doesn't make its stores and merchandise more attractive and consumer-friendly.

''The department store age is slowly fading,'' said Kurt Barnard, president of Barnard's Retail Consulting Group. ``The customers who go to department stores are aging, and young people don't find them an attractive place to shop. They're wonderful stores, but they're becoming irrelevant.''

Federated is trying to avoid that fate by reinventing the traditional department store, a strategy that is being tested at Burdines and all of its other chains except Bloomingdale's. The new look also includes a hipper juniors' department, expanded fitting-room lounges and improved signage.

At the same time, Burdines Chairman Tim Adams is trying to separate the Miami-based chain from the competition by putting a renewed emphasis on its roots as the Florida store. That means offering unique merchandise to meet the needs of South Florida's distinctive climate and lifestyle. At Burdines you'll find an abundance of linen and shorts on the shelves in the winter, for example, and home accessories ranging from crystal glasses to linens decorated with palm-tree motifs.

''We want to be the best retailer in the state of Florida for serving the Florida lifestyle,'' said Adams, who took over as chairman and chief executive in April 2001 but hasn't spoken to the media until now about his vision for Miami's oldest department store. ``Burdines still has a knowledge of this market and this customer that our competitors can't match.''

The key to Burdines' future will be how well the chain can execute that strategy at a time when the department-store industry is facing pressure from every direction and consolidation is the new strategy.

Federated on Sunday began merging its Rich's and Macy's stores in the greater Atlanta area. A total of 28 stores in Georgia, Alabama and South Carolina will now operate under the brand name Rich's-Macy's. The move means major store closings and layoffs for the Atlanta area, where Rich's has been a retail cornerstone since 1867, in much the same way Burdines has been in South Florida.

Analysts suggest that what happened in Atlanta is a sign of things to come for Burdines and the other regional department store brands owned by Federated. They say there's no need to have multiple chains when the merchandise inside the stores is virtually identical.

''In the long term, they're going to run two brands: Macy's and Bloomingdale's,'' said Walter Loeb, a longtime retail analyst. ``Eventually Burdines is going to become Macy's. It's going to take time. Whether it's going to be two or five years, they're going to do it.''

While strong Burdines' management and execution of the Florida strategy may forestall that consolidation for years, Loeb and other analysts argue that financial pressures on Federated's bottom line and industry trends are going to be virtually impossible to overcome.

Federated said last month it expects sales and earnings to be essentially flat for 2003. The company has been battling declining sales and profits for the last couple of years. Same-store sales, considered the best measure of a retailer's health, were down 3.1 percent for the first 48 weeks of 2002. Federated will report full-year results later this month.

Burdines' sales have also been declining. The company posted sales of $1.39 billion in 2001, the most recent figures available, down from $1.47 billion in 2000.

But Adams says Burdines continues to remain one of Federated's top-performing divisions, and company executives deny there are any plans for a Burdines-Macy's consolidation in Florida.

''Florida has had some challenges the last couple of years, but in our view the market appears to be getting healthy again,'' said Terry Lundgren, Federated's president and chief operating officer. 'Burdines' performance has been a little bit off, but when the market comes back they will come back strong. We consider it a very successful division and a very important part of our overall mix.''

UNIQUE CASE

Lundgren and others at Federated say Atlanta is a special case because six malls had Macy's and Rich's stores, plus the assortments at both chains were strikingly similar. By comparison, in Miami-Dade and Broward counties only Aventura Mall has both a Macy's and Burdines.

''The situation in Atlanta is very different than in Florida,'' said Susan Kronick, group president at Federated in charge of the regional chains and former Burdines chairman. ``We think both [Burdines and Macy's] offer Florida consumers a unique and distinct experience.''

That distinction goes back to Burdines' early days, when Roddey Burdine first coined the term ''Sunshine Fashion'' to refer to clothes that couldn't be found anywhere else because of their design, color or fabric. Then in the early '80s when Burdines faced increased competition from Northern competitors like Macy's, the ''Florida strategy'' became a deliberate corporate move to maintain market share.

Burdines still likes to brag about how it's the first in the nation to unveil a large assortment of spring merchandise when most retailers still have sweaters and heavy wool clothes on their racks.

But Kronick acknowledges the distinctions may be lost on some consumers, something Burdines needs to change.

''I think we have the obligation to make our marketing clearer so we get credit for many of the things we do,'' Kronick said. ``People assume the stores are the same because they see similar brands. But there are a lot of differences between Burdines and Macy's in the color, weight and the timing of the merchandise arrival.''

Customers such as Bobbi Madden of Coral Springs often can't put their fingers on what it is they like about Burdines. But they know they like it.

''It's my number one store,'' said Madden, who dropped into Burdines at Miami International Mall on a break from a business meeting. ``I always find what I want here.''

Emphasizing Burdines' unique attributes will be a key focus for Adams, a 25-year Federated veteran who came to Miami from The Bon Marché in Seattle where he had served as president since 1998.

During his second stint at Macy's West, Adams moved up the merchandising ranks. Along the way he earned the respect of then-Chairman Michael Steinberg, who recommended Adams for advancement within Federated.

''Tim is a very collected person who thinks issues through, comes to a conclusion and sticks with it,'' said Steinberg, who is retired but still serves as a consultant for Federated. ``He's very aggressive and tenacious, but at the same time he's quite an understated person.''

That personality is why Adams, 49, spent his first year on the job at Burdines visiting stores, meeting many of the chain's 10,000 employees and listening to their ideas. But now he's trying to make his mark, identifying what he sees as Burdines' top priorities and mapping out what needs to be done:

• Pricing: Move away from the reliance on constant coupons and sales, focusing instead on attracting customers by building the brand image and offering everyday value.

• Merchandise assortment: Make it more concise and easier for consumers to shop without getting overwhelmed.

• Florida store: Emphasize Burdines' image as the Florida store by bringing in more products suited for the unique lifestyle of the area and by marketing that image.

HUGE RENOVATION

Another key issue for Adams will be overseeing a massive renovation of the company's Dadeland flagship, the largest suburban department store in the United States. Federated late last year gave final approval to the project, which Adams says will cost close to $50 million. It will take until 2005 to renovate the almost 640,000 square feet divided between two buildings. The project will also include a new parking garage built in front of the store, creating a facade customers will drive through.

''It is truly going to be a different shopping experience for the customer,'' Adams said. ``Right now the aisle patterns and the shopping experience at Dadeland are complicated. We're going to create wide, spacious, easy-to-navigate thoroughfares.''

TOTAL `REINVENT'

The new Dadeland Burdines will feature every aspect of the ''reinvent'' strategy already being used at some Burdines stores and possibly others being tested across the country such as a baby-sitting area and a day spa.

But Burdines will not close during the renovations, so the work will be done in phases beginning in April with the home store building, which should be completed by early 2004. As part of the renovation, various departments will be moved to different floors in both buildings and the kids' department will move from the main building to the first floor of the home store.

''Creating sight lines throughout the store is really important,'' said Ian Tornquist, director of planning and design for Echeverría Design Group in Coral Gables, which is the architect firm working on this project and many of Burdines' ''reinvent'' strategies. ``It's going to feel more like one store as opposed to a series of rooms.''

The renovation comes after the Dadeland Burdines, which generates well over triple the volume of the chain's average store, has suffered from at least two disappointing years of declining sales.

The problem: a downturn in Latin American tourists. Shoppers from Venezuela, Brazil and Argentina, who come with large suitcases to fill up with designer fashions, have always been a big part of the traffic for both the Dadeland Burdines and the entire mall. That kind of business is why the Dadeland Burdines generated almost a third of Burdines' profits during the early 1990s.

At least for now the drop in Latin American sales has leveled off, and Adams is keeping his fingers crossed for the future.

''Burdines is still a very strong brand in Latin America and South America,'' he said. ``If that economy can come back, we're going to benefit greatly.''

Adams still believes there is room for Burdines to open additional stores in both South Florida and around the state in the longer term, particularly in markets like Jacksonville and the Panhandle, where the chain has no presence.

''There's a lot of business down here, and we're not getting it all,'' Adams said.

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