Call it a potentially dubious honor. Sears, Roebuck and Co. Chairman Arthur Martinez has been named chairman of the National Retail Federation, the industry’s largest trade group. It’s certainly a sign of Martinez’s golden-boy status among retailers. But there’s a dark side: The same honor came just before the unexpected end to the careers of his three federation predecessors.
Martinez is finishing the term of John Shea, the CEO of Downers Grove-based Spiegel Inc., who took early retirement July 3 after being unable to fix the problems at Spiegel’s catalogs.
Before Shea, Federated Department Stores Chairman Allen Questrom ended his chairmanship of the federation ahead of schedule for a more pleasant reason. Having shepherded the company through bankruptcy and a major acquisition, Questrom took early retirement to ride his bike in exotic places such as Italy, Cambodia and Nepal.
And before that, Montgomery Ward & Co. Chairman Bernard Brennan was the federation’s guy from 1994 to 1996. He found himself out a job in October as Wards’ losses accelerated and cash flow dwindled.
Given the federation post’s recent history, it might have been safer for Martinez to save this honor for the twilight of his career.
First swipe. . .: “Going after the low-hanging fruit” already has become a cliche at Montgomery Ward’s white headquarters tower on Chicago Avenue. For Wards’ new management team led by CEO Roger Goddu, it means making fast, easy changes to the ailing retailer, which suffers from a host of long-term problems.
First on the agenda: cleaning up Wards’ busy, hard-to-read newspaper fliers, which used to feature dozens of televisions, VCRs and recliners that were often out of stock.
When he arrived at Wards in January, Goddu ordered up interviews with 3,000 consumers and 500 Wards executives, including 400 store managers. The message from all groups was the same: Wards’ biggest problem was advertising stuff it didn’t have in the stores.
“We’re aiming at credibility,” says Goddu, who learned the ropes of mass merchandising as president of Toys “R” Us’ domestic operations.
So Goddu has slashed the number of items on sale as well as the number of sales in general. “When you have 200 separate promotional events in a year, people can’t keep up with it,” he says.
The cutback also allowed Goddu to slash headcount in Wards’ merchandise planning operation, which supported the retailer’s non-stop sales events. The strategy also is intended to reassure potential venders, who may not have sold to Wards because they didn’t want to see their brands on sale “50 weeks a year,” says Goddu.
. . .and more to come: Another axe is about to fall. Wards’ restructuring is sure to include closing a passel of money-losing stores. To date, only four of Wards’ 400 stores have bitten the dust.
Wards is likely to close at least 60 stores, predicts Rodman & Renshaw special situation analyst Barry Bryant, who has been closely following the retailer’s deteriorating financial condition. It probably should close twice that number, he says, except that a radical downsizing would hurt its profitable credit card operation, which is completely owned by Wards’ largest shareholder, GE Capital Corp.
Goddu admits the fate of all Wards’ stores is “under review,” but adds it may not make sense to close many stores now as the Christmas season approaches.
And he denies that a restructuring could mean the end for as many as one-third of Wards’ locations. Stay tuned.