Boscov’s Looks to Grow Faster

Discussion
Feb 10, 2006
George Anderson

By George Anderson


The recent announcement that the family-owned chain Boscov’s had agreed to purchase 10 stores under the Kaufmann’s, Macy’s and Strawbridge’s banners from Federated Department Stores was totally out of character for the regional department store operator.


The company, which was founded in 1911 in Reading, Pennsylvania, currently has 40 stores spread across six states in the Mid Atlantic region of the U.S. Adding 10 new locations represents a major expansion for the company, which generated $1.1 billion in its latest fiscal year.


Boscov’s, reports the Pittsburgh Post-Gazette, is focused on the middle market consumer.


At least one industry watcher, Howard Davidowitz, chairman of Davidowitz & Associates, believes this may help the chain in the Federated properties because Macy’s is focusing on a more upscale consumer.


“I think a lot of those customers are going to be turned off by what Federated is doing,” he said.


Boscov’s approach is different than many other department stores in that the company has maintained a presence in some categories while others in the same space have deserted them. The company has maintained its toy department and it continues to carry and offer repair services for appliances.


The decision to buy the 10 stores from Federated, the Post-Gazette rightly points out, represents “a turning point” for Boscov’s. The company announced it had been exploring opportunities which include a potential sale of the business but, instead, has turned the family business over to a younger generation.


Ken Lakin, is the new chairman and CEO of Boscov’s. He said the company was taking a long look at the properties it has agreed to buy to see if there is learning that may be applied when the banner change to Boscov’s takes place.


Of the Kaufmann stores included in the deal, he said, “We’re trying to understand the model that Kaufmann’s used to be so successful. These stores were great stores for them. These stores were not broken.”


Moderator’s Comment: What do you see as the challenges and opportunities for department store retailers such as Boscov’s that serve middle market consumers?
Is the regional nature of the chain a competitive advantage or disadvantage?

George Anderson – Moderator

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9 Comments on "Boscov’s Looks to Grow Faster"


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Alan Stone
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Alan Stone
15 years 15 days ago
Boscov’s is a very well run Department Store that serves Middle Class Americans by catering to service and the merchandise that their customers want. They have always been family owned and I am quite happy they are continuing this trend with a new generation. Their main obstacle with growth is being able to cater to the similar clientele in different markets such as Baltimore & Pittsburgh where they are going to enter with a much larger profile. They are very successful in Philadelphia because they knew how to present the correct merchandise at affordable prices to their target consumers. If they are able to do this in other large markets, they will continue to be successful for many years to come. I can remember over 40 years ago when they were only in Reading, PA with just 2 stores; they have come a long way since then. They also will be able to serve the smaller markets on the East Coast and beyond by being the dominant store in those markets.
Race Cowgill
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Race Cowgill
15 years 15 days ago

It appears that the trouble the national chains have run into is trying to target a broad enough base that exists in ALL geographic areas in order to be profitable. Hence the bland and mediocre (low number of customer expectations met) chains copying each others’ blandness and mediocrity, and then trying to make microscopic changes in an apparent effort to be different without taking much risk.

A chain like Boscov’s starts off being more differentiated, and that means it has courage to take more risk — if you are different to begin with, it is easier to try new things that are not what everyone else is doing.

I think the data shows that there is room for a national chain that would be very different from what the national chains look like now, and be quite profitable too. This would take a different culture than we commonly see in large retail operations. Could Boscov’s do that? I don’t know. Should it? I know even less.

Mike Romano
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Mike Romano
15 years 15 days ago

Boscov’s is a very respected brand. However, they will need to reach out effectively to Federated’s customers who are fiercely loyal to Macy’s and Stawbridge’s or not familiar with Boscov’s.

This will require a multi-channel, integrated marketing and advertising effort that shows the full-service benefits of Boscov’s.

Kohl’s is a great example of a retailer that has opened in Federated’s markets across the country with great success. Boscov’s should model some of the same branding techniques.

Don Delzell
Guest
Don Delzell
15 years 15 days ago
Others have hit on what I consider to be the primary challenge: effectively communicating the Boscov’s value proposition to the target market. Macy’s is a known value, and will communicate in a relatively well established and easily grasped manner. As has been pointed out, the positioning of Macy’s and the emotional connection at the core of their marketing absolutely do leave a clear positioning in the market. Location is not sufficient. Boscov’s has built enormous emotional equity in it’s existing space based on meeting high value needs in its customers, in an efficient and effective way. If significant pools of similar customers exist in the locations that these 10 stores occupy geographically, then it really simply becomes a task of communicating that need – attribute fulfillment. Everyone knows this, but it’s worth repeating. First impressions are just that, and they are as valuable and as easily squandered as folk wisdom indicates. In retail, this is particularly true. For the “sampling” consumer, there will be no second chance. The national chains offer a dependably bland and… Read more »
Bernie Slome
Guest
Bernie Slome
15 years 15 days ago

After 90 plus years, Boscov’s has built a name and reputation that obviously has a loyal following. Adding 10 stores is a major step, increasing the number of stores by 25%. The challenge will be to convert the Macy’s, Kaufman’s and Strawbridge customers into Boscov’s customers. Years ago, Macy’s found themselves in the same situation when they decided to change the Bamberger names to Macy’s. Boscov’s has made a decision to grow by eliminating some competition. As a regional they have some advantages. They don’t need to cater to the varying tastes of different regions, they have smaller logistical problems and are, hopefully, better able to stay in touch with their customer’s needs and wants. Bigger is not always better. But one has to grow and change to survive. looks like Boscov’s wants to be around for sometime to come.

Karen McNeely
Guest
15 years 15 days ago

I’m a firm believer that the pendulum has swung way too far away from the regional department stores. The McDepartment store just doesn’t work for so many areas because we are not a one-size-fits-all country. Technology can only do so much. There is something to be said about a buyer knowing the demographics of her stores and taking the effort to make special buys into them, etc. Even with regional offices, this is something that is impossible with a national chain. Department stores offer neither the lowest prices nor the most prestigious brands. This is a niche that can work for them.

Doug Fleener
Guest
15 years 15 days ago

While we know the middle market is getting squeezed, there is still, and always will be, a middle market. As more and more chains are national, taking with them regional and market identity, there is opportunity for a Boscov’s and others to fill that role. The ability to choose products and services that are important to their regional customer allows them to differentiate their offerings.

I would be concerned if Boscov’s was say going to Seattle or Florida. Instead they are expanding from their base to a customer who is much like their base. I think it is a smart move. Let’s just hope they never aspire to be a national chain…Lord knows we have plenty of them. Oh wait…they’re all the same company now. Just the same, stay regional and profitable.

Mark Lilien
Guest
15 years 14 days ago

It’s a good idea to keep the regional focus, since the advertising, supervision, and logistics costs can be leveraged. I hope for Boscov’s sake that they underpaid for the locations, since the easiest way to make money is to underpay. Biggest risk to Boscov’s: the new locations will cannibalize sales from the current locations. Biggest opportunity: decent customer service and honest advertising. Macy’s commitment to those 2 objectives seems minimal to me.

dan miller
Guest
dan miller
15 years 4 days ago

I applaud the expansion by Boscov’s – the stretching their marketbase into new and exciting areas. The Baltimore customer is not much different than the Frederick and Westminster customer. The Pittsburgh customer is not much different than the Beaver or Butler customer. This will allow the company to spread the cost of advertising among more stores within a region, lowering the individual stores expenses. Also, a key factor in Boscov’s future success is based on its past successes. The fact that it always has been a family run private company and with the new reorganization will remain so, allows it to make the necessary moves regarding products, sales, payroll expenses without the long drawn out process of top level executive discussions, study commissions, stockholder meetings and all of the delay they bring. Decisions are able to be made in an hour, not in a month or a quarter. I personally would like to see more regionally based retailers, instead of the national monsters.

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