Gottschalk(s) is Back
It seems like just last year that the Gottschalks department store chain was being liquidated as part of bankruptcy proceedings. Today, all that is in the past as former executives with the company are back trying to recapture past glory under the banner of a similar but not identically-named business.
Gottschalk (s missing) by Joe Levy is a planned department store chain that will be operated by the former chairman and chief executive of Gottschalks, Joe Levy. The old company’s former vice president and general merchandise manager Robert Wiser will serve as CEO of the new retailer. Former CFO Robert Lawson will serve in the same capacity with Gottschalk by Joe Levy.
The new business, which will be headquartered in the Fresno, CA area, plans to open its first store in November of this year somewhere in the state’s Central Valley region. Future stores are planned in many of the same areas where the former Gottschalks operated locations.
“The object here is to bring the public what Gottschalks used to be,” Mr. Levy said at a press conference. “We want to provide good customer service, high-quality fashions and merchandise at a very competitive price… Since Gottschalks closed, there’s a large void in that type of merchandising.”
Mr. Lawson said the company’s strategy is to open stores in “secondary markets in California because we could offer branded merchandise, such as name brand cosmetics, that they couldn’t get elsewhere.”
The former and current CFO believes the time for building the chain is now, with prime locations available at attractive lease rates. Gottschalk by Joe Levy is looking to open single-floor locations between 40,000 and 100,000 square-feet in shopping center locations.
James Tenser, principal with VSN Strategies and a member of the RetailWire BrainTrust, told the Modesto Bee that the new company will face challenges.Â
“Gottschalks was a great name, one a lot of people remember,” he said while adding “the department-store concept isn’t as relevant as it once was.”
“The best-positioned department stores are the ones who are the most promotional, and Gottschalks had a good track record of that,” Jeff Green of Jeff Green Partners told the Bee. “If Levy can keep the debt low, keep his store count low and sell promotional-priced merchandise, I think he can actually find a niche for himself competing with stores like Macy’s.”
Discussion Questions: What do you think are the prospects for Gottschalk by Joe Levy? Will the Gottschalk name help or hurt the new venture? What challenges will the retailer have to address to avoid the same fate as Gottschalks?
Sounds like an emotional decision vs a rational one. His only hope is to re-think the format altogether, which seems unlikely. We’re not exactly hearing the words, “We’re going to change the way people experience the department store!!”, are we? All the best!
In a time when retail is overbuilt with too many places to buy too much stuff, is this ego talking or a reaction to opportunities in the marketplace?
Mervyn’s of California, anyone? Nah. I’m with Lee. When I first read this story, I thought two things 1. They are actually bringing that name back? (Does anyone remember when Goudchaux’s was on the scene at the same time, much to the confusion of every sales team?) 2. Ruh roh.
Run for the hills!
Not clear how the very same team that failed to make a go of Gottschalks the last time is going to make it work now. During the last few years, Kohl’s has gone from a handful of L.A. stores in 2003 to over 120 stores throughout California today. It’s hard to see a valid “reason for being,” with Kohl’s at one end of the promotional department store spectrum, Penney continuing to have a strong footprint, and Macy’s domination of the moderate-to-upper position.
Never bet against the house … particularly when you have already lost your past bets. This project appears to be mighty heavy for Joe Levy.
In a head to head battle with Macy’s all you have to do is “just add service.” Macy’s has been systematically dismantling their customer service model in favor of no-frills self service for some time. As they continue to spiral down toward a slugfest with the discount department stores, there is an underserved, mid-tier department store customer that is emerging. Any retailer that enters the department store arena with great fashions, promotional price points, and a focus on real customer service has a great chance to pick up this disenfranchised consumer.
The department store model as defined by Macy’s is out of date. Old-line department store business has been replaced by concepts delivering what consumers want. The gamut includes Wal-Mart, Kohl’s, and specialty stores. It does not include Macy’s or Sears.
This is a disaster in the making. As Richard said, no “reason for being.” If they can compete with Macy’s, what have they gained?
Let’s see–46 square feet of selling space for every man, woman, and child in America; savings going up, unemployment stuck close to 10%, California teetering on bankruptcy–hey, let’s open a department store in smaller California markets. What a concept!
Snide comments aside, there is an opportunity to stand out with new product and great service. This requires a whole new approach–smaller box well integrated into a great web site, localized assortments, well-trained and motivated associates. The questions are whether the founder and senior executives of the company that went bankrupt have deep enough pockets and can operate in a completely new model.
A new department store launch–even with a storied and once-loved banner–is not for the meek. Low real estate costs may help the economics some, but Kohl’s, Macy’s, and JCPenney have mid-market fashion fairly triangulated, with Ross, Burlington and other off-pricers mopping up the value trips.
On the other hand, a nimble new player with lower operating costs and a disciplined positioning might just slide in below the national chains and earn shopper loyalty as a more responsive, local alternative.
FTR, as was hinted at in the story, Gottschalk’s doesn’t and didn’t (when it was alive) plan to go tete-a-tete with Macy’s, since its forte will be (was) smaller markets where no Macy’s exists. (Indeed, one of its problems was that many formerly smaller markets where it was located eventually grew enough that they attracted more competition…like Macy’s.) And of course I wish them well, but this has to be one of the most absurd ideas to come along in years: sure there were mitigating factors like overexpansion and a weak economy and…whatever…but guess what? The economy is still weak in the areas they want to open in, and if they do somehow survive their first few years, the first thing someone will say is “gee, if you were only bigger!”
OTOH, online dog-food sales are back, so I guess miracles do happen.
Lee Peterson: “We’re not exactly hearing the words, ‘We’re going to change the way people experience the department store!!’, are we?”
And we have heard those words many times (from Macy’s and others), and it has never turned out to be true. I wish these folks well, but I can’t see any way this works–department stores are a dead format.
Why should I shop for shoes, for example, at a department store when there are ten shoe stores in the mall that collectively have a far better selection? Or I can go to the Walmart/Target/Kmart in the perimeter strip malls and get a far better price. What need does the department store meet?