The stage is dark, the crowd hushed. Slowly, powerful stage lights come up, and a shower of golden glitter rains down on a slinky model in a shimmery, strappy $5,000 evening dress by hot designer Badgley Mischka . As the model struts down the runway to make her turn, the black-tie audience oohs and aahs, then applauds its approval.
In New York, Paris or Milan, such a scene occurs regularly and is nothing special. But in Chicago, it’s a sign that Marshall Field’s, the hometown department store, is making big changes. Chicago’s corporate and cultural elite were wined and dined by Field’s last Thursday at a fashion show fundraiser at the Museum of Contemporary Art off North Michigan Avenue.
The short-term goal was obvious–showcasing Field’s designer offerings by Ralph Lauren, Emanuel Ungaro, Yves St. Laurent and the Missoni family to the folks who can afford to buy them.
But the event had a much bigger-picture purpose–convincing Chicago’s toniest shoppers that Field’s is once again the place they want to shop.
A decade ago under fashion boss Philip Miller, Field’s prided itself on an array of European couture offerings that made the Oak Brook polo set look dowdy.
But after the parent of discount-chain Target, Dayton Hudson Corp., took over Field’s for $1 billion in 1990, its selection of “best” merchandise faded. Low price, not fashion, became the focus, and soon Field’s was running sales almost every other week to keep revenue numbers up during the recession.
Cost-cutting moves damaged Field’s vaunted customer service. And customers were offended by blunders such as ditching Field’s trade-marked green bags for cheaper tan ones.
Meanwhile, recently arrived competitors such as Bloomingdale’s and Nordstrom’s took advantage of Field’s malaise, wooing away its elite customers with trendier merchandise and better service.
The consensus among Chicago shoppers was clear: Field’s was now just another department store, not something special. Says Mary Foster, a 37-year-old Chicago attorney, who used to shop regularly at Field’s: “The personal service isn’t what it used to be. And the catalogs they were sending looked more like Carsons than Nordstrom’s.”
Now Foster, a busy mother of three, shops for casual clothes at the Gap or Banana Republic. And when she’s looking for something dressy, Field’s is just one of the places she may shop, along with Nordstrom’s and Talbots.
Dayton Hudson executives are quick to admit they screwed up. “We didn’t have the trendy merchandise, the new and exciting stuff,” concedes Daniel Skoda, president of Marshall Field’s. “We were losing our brand character with our core guests.”
For the past 18 months, Dayton Hudson has been trying to fix that. The uphill battle of restoring Field’s luster has fallen to Linda Ahlers, president of Dayton Hudson’s $3 billion department store division, which includes the Dayton’s chain in Minneapolis and Hudson’s in Detroit.
Ahlers, who rose through the Target organization as an operations whiz, has made some logical moves early on. She has recreated Field’s Chicago buying team, which was virtually eliminated after the acquisition to cut costs. Now, almost 40 Chicago-based buyers are scouring the world from Oak Street to Paris for the latest fashion trends.
Ahlers also moved quickly to address the legion of complaints about Field’s service. Even though she was feeling pressure from her boss, Dayton Hudson CEO Robert Ulrich, to cut overhead, Ahlers increased by 10 percent the ranks of sales associates, who had become scarce on the selling floor.
But despite such astute moves, there’s little numerical evidence that the upscale strategy is working. Since August 1996, sales at department stores open at least one year have declined in 10 out of 13 reporting periods, sometimes at almost double-digit rates, when many other department store chains were posting sales increases.
Of the three months when these so-called same-store sales actually rose, two of them were unimportant clearance months–January and February 1997. The best showing in the whole period was a recent 4.5 percent sales gain in August 1997.
“Look at the results. They started over a year ago, and we haven’t seen any improvement in their comparable-store sales,” said Kurt Barnard, publisher of Barnard’s Retail Marketing Report in Scotch Plains, N.J.
The profit picture hasn’t been much better. Operating profit for Dayton Hudson’s department stores declined 41 percent in 1996 to $108 million, while revenue shrunk 1.4 percent to $3.1 billion. For the first six months of this year, revenue declined slightly to $1.4 billion, although operating profit rose 59 percent to $68 million, as cost reductions kicked in.
Despite those unencouraging statistics, Ahlers insists progress is being made in restoring Field’s upscale image. Strolling through Field’s Water Tower store, she points out new offerings such as a Calvin Klein linens collection, introduced last spring and now carried in all its department stores.
“When we find something that works, we are rolling it out faster,” she said. Field’s also is boasting expanded lines in china and crystal, and collectibles, where assortments have increased by 50 percent.
Some of Ahlers’ biggest successes have come in the high-end women’s and men’s apparel businesses. Expensive lines like Missoni’s colorful knitwear, where prices start at about $350 for a tank top and go as high as $3,000 for a coat–are flying out the door.
Field’s still carries couture lines like Missoni and Christian LaCroix in only two stores–State Street and Water Tower. But the number of Field’s, Hudson’s and Dayton’s stores carrying so-called bridge lines, one step down from couture, such as Dana Buchman, Anne Klein II and Ellen Tracy, have steadily increased to 33 out of 65.
But it’s not only expensive stuff that’s selling better. Field’s junior department, “New Attitudes” is seeing sales soar with moderately priced party wear such as a $46 burgundy velour dress. And Ahlers has big hopes for new private-label offerings such as a trendy apparel brand dubbed 111 State and a casual linens line under its Field Gear label.
Other areas, such as moderately priced apparel, children’s and housewares, haven’t responded as quickly and may need a more fashionable look, Ahlers concedes.
Retail consultants don’t give much weight to Ahler’s anecdotal tales of progress. “These are small fine tunings for an ocean liner that they are trying to turn around in a bathtub,” said Alan Millstein, publisher of the Fashion Network Report, a New York-based industry newsletter.
And consumer research shows Field’s still has a long way to go in restoring its image. Field’s used to be ranked along with Nordstrom’s and Crate & Barrel as a top quality place to shop, said Chris Ohlinger, president of Service Industry Research Systems, a market research firm based in Highland Heights, Ky., that conducts random telephone interviews with between 40,000 and 50,000 consumers a year.
But in the past five years, Field’s ratings have dropped significantly. “We’re not looking at Kmart, but they have certainly dropped from the elite,” Ohlinger said. “They’re not keeping pace with the changing consumer, who is demanding more fun and excitement.”
His firm hasn’t seen any improvement in Field’s ratings yet. But even so, Field’s still ranks ahead of Bloomingdale’s in terms of quality and service and slightly ahead of Lord & Taylor and Nordstrom’s in the “value” category.
Ahlers acknowledges that much of the progress she sees hasn’t yet translated into top-line growth. Even with August’s decent showing, she still expects third-quarter same-store sales to be flat. But she points out it only makes sense that sales would initially suffer as Field’s cut its promotional sales events by 50 percent.
Despite skepticism by retail experts who predict Dayton Hudson will ultimately fail in recapturing upscale customers, Ahlers believes the turning point isn’t far off. Big, positive results should start rolling in next spring, she projects.
“We’re making good progress in getting Chicago guests to vote for Field’s. We can’t be all things to all people,” she said. And Ahlers has made a believer out of Diane Levborg, executive vice president of Missoni U.S.A. “I’m doing very well at Marshall Field’s. My (sales) are much better than they had been. We’ve both been rejuvenated.”
Even if Field’s turnaround doesn’t occur on schedule, Dayton Hudson doesn’t have much choice except to move upmarket, said Dean Ramos, retail analyst with Dain Bosworth in Minneapolis. “It’s the only place you can go,” he said. “The lower end of the price spectrum has been eroded by consistent players such as Kohl’s and Carsons.”
And it’s a lot more fun selling evening gowns than underwear.
