Pamida refines its hometown strategies

The most memorable dialogue in the now-classic film "The Graduate" takes place when a minor character utters a single word to the movie's protagonist. A bright future will be his, a remarkably youthful Dustin Hoffman is told in a satirical scene, if he pins his future on "plastics."

While the future of Pamida isn't based on one product category, it would not overstate the case to say that a single merchandise group--apparel, not a traditional Pamida strength--will play a crucial role in the success of this rural-American retailer.
"Apparel is critical to our strategy because we are using it to differentiate Pamida from other mass retailers. It has got to be the right assortment because we don't want our customers to not find the kind of clothing they are looking for. If the right ready-to-wear isn't in our stores, customers will get in their cars and drive to the competition," explains chairman and chief executive officer Steven Fishman, and East Coast transplant, who appears to have adapted with aplomb to "Hometown Values" espoused by this Omaha, Neb.-based chain.

Pamida's apparel strategy is predicated on a larger company grand plan. Since Fishman joined Pamida in April 1993, he has been working with his executive staff to reposition the store as a general merchandise chain--not a discounter--serving small-town America--exclusively. By doing business only in markets with populations under 20,000, Fishman reasoned he'd be able to avoid competition from the national retailers; his company's trading areas simply wouldn't have the population density necessary to support the big 100,000-sq.-ft. boxes that rivals typically build.
So far, the new plan that has only been realized on the selling floor in recent weeks appears to be effective. Same store sales for Back-to-School produced high single-digit increases and inventories, according to Fishman, "are cleaner than they've ever been before."

Apparel currently generates about 25 percent of total Pamida sales, a few points more at the new prototypes.

"If we can get it into the high 20s chainwide, that would be a great formula for making a whole lot of money for the company," Fishman says.

Womenswear
Pamida's largest apparel category, womenswear, fills about 15 percent of the floor at the chain's most-current configurations. Key sportswear categories for fall are knits, wovens, denim and fleece. "For spring, I see huge potential in short sleeve cotton sweaters priced at about $15 to $20," says Cozart, who joined Pamida--a transplant from Parisian--in February. Plus sizes, intimate apparel, junior and casual pants are other areas of emphasis.

Denim, a category seen as central to Pamida's plan is "growing by leaps and bounds," says Cozart. For spring, he anticipates a greater emphasis on alternative silhouettes and fashion colors. Denim brands include Brittannia, Riders, Bugle Boy and Cherokee, which is featured in trousers silhouettes and in a variety of tops.

"A separate entity," for about a year, junior is "very, very strong," says Cozart, who, as might be expected, is merchandising his most-forward fashions in this category. Junior success has been achieved through the sales of velour, flannels, wide-legged jeans and tops with zippered fronts. "Zippers are huge right now. All kinds of things like that, that maybe a year ago we wouldn't have thought about carrying," says Cozart, whose "upstairs" background serves as an obvious asset in Pamida's apparel upgrading effort. Another area of opportunity in juniors is in plus sizes, where novelty fleece and attitude fleece "has done phenomenally."
Other vendor-managed programs such as fleece from Tultex that is sold under Pamida's Heartlands private label and underwear from Fruit of the Loom and Hanes are also expected to continue their upward spiral.

Childrenswear

Leading the company in sales and gross margin growth during July, August and September, childrenswear represents an "enormous" opportunity for Pamida. Based on the basics, boys' apparel received a colossal boost in revenue from the sales of nylon wind pants. This category, with a different color palette, is also responsible for incremental dollars in girlswear.
"Pieced and colorful print models are blowing out," says Flodberg. "Leggings also continue to be unbelievable for us and represent a major opportunity" in yellows, greens and blue for spring, Flodberg says.

Licensed entertainment-related merchandise--"Mickey, Looney and Winnie"--has been outstanding as well in both the boys' and girls' categories