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A bigger Bon Ton tags smaller markets

Now merged and doubled in size, executives of The Bon Ton and Elder-Beerman department stores feel their competitive advantage lies in zooming in on secondary and tertiary markets.

The Bon-Ton's acquisition of Elder-Beerman, completed last month, created a retailer with 142 stores in 16 states and revenues exceeding $1.3 billion, the company said during its third-quarter conference call.

As the company refines the store prototype, the acquisition provides "an opportunity to expand the store base considerably," said Frank Tworecke, president and coo, providing fashion, value-oriented merchandise in these markets so that customers don't have to travel to regional malls. "It's a market niche not currently served."

In secondary markets, it likes the stores to be positioned as the anchor in a mall or a major retail player in a strip center said Jim Baireuther, vice chairman and chief administrative officer.

For now, the company is focused on the holiday season, and it will ramp up its integration process next spring, expecting to substantially completing it by the end of 2005.

Executives added that the company needed to grow quickly to remain competitive, and with the acquisition it now has increased buying power. It also has doubled its size without changing its targeted market strategy.

The companies were very complementary, with similar customers and merchandise and no geographic overlap, executives said, but also had individual strengths.

Elder-Beerman, for example, has developed a significant home textiles presence over the last few years, and that will "prove to be a sales and margin opportunity for the Bon Ton," said Tworecke.

Executives added that they do not expect to change Elder-Beerman's name or close any stores for the foreseeable future. With its combined vendor matrix, some suppliers would be cut and others expanded, Bud Bergren, president and ceo, Elder-Beerman division, said. "We have the opportunity to choose the best suppliers."

The Bon-Ton also reported that its home area was one of the best performing categories for both the third quarter and the year-to-date.

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