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Federated will expand home

Cincinnati — As Federated Department Stores rolls out its "reinvent" strategy launched in 2002, it also sees home as a large opportunity to distinguish itself not only from other department stores but from all other retailers.

Federated sees opportunities to expand home both within mall-based stores and in freestanding formats such as the Bloomingdale's Home store, which opened in the Medina Temple in Chicago earlier this year, said Terry Lundgren, president and ceo, at the retailer's annual meeting here.

Federated is also planning to test expanded home furnishings departments in "a couple of stores" and will take space from men's apparel and women's apparel to do so, Lundgren said.

"There are business categories that we have gotten out of, and we believe it is time to get back into them, without taking space from textiles and housewares," he said. He did not disclose the categories being examined for the project and said that neither the timing, location or the parameters of the test had been determined.

The company's new high-end Hotel Collection by Charter Club, which launched in April, represents Federated's most upscale home furnishings assortment — and is among some of the most upscale products across the store, he said. "The textiles have been excellent," he added. "And it's a great value, especially when you when you compare it to Pratesi. The product is selling."

Bed and bath are currently offered in 100 stores across the company. Bedding includes all-cotton sheets made in Portugal, cotton sateen quilted coverlets and silk quilts, as well as comforter covers, matelassé coverlets and decorative pillows. Retail prices on sheets range from $80 to $550.

The bath collection includes MicroCotton towels, priced at $25 for a bath towel and $50 for a bath sheet, both available in 12 colors. The collection also includes Chevron piqué towels made in Turkey, available in nine colors. Bath towels retail at $17 and bath sheets at $40. Also included in bath are mats, shower curtains and hard bath accessories.

Hotel also includes table linens and utility bedding, with prices on a queen down comforter running to $450.

"I don't believe it's a 200- to 300-store business, Lundgren said. "It's only for the top doors."

The "reinvent" initiative, now in 40 stores, will be extended to 100 by yearend. Launched last year at various Federated nameplates in scattered markets, "reinvent" will now be rolled out market by market to take advantage of advertising opportunities, he said.

The first full market iteration of "reinvent" is unfolding in Atlanta, where the integration of the Rich's and Macy's nameplates is already under way.

The key components of "reinvent" are differentiated merchandise assortments and improved shopping experience through the use of centralized checkouts and clearer signage, "upscale" shopping carts, price check scanners, enhanced fitting rooms and customer lounges. Response to the shopping carts has been particularly strong in the home department, Lundgren said.

Price simplification — a program involving key items at everyday low prices — is one of the most important components of the initiative, Lundgren said. EDLP on key items will be expanded from its current ratio — less than 3 percent of the mix — to 10 percent over the next two years, he said.

"We have to go after that Target customer, who is a fashion customer, not a price customer. This is usually someone who works and has an average income of $75,000," he said. "I'm not saying that coupons will ever go away, and we will still have sales. But we have to make it easy for the customer to understand good value."

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