Markets

Duckwall-ALCO Remodeling Stores to Drive Turnaround Home

By Mike Duff

Updated on: June 22, 2009 / 7:49 PM EDT / MoneyWatch

As reported earlier in this blog, Duckwall-ALCO has reached a critical point in efforts to turn around its operation, developing a strategy to get out of a long sales and profits skid and get back on the path to growth, which the company plans to do by adding new locations but also by reconfiguring its existing stores.

A store remodel program is ready to roll and incorporates basic features such as enhanced signs and other elements designed to make stores more attractive to the shopping public. In a conference call, CEO Larry Zigerelli noted:

We have a new store layout. We have a new logo. We have a new storefront look. We have a lower cost store but a store that's laid out much more consumer friendly. Within store departments, we have a better pet shop, a better health and beauty shop, electronics and so on. Today, we don't have that, and its just going to make for a better in-store experience and drive sales even further

Duckwall-ALCO will apply technology to fine tune store operations, using information based on the research it is developing to establish store cluster profiles. Through them, it will develop product presentation programs suited to the needs of each identified store grouping. Those clusters also will take into considerations each store's competitive circumstances even to the department level. A store may generate the 10th largest sales volume in the chain, Zigerelli noted rhetorically, but it may be 50th largest in apparel because a JCPenney operates next door.

With its new approach, Duckwall-ALCO can take the competitive facts into consideration and develop a product assortment and display arrangement, or planogram, that suits the sales volumes attainable in individual departments at particular stores, something it could not consider doing up until now. "Today we've got a one size fits all," Zigerelli said. "We have the same planogram whether the store is doing two million or four million in sales."

Clustering also allows the company to tailor operations demographically if a store has a particular ethnic group or age echelon that represents a large proportion of folks shopping there. Zigerelli pointed out:

For example, in 59 stores, now we have Hispanic food. A lot of our stores in Texas are very heavy Hispanic population. This whole clustering program is a huge part of what's going to happen over the net 12 months or so. You haven't really seen any impact of that at this point.

Other initiatives that will give Duckwall-ALCO operations more momentum include a formal performance review system that now encompasses all of management and an expansion of private label, which today encompasses nine percent of sales but which Zigerelli said could attain 20 percent with the support of the established programs it can tap at the Topco wholesale consortium, an organization it recently joined.

"This is why I say we're only 50 percent of the way there," Zigerelli said. "A lot of things that are going to really help us drive the results in the future have yet to impact the business."