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Future Shop

Sandy Zimmerman's retail marriage of quality, discounts, and service has turned an obsure New York town into a mecca for a new breed of consumers.
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It is, for Sandy Zimmerman, the perfect summer's day. The air is chill, and torrents of rain cascade from a leaden sky. The doors of Cohoes Specialty Stores Ltd., his store in Cohoes, N.Y., opened just half an hour ago, but already Zimmerman's parking lot is awash in Volvos and Hondas, Cadillacs and Chevettes, cars from the Albany area and beyond, day trippers and summer tourists from nearby Massachusetts and Vermont and from distant Florida and Texas, flooding the store.

Zimmerman can feel the energy inside, the pre-August adrenaline. August -- his biggest month in a $30 million selling year, equivalent to other retailers' Christmas rush -- is just three days away, with its Sunday hours and late nights, art shows, professional models, and furs shipped up from Manhattan. Mostly, it is the crowds, throngs of people at nearby Saratoga Springs for the racing season: Angel Cordero and Martha Raye, assorted Whitneys and a gaggle of Du Ponts, celebrities, socialites, and big spenders walking out with 26 pairs of shoes or $30,000 worth of fur.

Zimmerman stands by the wide staircase leading up to the second floor, tan suit pressed, blue polo shirt crisp, Italian loafers polished, a proprietary half-smile playing across his round face. At 52, for all his years in retailing, he is still impressed by how many motivated people it takes to make a store hum. Three times today he has cruised the floor, trying to get a seat-of-the-pants feel for what the figures tell and rallying the staff, remembering not just their names, but that the new painter up on the third floor this morning is the son of Ted in maintenance, that John the operations manager has just painted the company station wagon, and where Sylvia in furs plans to go for her vacation. "Hello, Mark," he says, patting a salesman's shoulder. "I hear you sold someone seven pairs of slacks this morning." His brown eyes catch a scrap of paper on the carpet -- he picks it up. A stray packing case stands by the technicolor sweater bar -- he will have it moved. "My Dad says you're a pretty good shoe salesman," he compliments a hidden figure carting a pillar of boxes through the 90,000-pair stockroom. The outfits above the shoe display are still summer goods -- he will have them changed for fall. And wouldn't the cosmetic section look better if the light were a little closer?

His sales staff of more than 300 people, nearly four times that of a comparably sized suburban department store, is on the floor. Ads are running in the local papers, the Saratoga Racing form, the program for the Saratoga Performing Arts Center, and on AM/FM radio -- all designed to stress the concepts that make Cohoes unique: quality fashion goods in the latest style, presented with flair, sold with full service, and priced for less. Many discount houses resemble dingy barns crammed with junk, low quality for low price, no amenities, no displays, and no service. Off-price stores like Loehmann's Inc. in New York or Melville Corp.'s Marshalls chain, the current darlings of the retail analysts, may carry brand names for less, but their goods are seconds, overcut merchandise, or last season'sstyles.

Cohoes has nothing but the latest -- and the best. The merchandise has been pouring in, moved from the loading dock to the marking room to the floor: Calvin Klein jackets and Fila tennis wear, Dean sweaters and Albert Nippon dresses, each with its price tag proclaiming the value that draws shoppers from miles away. A Trigere coat, manufacturer's suggested price, $400; Cohoes price, $270. A $440 Ralph Lauren men's suit, $340; a $1,700 Judith Leiber handbag, $1,270; $40 Opium perfume, $32. An $11,900 Piaget Polo watch, $8,900. Everything is discounted.

A discount operation, even one as extraordinary as Cohoes, was hardly what Zimmerman had in mind when he decided to leave the corporate world. He had built a 27-year career in department stores by stressing customer service and staff satisfaction. But as he climbed the career ladder, retailing was changing; staffs and service were being cut to meet rising costs. And once he got near the top, as chief executive officer of Abraham & Straus, of Federated Department Stores Inc., he no longer had time for contact with the day-to-day business on the floor; instead he was enmeshed in corporate politics.

In 1979, in what The New York Times politely called "a policy disagreement," Zimmerman left Federated. Along with Ben E. Ames, a fellow Federated malcontent, he invested "several million dollars" to buy Cohoes Manufacturing Co., a small 43-year-old discount/retail business with a strong local reputation. He bet against the crowd -- for service and against markups -- and the business boomed. Sales grew more than 20% each year, and volume doubled to more than $30 million, with an aftertax profit of 6%, twice the industry average. With the opening this past July of his first branch store, halfway between Hartford, Conn., and Springfield, Mass., sales growth is expected to continue.

Let other retailers rely on sales, he thinks. They're just cutting their own throats. At Cohoes the excitement is with the merchandise; profit comes with productivity. Cohoes is the store of the future, he says proudly, "and, damn, it's exciting."

His eyes catch a woman flipping through packaged Danskin leotards, a Fendi bag strung across a bony shoulder. "Excuse me," he says, his voice so soft she has to lean forward to hear him. "Did you notice that we have Fendi bags in the store? We just got them in."

"Oh, you don't want to tell me that," she answers happily. "I've already spent all my money."

Years ago, before the industry went south and the young people moved away, the city of Cohoes was a thriving mill center shipping garments down the Mohawk and Hudson rivers to Manhattan. But today the paint is peeling off the tumbledown row houses on the hill, the saloons are decorated in burned-out neon, and deserted variety stores display 95 cent novels and yesterday's papers. The store is downtown, 90,000 square feet, with 60,000 square feet of selling space blossoming unexpectedly amidst the empty warehouses and rubble-filled lots, two bright red brick additions flanking the original Depression-deco manufacturing plant. Luminous orange billboards -- "Cohoes, Worth A Trip From Anywhere" -- sprout from the otherwise empty street corners.

Zimmerman's vision of Cohoes comes from a lifetime in retailing. Born in 1930 in St. Louis, Zimmerman grew up and put himself through Washington University working in his father's shoe store; after graduation he earned a master's degree in retailing and taught market research for two years at New York University. In 1955 he met Stanley J. Goodman, then assistant general manager of Famous Barr Co. department stores in St Louis. Goodman, who would become Zimmerman's mentor, hired him on the spot. "You'll start at the bottom," Goodman told him, "but if you're as good as you think you are we'll go places."

Entry level at Famous Barr was as a floorwalker in the shoe department -- white boutonniere in his lapel -- but go places they did. In 1967 Goodman was named to head May Department Stores Co., Famous Barr's corporate parent, and Zimmerman was named president of Famous Barr. He says he was, at 37, the youngest department store president in America.

"It was a particularly good time of life," Zimmerman remembers. "We ran a really exciting store, with low turnover, lots of customer loyalty, and a real camaraderie."

In 1973, however, Zimmerman decided to leave St. Louis. Goodman's successor had been identified -- "I just didn't think he was the guy for the the job," Zimmerman says. Federated, America's fifth largest retail chain and the largest department store group, offered Zimmerman the presidency of Abraham & Straus in New York, one of Federated's major department stores, and he signed a five-year contract.

By the time Zimmerman moved to A&S, inflation had killed retailing's '60s boom. Consumer spending had plummeted; profit growth through store expansion was thwarted by a market saturated with suburban shopping malls, and costs had soared. Retailers scrambled to cut. Since merchandise costs, utilities, and rents were inflexible, personnel got the ax. "Can you help me?" was heard from customers across the land as sales staffs were slashed in half, then slashed again. In a push for increased turnover, stores began styling out cutting inventory of goods that didn't move immediately. Such amenities as locker rooms for employees and lounges, gift wrapping, and free delivery for shoppers were dropped. And shoppers were faced with higher prices: Margins were increased, markup was pushed from 50% to 55%-58%, with retailers forced to rely on continual "special sales," heavily promoted, to help overcome consumer resistance.

"It was only because Abraham & Straus was in trouble that I was asked to come in," Zimmerman says. "Management had allowed the store to be profitable for years by taking money that should have been invested in the future. For instance they were proud to do their warehousing in a 1908 multilevel low-ceiling building that cost them $1.05 a foot. But it was labor-intensive, not mechanized, and when salary rates went up they were locked in. I think they probably didn't know how bad a situation they had -- as opposed to knowing and not telling me."

Zimmerman spent most of his first year developing a strategy to revive the company's sagging fortunes, developing, in essence, the plan he would later adapt to Cohoes. He hoped to change the demographics and the inventory mix, targeting the affluent professional with recognizable names for quality, fashion, and taste. Promotion would be out; service, in.

"It was soon apparent to me that Federated's management style and my management style were not compatible," Zimmerman remembers ruefully. He wanted long-term growth; the corporation wanted profit. He wanted to build a team and refused to fire anyone when he came on the job; the corporation wanted him to dismiss anyone who didn't perform at once.

Zimmerman knew after his first year he would not renew his contract: "In my last year I decided I had two choices -- to go with another corporation and do what I knew best, or to go into something for myself. I decided I wanted no part of a corporate situation. Federated was the most political environment I had ever been exposed to, and I said I'd never allow myself to get in that again."

Zimmerman and Ames, now chairman and vice-chairman, respectively, knew what they wanted: a quality fashion department or specialty store in a high-growth area. Three deals fell through. Zimmerman was talking with a seven-store fashion retailer in Denver when, as a favor to a friend, he took a look at Cohoes.

"As soon as I saw it I was bowled over," he remembers. "In all my retail experience I had never seen anything like it. The Denver stores had a lot more glamour, and a safeness, because we knew that business. But I was impressed with Cohoes. I'd never been in a store where the customers thanked you for letting them shop there.

"It was a very instinctive, gutsy decision I just said, 'Goddamn it, this is what we're going to do."

Zimmerman and Ames took control on August 1, 1979, then spent the first year just watching and listening. "It's human nature to want to bring in your own tricks," Zimmerman says. "But there were people here who had been with a very successful business, who were watching to see how we were going to change the place. And when you don't do anything you fool them; you have time to win them over."

Since that first year, however, change has been constant. The old Cohoes stressed dresses, handbags, and shoes; Zimmerman emphasized sportswear and menswear. The old Cohoes had been clean and neat, but hardly dramatic. Zimmerman remodeled the interior, adding floor space and easing access between merchandise groups. Then he painted the ceilings dark and the walls bright, put in an oatmeal carpet, display cases, and wall groupings, and began building additions. The old Cohoes had spread its reputation by word of mouth; Zimmerman began a modest advertising campaign. The store had once been run like a small family operation; Zimmerman added planning and systems, a common order form to keep track of purchases, an automated checking and marking division, and regular six-month employee review. Inventory accounting was changed from FIFO to LIFO.

The strategy he had developed for A&S "fit like a glove," as did his management style. Although he added staff, luring such career professionals as a former merchandise manager from Bloomingdale's and the mens buyer from Bergdorf Goodman Inc., in his three-year tenure no one, buyer or executive, has left the company.

"I just want people with a good batting average," Zimmerman explains. "No one is going to bat $600 or $700; we want people who will hit $400 and will learn from their mistakes. That's how you win.

"We can turn on a dime. We're not muscle-bound by red tape and administration. The average department store buyer is a glorified clerical who reports to a merchandise manager who reports to a vice-president who reports to an executive vice-president who reports to the president. Our buyers really buy. They go into the market confident and strong, knowing that we'll never try to second-guess them."

Out of the window of his corner office Zimmerman can see the old mill at Cohoes Falls and his parking lot filling up with noontime shoppers. His door, as always, is open; yesterday's sales figures sit on his uncluttered desk, along with a calculator and an unread copy of Women's Wear Daily. Gallery prints hang on the exposed-brick wall, and two pairs of shoes, a stack of shirts, and a bottle of Saratoga Vichy water sit on the credenza behind him.

Zimmerman's regular workday runs from 8:30 a.m. to 6 p.m. -- longer in August -- hours spent cruising the store or sitting in his office, talking to his bankers or his outside board, chatting with Ames, or conferring with buyers and managers. Usually Zimmerman has lunch with his customers. Coffee and egg salad or tuna fish sandwiches are provided for shoppers, free of charge, in the paneled third-floor hospitality lounge. Eating there is one way for him to stay in touch with his customers. But today he has saved noontime for his family, three generations of Zimmerman retailing, including his father, now retired, up from St. Louis for a visit; daughter Jill, who left Garfinckel's department store in Washington to become a coat buyer at Cohoes; and his wife, Eve, a former Bonwit Teller buyer and "the campus romance" from his days at NYU.

Zimmerman senior confesses to being impressed by his son's success, but hardly surprised. "He was always ambitious," the proud father recalls. "I remember him saying, 'I want to make it big -- BIG!"

"Good morning, associates," the young woman says brightly.

"Good morning," 300 voices respond.

"Good morning!" she repeats, louder this time.

"GOOD MORNING!" they shout.

It is 9:10 Saturday morning in the Cohoes shoe department. Display tables have been pulled away, chairs lined up, and coffee and danish set out on the glass case for the monthly storewide meeting cum pep rally. A 1980 survey of 1,000 Cohoes customers showed that it was service, not quality or price, that most attracted customers. Staff meetings are one way Zimmerman keeps his salespeople enthused. Usually the meetings are more serious -- a fashion show to familiarize the staff with the merchandise, or a reading of a letter to the manager -- with a gold charm presented to any salesperson singled out for exceptional service. But today is special.

"We know everybody's going to be working really hard in August, and we wanted to lift your spirits before that started. So, to kick things off, I'd like to introduce. . . The Great. . . LIPPELIO!"

Out he comes, Leonard Lippel, vice-president of stores, dignity abandoned, to a raucous chorus of whistles, clapping, and laughter. Straight-faced and solemn, balding pate covered with a curly brown fright wig, he bows to the crowd.

"Now you all know there's no magic to doing business," he says. "That magic is you. But I'm going to do a few tricks anyway, to show you that the hand is faster than the eye."

"Where's the music?" Lippelio demands. "What? No music?" He hums a few bars before he begins his shtick, maladroit juggling and botched -- presto, shazam! -- magic tricks. "I'll practice next time and see if I can't get it better," he promises before bringing on his curtain dropper, "brought to you all the way from Saratoga," a prancing palomino-horse suit with two associates inside.

Zimmerman calls his employees "associates" -- so as to make them feel more a part of the business -- but this morning they resemble nothing so much as joyous children at a summer camp variety show, with Lippel as the chief counselor, cheerfully sharing a chuckle at his own expense with his charges. Few of the salespeople are professionals, many are housewives working part-time. Salary is barely above minimum wage, and there are no commissions. So Zimmerman tries to motivate associates by making them feel special, by giving them a yearly dinner dance and tickets to the ballet, extra vacation days for Sundays worked, and birthdays off with pay. After last year's Washington's Birthday sale, when 25,000 customers passed through the store, each employee was given a jar of Smucker's dessert topping labeled "You're the Tops!"

"And now, we'd like to offer a tribute to you, our sales staff."

Eight managers rise to their feet, face the smiling faces, and begin to sing to the tune of "I've Got Rhythm":

We've got horses / Just made big bucks/ Sar-a-to-ga / Who could ask for anything more? Got his wallet / Took his car keys / Off to Cohoes / Who could ask for anything more?

The voices waver, off-key but enthusiastic. And the audience loves it.

Judith Seiber / Ferr-a-gam-o / I can charge them / To be sure. We've got Calvin / Perry Ellis / We've got Cohoes / Who could ask for more in a store? August hours / What a sales team / That's my Cohoes / Who I could ask for more in a store? No more money / Back to the track / I had Cohoes / Who could ask for more in a store? Who could ask for more in a store?

Zimmerman stands in the back, hands in his pocket, tapping his feet to the music and smiling, the camp director happy to see his charges so fired up. He will say a few words of encouragement and congratulations, but he knows the show belongs to his staff.

"Good morning, associates," the public address system announces. "The store will open in five minutes."

When Zimmerman walks up the stairs to his office he is humming: "Who could ask for more in a store?"

"Our salespeople are motivated because they like the business, they like the management, and they want us to win," Zimmerman explains. "Commissions don't lead to good service. Salespeople begin to say, 'I don't want to get tied up with customers who don't look like they'll spend a lot of money.' But there are other things than money to motivate people.

"There is a lot of psychic income from selling. The fact that Michael Maloney sells 26 pairs of shoes and we tell him to get a baby-sitter and take his wife out on the town, we'll pay, or that I rush down and congratulate Mark for selling seven pairs of slacks, that's psychic income."

Shopping in Cohoes can surprise a customer. It is not just the sheer number of salespeople, or even their relentless enthusiasm, but it's also their dedication to the shopper. Salespeople have just one responsibility at the store: service. Cashiers total the bill, and wrappers wrap the packages; managers make exchanges, and there is a credit applications lady at the front door. No salesperson says, "That's not my department." They can travel anywhere, selling you everything from hats to shoes. There are even salespeople in the dressing rooms.

Everything is designed for the customer. Free men's alterations, layaway and easy credit, free shopping bags, and couches with The New York Times by the sportswear department for weary husbands. Zimmerman's return policy is legendary in the business; once, at Famous Barr, he let a customer return a rug five years after the original purchase.

The problem, Zimmerman admits, is getting customers in the door: "It's damn difficult to communicate what this store is. " The store's advertising budget, nonexistent four years ago, is now 1% of sales, about one-third of the industry average. Word of mouth has been supplemented with radio, billboards, print, and a small amount of local TV, always stressing the nature of Cohoes.

Sensitivity to vendors precludes the use of specific brand names in advertising. Although it is illegal for a manufacturer to refuse to sell to a discounter, few quality vendors are anxious to attract a discount image. And their main customers, the regular department and specialty stores, are not eager to try to sell a product that is available for 20% less a few miles away from the mall.

"When I talk to new vendors they are reluctant to sell to us," Zimmerman says, "until they see the store. Then they see that they'll be next to quality merchandise in a full-service atmosphere and that they'll do a lot of business with us."

Vendors may do a good business with Zimmerman, but they are reluctant to talk about it. They avoid discounters, but Cohoes is a special case. "We will not sell in 'a discounted atmosphere," the East Coast sales manager for Fila sportswear says. "That's all my attorney will allow me to say." Cohoes is excepted on two grounds. "It's out in the middle of nowhere," the national sales manager for Calvin Klein points out, and "it's a specialty store."

Location has an advantage beyond calming nervous vendors. Zimmerman owns the building in Cohoes and charges himself a scant $4 a square foot rent. One reason for not locating his branch store in a mall was that he wanted rock-bottom costs there, too. Advertising represents another significant saving. But the most impressive measure of Cohoes is productivity -- Cohoes has a yearly sales average of $600 a square foot, five times the industry norm.

Zimmerman rejects many of the profit strategies of competing retailers, arguing that they shortchange the consumer. He keeps inventory high and, consequently, has a turnover below the industry average, "because I don't want to disappoint the customer who comes a long distance. When a customer comes from Rochester or Montreal they may come once a year; they should be able to find the goods. And then if they like a shoe they may want it in four colors, or a pair of pants in size seven." Many retailers have turned to house brands, sewing their labels into unnamed goods to increase margins. Zimmerman rejects the idea, believing it weakens the store's reputation for "having name merchandise at the right place and the right time." For the same reason he rarely buys off price, goods sold for less at the end of the season for a significant markdown. He uses store "extras" as selling tools: vinyl bags instead of paper because people reuse them, advertising the store's name; the sandwiches in the hospitality lounge -- "If we let them go out to a restaurant they'll spend two or three hours. Here they can eat in 20 minutes and be back buying."

Both volume and profit are expected to increase with the establishment of his 25,000-square-foot branch, set in a renovated building in East Windsor, Conn. The location was chosen in order to build on a strong base of customers who had been traveling to the mother store and so that executives who needed to supervise the opening would not be burdened with a long trip. East Windsor, already thriving, was meant to be a model "to chart a course for other stores." Zimmerman hopes to open a branch a year but would like to stay private, generating cash for expansion, as he did with the first branch, from his healthy sales volume.

There is, he knows, an irony in an executive who left a corporate situation because it was getting too big turning around and pushing to expand his new small business. "But I came to the conclusion that I was built that way," he says. "It's in my nature to want to see the business grow."

One woman needs an Ultrasuede dress. Another needs a new purse. One wants to buy a coat for her daughter. Another covets a fur for herself. And everyone needs shoes. Opening day of the August racing season at Saratoga, and the radio forecasts blue skies and sunshine. But here in Rochester, some 200 miles to the west, it is pouring rain when the ladies gather at 6:30 in the morning for the bus to Cohoes.

The buses are the store's most celebrated sales tool, a customer service that guarantees some 7,000 shoppers each year to the mother store -- members of clubs or charities, consumers carted in from Utica and Syracuse, Toronto, Boston, and Montreal. A bus from Rochester costs the store $800; the store collects a $5 guarantee per passenger, usually refunded for charities, and gets a captive audience.

The Rochester ladies climbing on to the bus this morning are serious shoppers, willing to ride 10 hours for 4 1/2 hours at Cohoes. They are members of the health club of the Jewish Community Center, 38 strong, and they have been making the trip once a year for the past five years.

For most of the long ride, the bus is abuzz with talk of marriage and divorce, my husband and her children, and, most of all, of shopping, that "Marshalls is tacky" and "there's never anybody to help you in Bloomies" and "wouldn't it be wonderful if Cohoes opened a branch in Rochester?" When they see the orange sign after hours on the road -- "Worth a Trip From Anywhere" -- they break into applause. Lipstick and combs come out, sensible shoes replace the high heels worn for traveling. When the bus pulls up to the red brick building, they hit the store running, rushing past the executive sent to greet them, launched in a shopping frenzy. The accepted strategy is to cover the whole store once quickly, then return to consider specific buys.

"We can provide quality merchandise that is timely, in depth, and at the right price, so people will travel that extra mile," Zimmerman says. "We have arrived at a moment in time when it is accepted that it is good to save money; people no longer look down on you for that.

"Most department stores are wrong; they overpromote. They're training their customers to buy on sale only.

"Department stores and specialty stores, sooner or later, are going to have to address themselves to the day-to-day business again. They'll have to address themselves to store proliferation, and to paying rent on places where productivity is as low as $70 a square foot. And they'll have to find new ways to be profitable -- if they keep resorting to higher markups and higher gross margins they aren't going to be competitive.

"This is nothing new, it is just now being applied to soft goods. I remember at Famous Barr we thought the world would end when the hard-line people decided to sell to discounters. A lot of department stores threw Sony out because of that. But all that means is that a lot of Sonys are being sold, just not in department stores.

"I think it will be fascinating to watch the future. Eventually everyone will have to do what we're doing."

The Rochester ladies don't care about theory; they're interested in results. But by 4:15, as they file back onto the bus, laden down with bags, they are sated. One woman saw a dress for $148 that she had seen for $200 at Lord and Taylor; she went on to buy an entire wardrobe. Another sat, disconisolate, in her seat; all she'd bought was three pairs of stockings. "I was totally unfulfilled."

The store, on the other hand, did just fine. Two of the Rochester riders spent more than $1,000, and most were clustered around the $300 and $500 marks. Their bus driver was unimpressed; they didn't match one Rochester busload that spent $18,000.

By the time Sandy Zimmerman pulls into the parking lot the women are back on the road, dozing through the long drive home. Zimmerman rarely takes any time off in August; he would rather be in the store, on the floor, checking the pulse. But today, the opening of the racing season, he had taken his wife and children to the track. It had not been a good day. Upper seventies. Clear skies. He had bet against the favorites and had had few winners.

But he's humming "I've Got Cohoes" as he walks into the store. Tomorrow, perhaps, it will rain.

Last updated: Nov 1, 1982




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