DRAFT

PROPOSED MISSION  STATEMENT

THE BON MARCHE

The dominant destination, branded, promotional retailer in each of our markets.

Our assortments will be dominant in Federated’s key core vendors and in Federated ‘s own brand product.

We will offer our customers value through a consistent and viable promotional rhythm.

Attached are the strategies that will be executed to ensure the successful execution of this mission statement.  The critical areas are:

Dominant  Assortments Key Marketing Strategies Use of Physical Space Customer Services Merchandise Handling

DOMINANT ASSORTMENT

Well-Understood  and Communicated  Family  of Business  Strategy. Vendor/Classification    Strategy:

• Newness – first in market
  • Exclusive
  • Presentation
  • Marketing

Never-Out:

• Basics

”          Inforem

• Focused list of never-out basics by family of business
• Auto replenishment

o          Utilization of technology

Clea r and Consistent Clea rance Strategy:

•..

..

..

Pricing Timing Out Date Marketing

Regula r Price Selling Strategy:

..          Marketing

”             Presentation

”             Product knowledge and training

• Specialist Program

Consistent Promotional  Strategy:

”              Definition of key events with planning tools

”              Promotional build-up orders and fill-ins after event.

Develop a Focused and Disciplined Pre-Sell Strategy Develop Strategy to Exploit Cross-Sell  Opportunities Vendor Pa rticipation  Strategy:

• Shipping
  • Margin

”              Advertising Dollars

”              Visual

KEY MARKETING    STRATEGIES

Discipline  to Promotional  Pricing Strategies:

The following documents are being constructed to be available for the QZ visit.

1. Objectives for each of our promotional events.

1. General pricing strategies as they are defined for each promotion.

1. Overall pre-sell strategy.

1. Advertising planning sheets — a quarterly review process to ensure pricing consistency.

1. Advertising pricing history — advertising pricing copy history.

1. Defined roles of the President, GMM, DMM, Planner/Distributor, Buyer, Senior Vice President of Marketing, Copywriter, and Sylvia Sinnema.

1. Dates for quarterly advertising review meetings.

1. Rewritten guidelines defining pricing standards.

1. Alternatives to sale pricing — things that can be used to promote products without affecting pricing guidelines.

More Depth in Promotional  Items:

The Sales Promotion division will work with the planner/distributor organization to devise a system to define investment for advertised items.

A More Even  Store Wide Promotion Rhythm/Beat:

Analyze the effects of our promotional beat and our ability to maximize our associate effectiveness.  We will also analyze our promotion’s effect on maintaining quality sales associates and maximize overall customer service levels.  Key projects are:

1. Effects of One Day Sale.
2. Effects of courtesy days.

Focus on Special Event Productivity:

A new strategy is being developed to re-position our Special Event activity.  The value driving our event strategy will be as stated in the Modified Marketing Strategy document.

KEY MARKETING  STRATEGIES (continued)

Changes in Creative Standards:

We are changing our approach to fashion creative.  Our goals will be to:

1. Save substantial creative expense in conjunction with Bon Days, Anniversary Sale, and Thanksgiving.

1. We are re-designing our fashion approach.  We will be moving toward a “J Crew” approach with a goal of 50% reduction in the use of models by using more “still life” in fashion RTW and men’s photography.

Increased  Use of Direct Mail Reach:

This strategy is being executed.  The priorities are:

1. Good Bon Marche credit card holders.
2. Addition of our reversed appends from checks and third party.
3. Key ZIP Codes that have high growth and high disposable income.

Develop  and Maintain  Better Vendor Positioning  Cam paign:

(Soft Oriented)

The program has been established for Fall 1995 to encompass ten soft vendors.  Both Home and Accessories are working to expand the program through Christmas.  Spring 1996 is being planned at the same level.

PHYSICAL SPACE

The overall appearance and shop-ability of our stores will continue to improve. Adjacencies, department clarity, signing and merchandising will be customer driven. Our ability to maintain the best looking, easy and pleasant-to-shop stores will be a major factor in our future growth.

More Open Visually  (depa rtments):

As our stores evolve, it is important that they become visually more open.  Customers need to have clear, logical access between classifications and families of business.

Regional Wrap Defined  by Family  of Business:

Service areas need to be strategically located and identified.  They should be prototypically functional and flex up and down according to business needs.  New stores, major remodels and “muscle moves” should reflect this strategy.  For ease of shopping, merchandise density should follow proper visual standards and consolidation policies should reflect each store’s ability to house merchandise.

More Improved Information Signing:

Sufficient, updated directories, perimeter department identification, elevator and escalator signing and major event registration are key store wide necessities.  At point of sale, trend, key item and vendor identification must be consistent and well impacted.  Feature and price signing (no mark areas, etc.) needs to be complete, current and easy for the customer to understand.  A well signed store is a major customer service benefit.  Equipment, such as store level automated sign system, proper sign holders, and price point kits are essential.

Changes in Visual  Strategies:

Overall visual strategy will simplify.  While exciting stores act as differentiators, the methodology will be less labor intense.  Judicious use of mannequins, seasonal shops and high maintenance fixtures will improve productivity.  Vendor support will mitigate costs.

Improved  Technology:

Our commitment to UPC-related technology will continue.  The flow of merchandise will be more even, with fewer peaks and valleys.  We will be consistently in stock on basic items and promotional merchandise will arrive on time.

Faster Distribution:

Faster distribution of our merchandise is a key component to our success.  We must develop a long-range plan and make the necessary changes to assure that our distribution facilities will support our projected growth efficiently.

PHYSICAL SPACE (continued)

Better Use of Capital:

Capital investment must show return.  Fixture and space re-allocation expenditures must meet incremental sales criteria.  Store planning will take an active role in prioritizing these investments.

CUSTOMER SERVICE STRATEGIES AND TARGETING

As we look to the future, it is clear that many issues will impact our present concept of customer service. The immediate reaction is to assume that anything we do will not be as good as our current practice and philosophy.  We are not prepared to accept that premise and, in fact, to do so would assure a level of service that would be as bad as we expect.  We see opportunities that exist to develop a new paradigm of service that is better directed, understood and more effective.

POS Service Enhancements:

Wrap stand tactics that aid service:

• Front and forward.

..          Well signed.

‘”          Provide customer service information.

• Corral and stand-alone designs.
• Clear guidelines for quantity.

POS

‘”          RF strategy for flex – are we already planned too close?

• RF telxon study and direction.
• Enhanced customer service through faster customer-friendly transactions.
  • Availability of product information by location – including size/color.
  • Multiple unit selling prompting.

e          Customer information to aid cross-selling.

Staffing Plan Development:

Selling Specialists – the number to be determined by volume and type of department.

‘”          Commission/draw compensation of specialists to be used only in those departments where it can be shown that the department supports commission when deficits are applied (8-9 months/year) or where it can be shown that this system of payment drives the business.

• Zone commission ultimately based on selling opportunity – goals based on projected volume by shift.
  • First use of vendor specialist support will be for salary support.
    • Specialists become the core associate group and therefore the focus of the company’s efforts to minimize turnover, train and incent.

Selling Assistants – scheduled primarily by FOB or pyramid. ”            Limited benefit package.

• Hourly pay, regular schedule – business peaks and valleys need to be smoothed to the extent possible.

”              Productivity measure initially by FOB or pyramid averages and later by selling opportunity as developed by scheduling system.                       ·

e          Incentive to become specialist.

CUSTOMER SERVICE STRATEGIES AND TARGETING  (continued)

Family  of Business  Ta rgeting:

Customer identification and expectations

”          Intensification by family of business with the type of customer service to be provided specifically addressed.

Prod uct knowledge and assistance required by selling associate. Physical space issues (addressed separately).

Application of specific delivery for that family of business. Open  sell opportunities.

Personal trade limited to better businesses or automated through FACS.

Policy  and Practice Review:

Customer Policies – Review for consistency  and sim plicity:

”          Review on an ongoing basis with focus groups or consumer board. ” Review with associate focus groups.

Review associate policies for consistency.

Job description-write for clarity of the new reality. Communication strategy for all audiences.