DRAFT

INDIVIDUAL EVENT STRATEGIES

Key Seasons:

Our focus must remain the key customer seasons such as the Home Sales in February and August, Spring and Fall sales, Mother’s Day, Father’s Day, Back-To-School,  Thanksgiving, and  Christmas.  These will continue to be the most important merchandising and marketing periods in the calendar year.  All activities need to support our dominance during these periods.  We must peak inventories, maximize marketing dollars, intensify sales help, and create visual excitement around these selling periods.  We traditionally open the season with our best assortments focusing on the breadth delivered to our best customers.  Then, as the season progresses, we become more

focused on key items and classifications and become more reach oriented with a well-designed clearance at the latter stages of the season.

A new strategy suggests that at the beginning of the three-and-a-half week period prior to the selling season, we open with a strong price leader — items that are the commodity of that selling season — to establish a strong value image.  We then add a wide assortment value message to our best customer with a strong loyalty enhancement for using our Bon Marche credit programs.  Then, we continue to define key commodities at value pricing with an aggressive re­

pricing of slow selling merchandise just prior to the season ending.  The ideal strategy would be to start with a store wide event with a targeted classification of business, i.e. men’s for Father’s Day would open with incredible value priced commodity products.  We would then have a color fashion value direct mail piece that would be specific weighted toward the family of business in season with loyalty customer value enhancements added to create urgency for this event.  The  third promotion would be a One Day Sale that starts the re-pricing of merchandise that is not selling to expectation.  The last four to five days before the season ending, a multi-media store wide sale would close out the season.  At the conclusion of the season, a massive clearance would run to re-price remaining merchandise.

Each of these customer events would become the operational focus of the entire organization with all aspects of the company’s energy focused on being the dominant retailer in each of the markets involved.  This dominance would be focused on Federated core resources and promotional value.

Three Day Holidays:

All three day holidays will continue to be built into five to six day store wide events.  Coupon  sales have proven very effective in that consumers still believe in coupons, and as a copy only event, proves very flexible and affordable to promote these periods.  The major emphasis in soft apparel is to help position clearance.  Usually a POS off all marked clearance at the 30-40% range is sufficient to help drive the business.

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One Day Sales:

One day sales will continue to be placed on the calendar as an accent to major store wide customer driven selling periods.  They seem to work best two weeks out from the end or beginning of a selling season.  They are used to help manage the inventory by aggressively re­ pricing in-season slow selling merchandise.   To ensure that one day sales out-perform  our

planned sales increase, we will add key item drivers to each of these events.  The consumer will be offered 8 to 12 key products priced to ensure strong customer recognition of the value offered.

Consistent use of key vendors will also be a part of this strategy.  We will downsize our overall newspaper presentation by using less photo advertising and more liner advertising with increased investment in radio and television to ensure greater reach.  One day sales will be onr most aggressive  monthly   promotion.

Seconda rv Store Wide Events:

Super Saturday, Super Sale, Three Day Sale, Savings Days, etc., are to be placed in any week where our customer driven selling season is in need of a weekend promotion.  These events are to be classification driven and the values will depend upon the current sales performance of any one division.  The worse the sales trend, the better the value a classification will deliver.  The goal of these events is to sustain a promotional value image to our customer and to offer a reason to shop every possible opportunity.

Chairman’s Letter:

Chairman’s Letters are delivered at several levels depending upon the season.  They can be a simple 10% off with very limited POS promotions or developed into a multi-leveled promotion that helps grab business at the beginning of any season.  The Chairman’s Letter concept must be carefully planned to ensure the consumer does not become cynical as to the value of the promotion.  Where as all of our other promotions are impersonal, the Chairman’s Letter is a personal interaction and could have huge implication on our customer relationship to company. We may need to develop a more exclusive offering to our Premier Gold customers.  The most logical effort would be to offer 15% off as a special way to promote to the Gold group.  All discounts will be offered only to the people using The Bon Marche credit card.

Anniversary  Sale, Bon Days, and Thanksgiving:

The three grand events of the year will be Anniversary Sale, Bon Days, and Thanksgiving.  These events will have the largest assortments, the greatest depth, the most number of days, be marketed to the highest number of customers, and offer the greatest number of enhanced promotional activities to ensure their success.  Each of these events will have a credit card loyalty aspect built around additional discounts for courtesy days.  These additional discounts will be earned only by using The Bon Marche credit card.  The merchants will negotiate their best promotional deals of the spring, fall, and holiday seasons for these promotions.

Bon Bucks, Wa rdrobe Dollars, and Holiday Dollars:

These “purchase and get rewarded” programs will continue to be used for selected store wide or soft business promotions.  The strategy will be to earn these discount certificates for purchases during an event, and then require the customer to use these certificates for a limited time, almost immediately after they are earned.  It is very important that the pricing of these promotions be weighted to include the value of the earned certificates.

Loyalty Programs:

The nature of the current customer environment is filled with incentive loyalty programs. Airlines, hotels, other major credit card programs, and even espresso carts have incentives to build customer frequency.  Rebates on seasonal purchases, coupons, discounts, and added services must be blended to our overall seasonal customer seasons.

Differentiation:

As we narrow our vendor list and build our investment in commodity items, our inventories are in danger of becoming undifferentiated and boring.

The answer is in four segments:

I.         Action Items:

(                                    We must develop a hot item formula that consistently informs the customer of unique  items that are in the market.  The entire organization will receive rewards for finding and

exploiting unique and fun items that become one of the cultural aspects of the merchant selling and marketing organizations.  The unique items also must blend into the overall gift image of the company to ensure when people are thinking about the gift portion of their needs, that a unique item from The Bon Marche is first and foremost in their minds.

2.                   Own Brand:

With the addition of Macy’s Own Brand program, a second opportunity exists to differentiate our product from our competitors.  We will introduce a PR strategy to begin talking about the high quality of the Macy’s product The Bon Marche is about to receive. As we start receiving this product, we will to invest in positioning this merchandise as an exciting enhancement to our assortments.  It is very important that we don’t introduce this product in our store wide promotions.

3.                   Launch  Strategies:

The Northwest consumer has become inundated with new product launches — the Boeing 777 and Microsoft Windows 95 are the two largest product launches — but all of the consumer product classifications manufactures are driving incremental sales through  launch strategies.  All of our up-scale grocery stores are involved in sampling new product on high traffic days.  Our own cosmetic businesses are still very healthy in a large measure to new product launches and intimate apparel has been turned around by the introduction of the Wonder Bra.  One of our driving strategies will be to “launch” items and key vendors to ensure our customers are constantly told there are new and exciting things at The Bon Marche.

4.                   Key  Vendor  Differentiation:

Key resources that are exclusive to The Bon Marche needs to be constantly in front of our customers. Polo, Tommy Hilfiger, Jones of NY, Belgique, etc. These key vendors will be distorted at point of sale as well as with a targeted upscale advertising program.

Classification  Businesses:

Because of our historical culture, the merchandising pyramids are all based upon the reward system that drives individuals to focus on their individual classifications rather than store wide programs.  At odds with this culture is the fact that the store receives greater lift when programs are run from a store wide effort.  One of the biggest challenges to the future is to keep merchant accountability to profitability and sales growth while they have less and less control over purchasing, marketing, and inventory disbursement.

The customers become loyal to brand names in the soft portion of the business because of fit, image, and past wardrobe purchases.  Our classification efforts should be driven by this customer loyalty to key brands.  Our Harte-Hanks marketing system should become a key strategic force in development of vendor-consumer relationships.  Highly targeted direct mail should be developed to continually talk to customers who have shown resource preference and new strategies need to be devised to continually enhance these relationships.  This should be a major focus for getting extra co-op from a resource in that it represents a direct link between our customer and their product.

Individual classification promotions should always be added to the calendar after the store wide programs are in place and planned.  If a classification has a significant opportunity, the first effort should be to integrate the opportunity into the store wide event.  The greatest return on investment comes from store wide.  The subtle classification cultural change is in the merchants focus on driving key vendors to their best customers, not classification development through classification specific promotions.