POWER 50: INFORMATION AGE NEW CHALLENGE TO DEPARTMENT STORES: RETAIL: REACHING SHOPPERS IN A HURRY PRESENTS SERVICE PROBLEMS

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Location, location and location has been the key to success in the retail industry since the first U.S. department store opened in 1846. But information, information, information is becoming the industry's new mantra.

The power of information about customers "is the real estate of the next century," says John Costello, 50, senior exec VP, Sears, Roebuck & Co.

Mr. Costello, who oversaw $557 million in media spending last year, says retailers will need to see themselves as solution providers, so obtaining information about customers is crucial to helping match their products to consumer needs, quickly and efficiently.

SALES A THRILL

"Consumers love the thrill of a kill in finding a sale," says Mr. Costello, although noting con-sumers are time-starved as well as value-conscious.

"There is increased emphasis on fast, efficient service and the right assortment. Retailers need to ensure customers get merchandise at the price they are willing to pay as quickly as possible," he says.

In the new environment, the current emphasis on branding will continue, with private-label brands used as one of the new ways retailers drive traffic, he says.

WORD OF CAUTION

But Mr. Costello offers a word of caution for those directing retail marketing dollars.

"There will be a greater emphasis on analyzing what works and what doesn't work," he says.

Promotions, for example, will be assessed by the profit they generate, not the traffic they pull, he says.

The power of information-and using it to be more responsive to consum- ers' wants-is helping to rebuild once-depressed retailers like Kmart Corp., bearer of a $241 million media budget last year.

Under the turnaround team of President-CEO Floyd Hall, Kmart has become more adept at harnessing the marketing power of other brands: Kmart has centered its home products around Martha Stewart and its children's department around Sesame Street.

SETTING UP PANTRY

Additionally, it will team with Little Caesars Enterprises to boost sales of in-store restaurants, and is setting up a section to allow shoppers to pick up groceries.

The power of information is enabling Kmart to better target individual groups of customers and to offer products regionally, avoiding the problem of stores in Florida running out of bathing suits in winter or flooding them with overcoats.

"We've got to be efficient; we've got to learn to micro-market and to regionally market," says Larry Davis, 54, VP-advertising.

A tighter relationship between marketing and merchandising is emerging in retailing, led by such retailers as The Gap.

IDEA SWAPS

Michael McCadden, 39, senior VP-marketing, who is promoting the retailer via the "Fall into the Gap" campaign, often confers with his counterparts in merchandising, exchanging his ideas for products with their ideas for marketing. Like great merchandisers, great marketers know how to work part science and part art, says Mr. McCadden, who controls a media budget of about $40 million.

"Brands that succeed are brands that know what they are," he notes. "Retail is no exception."

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