Friday, October 10, 2008

Take Another Look - at Zayre!

(In our case, one last look at Zayre for the time being, with some nice photos from 1981.) Ah, the asterisk. Throughout history, nothing else has etched “Buy! Buy! Buy!” in the mind of the American consumer in quite the same way. Even today, its hypnotic pulling power is employed by a wide range of entities, from gargantuan retailers to well-loved retail fansites. And from the late 70’s through the end of its existence, the asterisk was Zayre’s calling card, with an association that endures even today. For a time, it actually helped.

By the mid-70’s Zayre, a billion-dollar company by that time, was in trouble. Profits were down sharply, stockholders were upset, and Zayre’s image with the buying public was a mess. The country was in the midst of a gloomy recession, which mortally wounded a number of discount retailers. More than a few of Zayre’s problems were self-inflicted, however, as company chairman Sumner Feldberg later admitted, with brutal candor, to the New York Times – “Our stores were not exciting and each did relatively little volume…attempting to stay alive, we squeezed the payroll and this created low operating standards for the stores”.

In a bid to reverse Zayre’s fortunes, the Feldberg family turned the company reins over to an outsider for the first time. In 1978, Maurice Segall, a Canadian-born vice president of the American Express Company and former executive of Steinberg’s, a large Quebec-based grocery/discount chain, was installed as Zayre’s president and CEO. Attracted by the prospect of a turnaround for the Zayre stores, but even more so by the potential of the fledgling T.J. Maxx chain, (a then 12-store Zayre subsidiary launched in 1976)and the 200 Hit or Miss stores, Segall jumped in and set about the task.

One of Segall’s most successful strategies was to strengthen Zayre’s presence in urban markets, which by 1983 contributed nearly 30% of the company’s sales and an astounding 60-plus percent of its profits. Already having a strong established urban base of Zayre-built stores, the company benefited from the flight of other chains from these areas, including one Chicago example cited by the Wall Street Journal, where Zayre took over a May Company-owned Venture store that had just posted a loss on $7 million in sales. After a year of operation as a Zayre, the same store was profitable on nearly double the sales. Smart merchandising played a major part, of course –the company scaled down its home repair and lawn mower departments, owing to the fact that many urban dwellers rent their homes. At the same time, Zayre significantly expanded its apparel offerings in these stores, providing a wide clothing selection for areas where store choices were often limited.

Segall’s master plan for Zayre included some relatively minor tweaking of the company’s geography, coupled with a major revamp of its store mix. Zayre pulled out of the St. Louis and Minneapolis markets altogether. The Warwick Shoppers Worlds, Bell/Nugents, and fabric stores were all disposed of. A major ramp-up of the Hit or Miss and T.J. Maxx store programs was launched, with the T.J. Maxx store count ballooning from 12 to nearly 170 units by 1985.
And of course, there was the “extreme makeover” of the Zayre stores themselves, a forty-million dollar revamp phased in over a four-year period beginning in 1978 (although it had been “previewed” on a couple of stores a year or so earlier). The orange-and-brown rainbow color scheme and the venerable asterisk would become familiar sights in communities (and in TV commercials) throughout all Zayre-dom. It was an outward sign of a new optimism at the now very profitable Zayre. For his efforts, Segall was awarded the chairman’s title as an addition to those he already held in November 1986.

Zayre’s “second golden age” proved to be short-lived, as the virtual bottom fell out in 1988. From a nearly $130 million operating profit the previous year, Zayre posted a disastrous $13.9 million loss. The late 70’s remodels were by now looking old. Zayre had become overly dependent on deep-discounted specials, to the point where customers spurned anything the chain sold at regular price. Most troubling were the apparel lines, where Zayre was losing ground rapidly to Kmart’s Jaclyn Smith line and also to Dayton-Hudson’s growing Target chain and their “Honors” line, an early example of that company’s affordable trendsetting prowess. In a May 1988 article outlining Zayre’s woes, the Wall Street Journal quoted a college student named Marie as she pointed at the Zayre store in Cambridge, Mass. “Look at it,” she said. “If my friends saw me coming out of a place like that, they’d never talk to me again”. Ouch.

By this time, it was clear to most that the real gem of the Zayre organization was the TJX Companies (T.J. Maxx), in which Zayre held an 80% percent stake, having sold a chunk of it to the public in 1987. Talk of a corporate breakup of Zayre began to circulate. It took a hostile takeover attempt by the infamous Haft family to actually bring it about. In August 1988, Herbert Haft announced his family’s intention to buy a major stake in Zayre. In the previous couple of years, the Hafts had made similar runs at Safeway and Stop and Shop, among others, and at the same time they pursued Zayre they had Kroger firmly in their sights as well. In each instance these companies were forced into a defensive position, with Safeway and Stop and Shop being taken private (Safeway later went public again and Stop and Shop would sell out to Royal Ahold) and Kroger forced to restructure. Although the Hafts never ended up controlling these firms, in most instances they walked away with a pile of cash, which was probably their intention in the first place. Zayre’s response was to break up the company. In mid-September, Zayre announced its sale of their discount (Zayre-branded) stores to Ames Department Stores Inc. of Rocky Hill, Connecticut, in a cash and stock transaction.

Ames’ purchase of Zayre made them the third largest discount chain behind Wal-Mart and Kmart, but it placed a tremendous strain on Ames, like “a guppie (sp) swallowing an Atlantic salmon”, to once again quote from the Journal. Ames closed 74 underperforming Zayre stores and (mildly) facelifted the remaining 315. Beyond the name change, which was applied to most but not all Zayre stores to mixed opinion, Ames failed to appeal to Zayre’s small but loyal band of customers in some important ways. They discontinued the Zayre credit card, through which 5.5% of Zayre sales had come, not an insignificant percentage. The tradition of keeping Zayre’s stores open 24 hours a day in the days leading up to Christmas was abandoned. Most importantly, Zayre’s “promotional” approach – special sales, mailed circulars, markdowns and TV ad blitzes was discarded in favor of Ames’ “everyday low price” approach. In April 1990, with the strain of the Zayre acquisition lumped in with the generally poor economy of their core New England market, Ames filed for Chapter 11 bankruptcy, the first of two times they would do so. Two years later, Ames sued the advisers who promoted the Zayre transaction. In 2002, Ames closed their doors for good. The TJX Companies are still going strong.

Just for fun, here are a few Zayre commercials from their “renaissance period” - The “Take Another Look” campaign from 1978, a great 1980-ish Chicago Grand Opening ad featuring the fastest stockers in the world, and a Christmas ad from 1984. And here’s a link to a great post on Eddie’s Rail Fan Page, featuring a great night shot of a 60’s vintage Zayre revamped to the 1978 image, right down to the asterisk door handles! This empty parking lot shot brings back memories of driving home on late winter nights in my early 20's, pondering the great questions of life, like this bit of eighties profundity I read recently (can't remember where) - "Should I stay or rock the casbah?"

21 comments:

  1. Now THAT's the Zayre I remember!! That really brings back memories, as distant and foggy as they may be. That asterisk was a powerful and memorable marketing image to me, and I was just a little kid, so that really says something about its impact. When Zayre sold, I had just turned seven.

    Thanks for the trip back, I'm sad to see your Zayre segment come to an end, but I'll definitely stay tuned for whatever's to come next!

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  2. Orange and brown, oh how I love thee!

    That college student quote (Can we say "MEOW!") reminds me of something a grade school friend of mine said about Kmart circa 1990. LOL!

    I found that tidbit about Zayre taking over a Venture in Chicago store interesting to say the least since Venture ended up taking over some of Zayre's locations after Zayre was bought out by Ames.

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  3. Wal-Mart's 1980 store designs were obviously culled from the new-Zayre look with the orange and brown, but it's taken another 20 years to co-opt the asterick into the sunburst. Sam Walton outwardly spoke of Kmart as his inspiration and yardstick to compare Wal-Mart, but I wounder if he sublimely admired the underdog in Zayre.

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  4. Kendra - Thanks, and please do stay tuned! It really was a strong and memorable image, even for those of us who didn't shop there much by that time. As I mentioned in one of the earlier posts my family pretty much dropped Zayre a few years before, but they advertised a lot so the impression was strong.

    Didi - Brings it back, right? And I agree about the college student's comment, but it kind of sums up Zayre's problem in a nutshell.

    Ken - They were extremely similar, that's for sure. Even the Wal-Mart interiors had the Zayre feel. Sam Walton was a true believer in the "steal from the best" philosophy, so it wouldn't surprise me at all if that were the case. I'm confident Sam's admiration was limited to Zayre's store designs and not their business approach, though.

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  5. I would have actually loved to have seen a Zayre of this prototype. The last Zayre's to be built in the region dated to the mid-70's. Florida may have gotten some of the new designs, as Zayre was firmly established there, but by the time Ame's took over, Zayre was flagging against Kmart and an emerging Target, fresh with former Richway's as Wal-Mart was still focused on smaller and rural markets in Florida. By the time Ames took over, Zayre was synomous with tacky, poor service and out of stocks. I'm sure Ames entering unfamiliar territory as well as its rural roots made the final incarnation of Zayre seem more capable than the Ames succesors.

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  6. As always Dave, you've gone out of your way to bring back pleasant childhood memories. I told my fiancee that you were now featuring Zayre on your blog and she lit up! I'm thinking a Venture retrospective should be soon. :-)

    Oh, and I found a picture of the Peoria Sears store which is no longer.

    http://flickr.com/photos/army_arch/2820783235/

    Thanks for the blog and your labor of love.

    Jack

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  7. What a great, slick modern looking entrance and a great shot -- very simple looking rippled door entrance scheme. I actually seem to remember those asterisk door handles too!

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  8. Now this is the Zayre I remember as a child.

    Some of the former Zayre's in Atlanta became Flea Markets. One particular store didn't even bother to remove the orange stripes from the wall or floor.

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  9. Ken - These Zayres in the photos were the best they ever looked. It was downhill big time over the decade that followed. Ames struggled everywhere outside the upper eastern seaboard, in my opinion.

    I didn't know there were Richways in Florida!

    Jack - Thanks once again, and I hope she likes the Zayre posts! I've got some legwork to do on Venture (although I have quite a few personal memories)but will try to get to it coming up. And that Sears store is awesome. I never get tired of those.

    Nick - I agree it was a great look, and it certainly lifted Zayre out of the doldrums for a while.

    Erica- Thanks,and they make good flea markets, I'm sure. I believe one of the ex-Treasury stores (former discount division of JC Penney)in Atlanta is now a flea market.

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  10. The Richway's were in Burdine's homemarket in the Miami-Fort Lauderdale-Palm Beach corridor and disconnected from the other Richway's. I don't think they were more than 6, but it was a foot in the door for Target. Also, the Charlotte area Richway's briefly became Gold Circle before the sale to Target.

    Another aside, the Plant City, FL distribution center for Zayre ended up as Albertson's distribution center, though its days are now numbered.

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  11. In the UK there is a retail chain called TK Maxx with the same logo style as TJ Maxx, are they related?

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  12. Ken - Thanks for that interesting background info!

    Jamcool - Thanks for writing. TKMaxx is the UK version of TJMaxx, both are owned by The TJX Companies and share similar formats. I don't know the reason behind the name difference.

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  13. Dave of Gary IndianaDecember 28, 2008 at 4:31 AM

    There used to be 4 Zayre stores in my area (3 that opened in the early 70's, & 1 in 1978). The early 70's stores had the registers & Jewelry departments in front of the store, viewable from the outside. The only store with a different layout only had the womens department in window view, and the sign was to the right side of the entrance. The Zayre scheme on the outside of this store in Merrillville Indiana still exists, but when Ultra Foods took over the spot, they eliminated the windows in the store. Prior to Ultra Foods, it was Menards, and they kept the windows, but tore out the storage rooms. When it became Ames in 1990, the store only had a paintjob, but otherwise was still Zayre. The other 3 stores (Gary stores on US 20 & Ridge Road store listed as Griffith) & Hammond Indiana also only had a paintjob to the walls, but otherwise retained the Zayre look. The stores were also dirty. My mom shopped there only because it was the closest to home, and shopped there until it was renamed Ames, and closed in 1990. While Zayre was doing poorly, Ames eliminated the 10% senior citizen discount on sale merchandise (that caused them to lose business to neighboring Venture), changed over to a cash register system that was severely flawed, and rang up wrong prices too often, and required a manager to do overrides. They lost sales to that as well. Ames actually destroyed what was left of Zayre. Ames returned to my area with the buyout of Goldblatts, and people overall remembered Ames that they didn't want to be burned by them again, and closed 10 months after reopening in Gary Indiana. 8 Months after the Gary Indiana store closed, Ames liquidated.

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  14. Dave - Thanks for that wonderfully detailed history of Zayre in the Gary area! Ames did a generally poor job with the Zayre stores they took over, eliminating the few reasons people still had to shop there. And they broke Rule #1 - Don't mess with the senior citizen discounts!

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  15. Fantastic write up, thank you very much for this. Growing up in small town Maine the Augusta Zayre was the biggest and best Store I could ever imagine going to and it was a wonderful trip every time we went. I fondly remember bugging my Mom to head down to the toy section so I could beg for a Stomper of He Man figure. I truly miss Zayre....Thanks again.

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  16. ZF Camaro - Thanks very much! Glad it brought back some good memories of your Zayre shopping days. Funny you should mention "He-Man". I'm in my forties, but my youngest brother is 29 and he was big time into the Masters of the Universe figures in the mid-80's. We always knew what to get him for birthdays and Christmas!

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  17. I have just discovered your site and love all the information you have on Zayre (and everyone else) here. :) I have a small electronics company that may use a familiar logo: zayre-electronics.com. It's named after the my first job - working in sight and sound at Zayre #155.

    When I was going to college in Western N.Y. (Dunkirk/Fredonia) they built a brand new Zayre store - it was 1986 or 1987. It was built across the street from Hills and down the road from Ames. When Ames bought Zayre they converted the Zayre store to Ames with the splash of paint and change in registers, but they kept the Ames store as well. Two Ames within eyeshot of each other.

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  18. I remember Zayre when I was a young lad going to the Dartmouth Mall in Massachusetts. I bought my 1st 2 decks of playing cards there. The brand name was Standard and the face cards were colorful,the ace of spades had a joker clown inside the spade and a hobo clown as the Joker card. When I took out that first deck after I bought it,I loved that new-playing-card-deck smell. Man,how I miss this store. Thank you for the memory trip!

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  19. I wanted to say "thank you" for this post. It brought back memories of when my family and I used to shop at the Zayres that was located in Louisville, KY (on Dixie Hwy.

    There is another store that merged with Zayres. It was called "Home Base". If anybody is interested in reading they can go to:
    http://www.fundinguniverse.com/company-histories/homebase-inc-history/

    The mentioning of Zayres brought me to here. I used to shop at that store as well. Thanks to Home Depot, that store is no longer around.

    Thx again for the post.

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    1. What did Home Depot have to do with Zayres?Ames and Zayres became one and Ames went bankrupt!Bought Hills out too!Bite off too much!

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  20. Talking to my brother brought me here.Zayre's I remember as a child I believe it was located in Bloomfield,Conn.As a poor family my parents loved it.Those Easter egg hunts were the best.Use the entire store for a kids playground.Neighborhood stores are few and far in between.Thanks for the memories.

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