Word: ferkauf
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...Price Alone. This put Ferkauf in a two-way bind. He had expanded too fast on a small capital base-four big new branches in 1957 alone-and department stores were beginning to win back business from him. His after-tax profits on invested capital plunged from 29% in 1956 to 9% in 1958. (Currently, they stand at 23%.) Fighting back, Ferkauf determined to challenge the department stores in the place where they were strongest. This meant getting into service, style-and soft goods...
...world of soft goods is a pink jungle in which stores compete savagely for the best styles and stylists, and a great deal depends upon cozy relationships built up over the years between the manufacturer's "vendors" and the store's buyers. Almost from the start, Ferkauf had had soft goods of sorts in his stores...
Blackballs & Back Doors. To get rid of his rags, Ferkauf in 1958 abruptly sold $5,000,000 worth of them below cost and set out to restock with better goods. But to do so, he desperately needed an experienced soft-goods buyer. He ran through four merchandising managers in three years until last year he hooked boyish-looking Jack Schwadron, 36, the whip-smart scion of a family that helped to found New York's Alexander's cut-rate department stores (in which Korvette's has a 43% voting interest). Schwadron knows soft goods. More important...
Buying the name brands of soft goods is still hard for Korvette's because manufacturers who openly deal with discounters are often blackballed by conventional retailers. To get high-fashion goods, Ferkauf and Schwadron sometimes have to go through cloak-and-dagger maneuvers that the CIA might study with profit. Korvette's Fifth Avenue recently scored something of a coup by offering its customers Pringle of Scotland fur-trimmed cashmere cardigans for as little as $25.90 each, despite the fact that Pringle tries to hold the price to more than twice as much by refusing to sell...
...slacks, which retail for $10 to $18, sell in Korvette's for several dollars less-but without the Pantino label. Jantzen and Catalina swimsuits-also stripped of labels-sell for 10% to 15% off regular retail prices, but the choice is limited. For the most part, Ferkauf relies on private-label soft goods put out for him by big-brand manufacturers. Korvette's calls them "compara-bles"; they include such items as Kayser-Roth "Nolde" nylons at $2.55 for three pairs, v. $4.05 for Kayser's better known "Kayser" hose, and Kentshire sheets by Pacific...