Field's Dumping Vendor Shops

Marshall Field's, the department store division of Target Corp. (Minneapolis), has determined it will no longer build in-store vendor shops for designers, and is removing some of them as stores come up for remodeling.

According to a report in Crain's Chicago Business, a renovation that began last fall at the Field's store at River Oaks Center in Calumet City, Ill., a southern suburb of Chicago, eliminated the standalone Ralph Lauren and Tommy Hilfiger men's sportswear boutiques.

Crain's says it's not clear how far Field's will go to distance itself from designers and develop more exclusive private-label apparel lines. The store is still giving prominence to designers such as Hilfiger, but without permanently assigned space, wall treatments and fixtures.

A spokeswoman for Field's insists the initiative won't purge designer boutiques. “We're striving for a balance of both shops as well as prototypical (Field's) fixtures,” she says. “It gives us more flexibility to increase or decrease space for the vendors based on what our guests are asking for.”

A spokesman at Tommy Hilfiger Corp. issued a statement saying, “We believe in separating designer brands to create their own environment within a department store, but we recognize those environments are evolutionary.”

Crain's also reported that Target may be looking to sell off its department store division, which has suffered declining sales for much of the past 18 months. Same-store sales fell 3.4 percent in the critical fourth quarter ended Feb. 3, 2002, and were down 4 percent for the fiscal year. According to the report, Field's “has become an unnecessary distraction for Target management, as well as a drag on the company's growth and stock valuation.”

“They should have sold it years ago,” Crain's quoted an industry analyst as saying. “It's not a core business. They've let it decay.” Analysts estimate Field's could fetch about $1.8 billion, a deal that would presumably also bolster Target's stock valuation.

“Considering that Wall Street views Field's as a cash cow to be milked, not a business that deserves more investment,” said Crain's, “a sale is probably the best way to revive the 150-year-old chain.”

Crain's says analysts argue that now is the time for another consolidation wave in the department store industry, allowing chains to cut costs, win better terms from suppliers and weed out the weak links.

“May Department Stores Co. and Federated Department Stores Inc. have held merger talks with each other, according to recent news reports,” says Crain's, “and observers say Field's would get the attention and resources it needs if it became part of a larger department store chain. The big unknown is whether Target could find a buyer willing to pay an attractive enough price.”

The department store division of Target is a vestige of the old Minneapolis-based Dayton Department Stores, which launched Target mass-merchandised discount stores in 1962, merged with Detroit-based Hudson's Department Stores in 1969 to form the Dayton Hudson Co. It added Chicago-based Marshall Field's in 1990 to form a 65-unit department store chain, one of the largest in the U.S.

With Target Stores outperforming the rest of the organization (which also includes Mervyn's on the West Coast), the company renamed itself Target Corp. in 2000, and re-branded all of its department stores under the Marshall Field's nameplate last year.