“I’m not into buzzwords or terms companies use to keep Wall Street happy,” said Jim von Maur, president and chief executive officer of Von Maur and the retailer’s fourth-generation leader.
When talking strategy, “digital-first” or the metaverse aren’t part of von Maur’s conversation. It’s more about “blocking and tackling,” bricks-and-mortar and service. And he seems dubious about retailers that come up with slick corporate mantras to impress investors, or identify as tech companies to seem cutting edge.
“Shouldn’t it just be you want to provide a great product, at a great price with great service? That’s our strategy. Call it whatever you want,” von Maur said.
“We are just customer-first. We have always prided ourselves on doing what we need to do to get the customer the information they need, and what they want. We have always been omnichannel.”
Von Maur does have a growing digital business. It currently represents a low, double-digit percent of the company’s approximate $1 billion annual volume, whereas in 2019, it was 8 percent of the total. “It’s our number-one store now,” von Maur said. “Digital has grown on its own. It’s a good augmentation to our brick-and-mortar and an important part of our business.”
He believes the customer’s shopping behavior will dictate just how much e-commerce should represent of the company’s total sales in the future.
But the physical store, “that’s our bread and butter. True retail brick and mortar is here to stay,” von Maur said.
During a wide-ranging interview from his headquarters office in Davenport, Iowa, a city on the Mississippi River with a population of 101,000, von Maur made the case for operating a privately owned versus a publicly owned company. He also discussed the secret sauce behind his company’s longevity, his expectations for continuing to grow his business, and his philosophy on shopping.
“People want to get out and shop, get real service, touch and feel the product, try it on, not just sit at home and click on a device,” von Maur said. “People want to see other people and have a real experience. When I talk to the young executive trainees, they will tell me they prefer to go out and shop. I think it’s the older demographic that likes the convenience of shopping online.”
After 150 years in business, Von Maur sees much room for growth and continues to launch stores in cities and suburbs around the country where it hasn’t had a presence before. Von Maur’s 37 department stores, situated in 15 states, sell men’s, women’s and children’s apparel, footwear and accessories; beauty; soft home; home decor; gifts, and some food. The company also operates 70 Dry Goods specialty stores selling contemporary women’s fashion, accessories, shoes and gifts.
“Geographically, we would eventually like to be coast-to-coast, but it’s so hard to predict the future,” von Maur said. “We open one to two Von Maur department stores a year, so I don’t know how long it’s going to take” to reach that national goal.
“We’ve been very patient. But if we end up buying another chain to grow faster than our typical rate, it’s possible. I don’t know who that would be. We are very happy with the course we are on, though we would like more opportunity. We are actually surprised that there hasn’t been more options out there, with Sears going under and other stores retrenching and having difficulties. Sears has been very strategic with how they sell their real estate. We thought there would really be so many it would be hard to chose from, but the availability hasn’t been there. They’re asking for a lot of money, holding out.
“We have a lot of places where we could open a department store.”
These days, it’s rare when a department store opens, yet Von Maur has been opportunistically seizing vacated store real estate. In fall 2024, Von Maur will open a 118,000-square-foot store at South Hills Village in Pittsburgh, Pennsylvania, its first location in the state, on the site of a former Sears.
Last month, Von Maur opened a 90,000-square-foot department store at West Towne Mall in Madison, Wisconsin, on the site of a former Boston Store. “It was wall-to-wall people from the minute we opened the door,” said von Maur.
Last spring, Von Maur opened a two-level, 140,000-square-foot department store in Rochester Hills in north Detroit, Michigan, moving into a former Carson Pirie Scott store.
A 140,000-square-foot store in the Jordan Creek Town Center in west Des Moines, Iowa, was set to open Nov. 5, in a former Younkers, replacing the Von Maur in the Valley West mall.
“We were ready for a new store there,” von Maur said. “The old one was getting a little tired. The Jordan Creek store will have a more updated look. The children’s department instead of being covered in primary colors, that kids’ look, it’s more modern and sleek. We have added a food section, and we’re going to a smaller footprint so it will be easier to shop. Valley West was 180,000 square feet. For me, it was too big. To get from one end of the men’s department to the other, it took a lot. It was harder to get service.
“I think our new store is going to be more shopper friendly, with better sight lines and more symmetrical than the old store. It’s in a great mall,” which is anchored by Scheels, Dillard’s, P.F. Chang’s, Barnes & Noble and Apple. “It’s very well leased.” There is also a Dry Goods store in the mall. “It’s got better parking, and better stores around it. Des Moines has been one of our best markets since we opened there in the 1970s. We want to put our best foot forward in Des Moines.”
Jordan Creek will be the scene of Von Maur’s biggest 150th birthday celebration, with giveaways, gifts with purchases, a charity donation, and what von Maur described as a massive free gum ball machine, that depending on the color of the gum ball dispensed, a customer could get a $15 gift card or a $500 gift card, or just a piece of chewing gum. Other stores are also celebrating the milestone.
Von Maur expanded into Michigan in 2003, and New York State nine years ago. The retailer’s most western location is in Oklahoma City, Oklahoma, where in 2014 it opened in the Quail Springs Mall, also on the site of a former Sears.
In the near term, Von Maur could push further west and Denver, Colorado, is being considered, though for now at least, the Midwest and Southeast are the primary regions for expansion.
Von Maur selects markets with minimum populations of 400,000 to 500,000, and locations that are readily accessible off a major artery to draw customers from a wide radius.
“You want to be in a quality shopping environment. Are there good stores that would surround us? We don’t want to be next to lot of budget stores,” von Maur said. “Are there nice restaurants? We don’t have restaurants so that’s an important component. Are there movie theaters and other forms of entertainment? Is there good visibility [from inside and outside the mall]? Good parking is important too.
“We look for communities that have been overlooked,” von Maur added. “Madison was really underserved for the size of the market and the type of customer that is there. They didn’t have a lot of options. But we are not afraid of competition. Atlanta is a very competitive market.”
Von Maur entered the Atlanta market in 2011 by opening a department store in the North Point Mall in Alpharetta, Georgia, and subsequently opened units in Atlanta’s Perimeter Mall and the Mall of Georgia. Von Maur’s business in Atlanta has been “solid, but not going as well as we hoped, though this year it has been very good,” the CEO said. “We’ve grown quite a bit on a comp basis. It has not been as good as we hoped but we are making inroads. We are making money, not a lot. We are not losing money. It’s a highly retailed market, with a lot of malls.”
Coming off the pandemic, Von Maur opened just one Dry Goods store this year, but next year, 15 to 20 are seen opening. There are 70 Dry Goods stores.
“We have big plans for Dry Goods,” von Maur said. “It’s doing really well so we want to be aggressive. It’s a great concept and we have an exciting mix. We have great merchandise. We are seeing some pull back from that younger demographic but it’s still doing extremely well. It’s very, very profitable.”
The 12-year-old Dry Goods has been rolling out 4,000-square-foot specialty stores focused on junior and contemporary women’s apparel, accessories, shoes and gifts with an interior design that has a SoHo feel, like an old vintage store. The Dry Goods units each generate around $1.5 million to $2 million in sales, while some do as much as $3 million.
For the Von Maur business overall, “I always say we are all fighting for the same dollar. Dillard’s, Target, and Scheels are out there and there is all that stuff on the internet pulling dollars away,” von Maur said. Nordstrom and Macy’s would be direct competitors as well but there’s also J.C. Penney, Kohl’s, Walmart, Gap and others. “The competition is anybody selling apparel and accessories.”
On the other hand, “Practically all the family department stores that used to be in America no longer exist,” von Maur observed. “There were hundreds and hundreds of them.”
Citing several reasons for their disappearance, von Maur explained, “You might have had family dynamics. The families grow and some members want to get out, some want to continue. Or they didn’t adapt. They ran the same thing, without changing.
“We are pretty much one of the last ones that’s still family-owned. We are a traditional, family-owned, good old department store. It’s 100 percent still owned by the family.”
So how has Von Maur endured for 150 years?
“My dad and uncle reinvented the store,” von Maur said. “They focused on service and selection, rather than price. They realized they didn’t want to be one of those stores that had a blowout sale every weekend. So they decided to go a different avenue, focus on quality experience and quality merchandise and not playing games with the customer with coupons.
“We are extremely profitable and we do it without charging interest on our credit card,” the CEO added. “Most retailers make their money on the interest they charge. We don’t do that. We do it by running a clean business.” It’s an interest-free charge card with no late fees and no annual dues. The card has been around since 1988.
“Remember the days where there was Federated and May? You walked in their stores and they all seemed the same. The same merchandising, the same layout, the same boring decor. Make it a great experience.
“You walk into our store and you are going to feel special, and we make sure you get what you need and that you leave happy. It’s hassle free. We have exciting merchandise,” he added. “We make it relaxing, no loud music, hardly any vendor signage. We’re not screaming 40 percent off. You’re walking into a nice relaxing residential environment. Our aisles are not merchandised. You don’t run into a rack or a dump table. You don’t get people bumping into you. People come to our store to relax and enjoy themselves, rather than just to get in and get out. There is a piano in every store with live music. We employ a lot of piano players.
“When you walk into a Von Maur you know you are in a Von Maur. It’s special and unique.”
Other factors have sustained the business.
Von Maur has managed to escape decades of department store attrition by avoiding the traps many retailers fell into, like overexpansion, overpromoting to push volume, or taking on too much debt. Von Maur has outlasted large retail nameplates that were either gobbled up by other retailers or went out of business on their own, like Marshall Field’s, Hess’s, Carson Pirie Scott, Parisian, Younkers, Bamberger’s and Abraham & Straus, among others.
The company has kept a clear course and a identity, banking heavily on national brands without the kind of heavy private label buildups seen at other department stores and mass chains. Some key brands at Von Maur are Vineyard Vines, Tory Burch, Kendra Scott, Free People, Eileen Fisher and Tommy Bahama. Key brands at Dry Goods include Blowfish Malibu, Lola Grace, Eunina, Originality and Thread & Supply.
“The fact that we are family-owned allows us to make smart decisions,” von Maur maintained. “We don’t have to worry about propping up the stock price by growing too quickly, or getting the topline up. It hurts the earnings. We think in terms of five, 10, 20 years. We had seven presidents in our company’s history. My great-grandfather, my great uncle, my grandfather, my uncle, Jack Arth, the only non-family to be president, my brother Richard, and me.” A dozen family members are owners. His uncle, Charles von Maur, serves as chairman.
Asked how the business is performing, von Maur replied: “We have seen a pullback in the younger, junior demographic at Von Maur and Dry Goods.” He also said the children’s business recently turned flat. “The rest of the business has been very solid,” he said, citing women’s sportswear, men’s clothing, shoes and handbags.
“We, like everyone else, are trying to be optimistic for the holiday season but there are a lot of headwinds,” von Maur said, referring to inflation, declining consumer confidence and recession fears.
“I was talking to a handbag vendor on Saturday and he said he is going to increase his prices again. I said, ‘Give me a percent,’ and he said, ‘It’s a lot.’ And I said, ‘Would it be like five percent?’ And he said, “More like 30 percent on the stuff being manufactured right now.
“It’s like price increase after price increase. We are going to see fewer units go out the door, but at higher price points. The volume may stay the same but we are not going to be moving as many units,” for the most part.
Von Maur does see a “silver lining” in a recession. “You don’t need to staff your stores as much as in good times. We used to have 5,500 employees but since the pandemic we are probably down to 4,000. We have had a hard time hiring people.”
Generally, though, “Our selling payroll [as a percent of SG&A] would be dramatically higher than our competition,” von Maur said. “We are just going to always have more full-timers and more people in our store, to the point where it drives my CFO crazy. Before the pandemic, it was double as a percent of selling. We pay our people more. We like full-timers and we have lots of them.”
Discussing the future and further expansion, von Maur said, “I am very optimistic based on the number of stores we have been opening. We are willing to make that investment. Retailing is changing so fast, with the internet, these pop-ups, so many little apparel websites out there that people use, and you have influencers that have a huge impact on your business — YouTube influencers, Instagram influencers.
“Navigating all these new things that are popping up, retailing is not like it used to be. But we are doing better with vendors than we ever have. Sometimes they limit distribution, and let us sell their products in seven stores or whatever, instead of all of our stores. That gets frustrating but it’s getting better over time. It helps that a lot of the competition has been struggling.
“When we opened in Madison, we had so many customers come into the store and saying they had no place to buy shoes. OK, they got Macy’s, but it’s in a mall that’s hard to get to. Here is a community with 600,000 people that doesn’t have a place to buy a decent pair of shoes. The lack of competition is encouraging because we are not dealing with a lot of promotional department stores like we used to.”
Von Maur acknowledged that when the company expanded into Georgia, Pennsylvania and New York “there’s been a learning curve for sure,” meaning many shoppers in markets new for Von Maur are getting to know the store for the first time.
“Because we don’t do a lot of advertising, word of mouth, as well as the internet, billboards and staging a big grand opening, all help. It does take awhile to develop some customer loyalty in new markets. We do get our name out there, and we let our reputation spread by giving that legendary customer service. But sometimes it’s astounding how many people, after five or six years of being in a market, just discover our store.”
Asked how he feels about being in business for 150 years, von Maur said, “This is a great source of pride for the company, the family and the community. The fact that we are based in Davenport, Iowa, is pretty unique.”