Service Merchandise Refocuses on Jewelry, Housewares

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A little more than a year after a federal judge allowed Service Merchandise to undergo bankruptcy reorganization, the retailer is rolling out a line of reformatted sales floors devoted solely to jewelry and housewares.

Retail stores in Nashville, TN, and Tampa, FL, have already been remodeled, and a store in Orlando, FL, is near completion. By the middle of 2001, the company plans to have about 160 of its 221 stores reformatted. It has not yet been determined whether the other 60 stores will undergo the transformation, company officials reported.

Toys, electronics and sporting goods will be a thing of the past for the new-look retailer, which is still trying to recover from its publicized bout with Chapter 11 bankruptcy protection. The company has decided to do more of what it has always done best.

Redesigned Service Merchandise sales floors now will be devoted to what has been the company's most lucrative products: jewelry and housewares.

With annual jewelry sales in excess of $700 million -- an average of $3.2 million per store -- company officials thought this was a strength that should be exploited.

The reformatted stores will be split into two sections: 66 percent of the store merchandise will be dedicated to jewelry while the remaining 34 percent will showcase housewares and seasonal items. The new stores will include Internet kiosks and bridal registries.

The retailer's expanded jewelry collection includes bridal, diamond and fashion jewelry as well as watches ranging in price from $10 to $4,000.

The Gallery, a department within the redesigned jewelry sections, will launch this fall in 41 stores. The Gallery is expected to showcase high-market gems at prices up to $20,000.

"We have changed the look of the stores to create an open and inviting shopping atmosphere, with an emphasis on ease of shopping," Charles Septer, president and chief operating officer of Service Merchandise, Brentwood, TN, said in a prepared statement.

But company officials were not forthcoming with details. Several messages left for advertising executives requesting information about how Service Merchandise will target a wealthier consumer base and about how the company is promoting the new store layouts went unreturned.

Other than press conferences and news releases, no information about marketing or advertising campaigns to raise awareness about the reconfigured stores was available.

Service Merchandise will continue selling merchandise through its retail outlets and e-commerce Web site and by telephone from the company's catalog.

Company officials acknowledged the move to reformat the stores was a result of the Chapter 11 filing.

It was reported last year that Service Merchandise claimed $1.29 billion in debt and was forced into bankruptcy by five vendors, including Remington and Samsonite, that claimed Service Merchandise owed them more than $27 million.
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