Frederick Atkins Inc.
Frederick Atkins Inc.
Frederick Atkins Inc.
Sales: $367 million (1995)
SICs: 5023 Home Furnishings; 5136 Men’s and Boys’ Clothing and Furnishings; 5137 Women’s, Children’s and Infants’ Clothing and Accessories; 5199 Nondurable Goods, Not Elsewhere Classified; 8732 Commercial Economic, Sociological and Educational Research
Frederick Atkins Inc. is a nonprofit marketing organization that functions as a cooperative buying office for the department and specialty stores who own it and are its members. The company also conducts retail-marketing research studies for its members. It earns revenue from fees charged to members, based on each store’s sales volume, and from private-label sales of apparel and home goods. In 1993 Frederick Atkins had 30 members in the United States and four foreign affiliates. Together they were operating more than 900 stores in North America and had sales totaling an estimated $14 billion in that year.
The Founding Father
Frederick Atkins began his business career in 1874, when at the age of 13 he went to work as a stock and general handy boy in a store for $1 a week. He opened his office as a resident buyer in New York City’s Union Square in 1900. This enterprise grew to become first Atkins Mercantile Co. and later Frederick Atkins Inc. By 1938, when Atkins was honored at a testimonial dinner for his 50 years as a resident buyer in New York City, he was representing 30 department stores in the United States and abroad and was buying goods valued at as much as $100 million a year. By the time Atkins died in 1946, his firm was owned by its member clients.
By the mid-1950s there were some 700 buying offices in the United States, of which nearly 500 were located in New York City. They not only bought merchandise but monitored supplies, prices, and fashion trends; looked for new items; and issued market reports and surveys to the stores they represented. They even served as a clearinghouse for communication between members. In 1954 Frederick Atkins had members who sold a combined $475 million worth of merchandise. The next year it picked up as a member the Philadelphia department store John Wanamaker. Like other buying offices, the company usually represented only one store in a city so that information remained confidential in any one area.
Second Place in Its Field
Robert J. Futoran became president of Frederick Atkins in 1967. Interviewed by the New York Times, the new president declared that his company’s members were challenged both by discount retailers and chains like Sears and Penney’s. This and other major trends in retailing, he continued, were causing the independent stores to “buy more creatively and more efficiently in order to compete.” Futoran went on to recommend long-term planning to his clients, including establishing a demographic outline of the customers being aimed at, the product mix, the price range, and profit and volume growth. “I’m also very high on fashion research,” he added. “The central buying office … must stress creative market development. That means not just accepting what the market is, but also to help it creatively to design new fashion ideas.”
By 1969 Frederick Atkins was second only to the Associated Merchandising Corp. among buying offices and merchandising-research centers in the United States. Its 40 members had annual sales volume of more than $1.2 billion. According to Charles W. Veysey, its incoming president in 1970, Frederick Atkins was better described not as a buying office but as “a consulting and researching organization” that helped its members generally develop their total business by keeping abreast of the market. Veysey told the New York Times that groups like Frederick Atkins were needed to enable independents to compete with chain stores. He also said that the trends of the future for his members, who included B. Altman in New York and Halle Bros, in Cleveland, were buying merchandise abroad and buying private-label goods, because they would provide the buyers with exclusive merchandise.
In the course of its work Frederick Atkins was keeping track of detailed sales and inventory data: for example, of the availability and disposition of 5,000 to 6,000 dress styles in 10 departments within 300 department stores in the United States. This information was entered on file cards before Atkins bought an IBM 360-20 computer and Cognitronics remote optical character-recognition scanner. By 1974, when an Atkins buyer gave an order to a vendor, the information was entered in the computer. As the merchandise was sold, stores sent in data on optical character-recognition sheets, punch cards, or magnetic tape, which the computer used to produce a midweek sales report, weekly sales summary, and vendor analysis report.“We couldn’t operate the way we do without it,” an Atkins executive told a business consultant. “There would be just too much to keep track of.”
Frederick Atkins was also prominent in longer-range projections of consumer buying. An in-depth 1977 study of the dress business resulted in ten “educated guesses” defining what was likely to determine women’s lifestyles in the 1980s. It concluded that by the early 1980s more than half of all American women would be gainfully employed, and that the majority of working women would be career- rather than job-oriented. Women would be participating equally, and often unilaterally, in making major financial decisions for the family, as well as making all financial decisions regarding their own personal needs for such things as clothing. It also concluded that non-working women of the 1980s would rather quickly accept most of the new social values, women would wait longer before marrying and starting families, there would be fewer children in the average family, sex attitudes would become more liberal, and women would, because of higher family income and greater educational levels, have the ability and interest to participate in a broad range of activities.
The implications for the retailer, according to the Atkins study, were that the market for women’s clothing would be more heterogeneous to fit a variety of activities, that there would be a broader range of styles available, and that women would wear what they thought would be appropriate instead of believing they must wear certain outfits for certain occasions. It also concluded that women might need larger wardrobes to fit their growing number and variety of activities and thus would spend somewhat less for each garment. Since they would be too busy to spend much time shopping, they would seek to save time and effort and would be likely to make more impulse purchases. Retailers might have to organize clothing according to lifestyles or activities rather than by price or by separating outerwear from sportswear and dresses, the study concluded.
Expanded Package of Services
Veysey was succeeded in 1981 as president and chief executive officer of Frederick Atkins by Fred O. Lawson, Jr. Interviewed by the New York Times, Lawson called the term “buying office” antiquated and said of his company, “We provide marketing direction and research to try to direct our stores to the strongest possible resource structure in each classification.” He predicted that in the future more and more of Frederick Atkins’s member stores would have units in the same community. The firm’s 50-odd members at this time included Altman’s, the Broadway in Los Angeles, and D.H. Holmes in New Orleans.
Frederick Atkins in 1983 considered, but rejected, a merger proposed by Associated Merchandising that would have created a combined group with $15 billion in annual purchasing power. Both organizations were owned by their members, whereas most buying offices were representing retailers for a fee, but sources in the industry said a major difficulty was the likely reduction of as much as 30 percent of the staffs of both concerns. Another problem would have been posed in cities where the merged group would be representing major competing stores, such as Wanamaker and Strawbridge & Clothier in Philadelphia.
Many other buying offices closed or merged during the 1980s, reflecting a difficult decade for their members. Frederick Atkins, however, expanded its headquarters in the Times Square area in 1992, signing a new 15-year lease for 135,000 square feet of office space, compared to the 100,000 square feet it already occupied in the same Broadway building. After nearly two years of negotiations, the landlord agreed to upgrade as well as expand Atkins’s space, exacting only a “minimal increase” in the rent per square foot. The company had been considering leaving Manhattan, in part because of the downturn in department-store business in the early 1990s.
Frederick Atkins announced plans in 1992 to raise its wholesale private-label sales from $400 million a year to $1 billion a year by 1997. Lawson, who had been promoted to chairman in 1987, told a WWD (Women’s Wear Daily) interviewer that Atkins-developed private labels accounted for about seven percent of store inventories but that it hoped to raise this to 12 percent in five years. He said there had been particularly strong acceptance of the Clean Clothes line of all-cotton basics introduced in 1991, packaged with biodegradable materials. Atkins also was offering about two dozen labels in women’s ready-to-wear and sportswear, including Silvercord, Allison Smith, and Danielle Martin, and was also developing menswear and home-goods lines.
Lawson also announced that Frederick Atkins planned to open an export office in Mexico in response to the North America Free Trade Agreement. He mentioned handbags, shoes, men’s suits, and women’s sportswear and dresses among the goods that could ultimately come from Mexican suppliers. The free-trade agreement, he continued, also would enhance Atkins’s relationships with its Canadian and Mexican affiliates, including Toronto-based The Bay and Mexico City-based Liverpool Mexico S.A. The Mexican office would check quality control, execute letters of credit, and aid visiting Atkins product managers, operating, like its other overseas agents, on a commission basis.
Frederick Atkins, Lawson added, would continue to provide its members with a package of services, including regular meetings with the office’s staff to discuss group buys, fashion overviews, catalogues, bestsellers, and office-price buys. Staff members would continue spending much time on the road to advise stores on presentation. The figure exchange would continue to allow stores to compare inventory-to-sales ratios, turnover, and margins. He noted that The Bay and Honolulu-based Liberty House had left Associated Merchandising in 1992 to join Atkins.
Barmash, Isadore, “Buyers’ Services Found Useful,” New York Times, December 15, 1969, p. 77.
——, “New Atkins Chief Sounds Warning,” New York Times, September 24, 1967, Sec. 3, p. 16.
“Frederick Atkins,” New York Times, November 18, 1946, p. 23.
“Frederick Atkins Honored by Stores,” New York Times, December 8, 1938, p. 42.
Giles, William E., “Big-City Agents Offer a Growing Variety of Services to Retailers,” Wall Street Journal, June 9, 1955, pp. 1, 10.
King, Pat, “‘Modest’ Computer Controls Inventory,” Administrative Management, January 1974, p. 37.
Moin, David, “Atkins Targets Mexican Goods, Private Label,” WWD, August 24, 1992, pp. 1, 8.
“New Chief at Atkins,” New York Times, September 8, 1981, p. D2.
“‘New Woman’s; Wardrobe to Be Varied, Voluminous: Moss,” Marketing News, April 8, 1977, p. 7.
“2 Buyers Halt Plans for Merger,” New York Times, March 15, 1983, pp. D1, D11.