New chapter begins for Isle retailer

By Andrew Gomes
Advertiser Staff Writer

A new leader will assume control of the state's largest and oldest retailer, Liberty House, tomorrow as Federated Department Stores Inc. completes its purchase of the kama'aina company and begins converting more than a dozen stores to Macy's.

Deena Nichols has been spending the past few weeks working the floors of Liberty House, getting to know employees such as salesclerk Dephine Teruya as part of the effort to make the 152-year-old chain a part of Macy's. Richard Ambo • The Honolulu Advertiser

Running the stores will be a test for Nichols and Federated's Macy's West division, both of which have operated similar-size regional retail chains before — but never in an area separated by logistically challenging expanses of ocean and time zones.

Macy's bosses selected Nichols for the job because of her experience with specialty stores, resort locations and leadership skills. It didn't hurt that Nichols, 46, also was comfortable moving.

"She is a seasoned store-line executive who's worked in multiple assignments and has not only directed strong sales and profit performances, but is also very involved in the community she works in," says Bob Mettler, president of Macy's West.

Up until a month before Federated announced its acquisition plan in June, Nichols, then a store manager in San Diego, says she had no idea she'd be tapped to head Macy's Hawai'i mission.

In April, before her first official trip to the Islands to scout Liberty House stores, she came to Hawai'i for the first time on a one-week vacation with her husband.

"It was funny, if I had waited a little it would have been a company-paid vacation," she jokes.

As on any trip Nichols takes to a new city, her Hawai'i vacation included a stop at the local department store. She shopped a little. But true to the retailing in her blood, she also observed.

What Nichols says she noticed at Liberty House's Ala Moana Center flagship location was a neat, orderly, well-run operation with people who showed an enjoyment and product knowledge that conveyed their pride in working for the 152-year-old retail chain.

The "aloha spirit" also was something that she says was evident in the warm and friendly attitude that emanated from Liberty House employees.

Those impressions were reinforced in April when Nichols came to O'ahu again with a handful of Macy's West executives who toured every store on the Island as part of their initial on-site assessment. "We were very impressed," she recalls.

Preparing for takeover

Since arriving here about three weeks ago for the official Macy's West announcement of the Liberty House purchase, Nichols has remained in Hawai'i to prepare for the takeover.

Liberty House has stood for classic retail at Pearlridge and other Island malls. That image faces a key test. Richard Ambo • The Honolulu Advertiser

Cincinnati-based Federated has acquired many smaller department store chains across the country. It also has been acquired itself. Some of the bigger, widely known chains like Macy's and Bloomingdale's, Federated generally maintained as they were. Others were converted to Federated names much like Liberty House will be.

For her part, Nichols has spent most of her time talking to Liberty House employees to learn what they do and how they do it — information she will use to prepare most of them for assimilation into Macy's while identifying areas for operational change.

The latter, involving implementation of a new system for stocking and selling merchandise that will be coordinated from a central office in San Francisco, is the bigger personal challenge for Nichols.

"Any time you make change it's a challenge," she says. "We're still figuring out how do you handle all the parts of remote island operations. That's new to us."

Personnel retention and development is just as important to Nichols, though it is something with which she has more experience.

Nichols says her leadership philosophy has nothing to do with crisis management or excessive work hours. Rather she believes in surrounding herself with level-headed teams that can work together.

"You do really have to develop that relationship with front-line people," she says, noting that keeping an experienced staff is one of the most important keys to assimilating one successful retailer into another. "That experience is invaluable," she adds. "It's just a wealth of knowledge."

So far, Nichols has been talking with employees to find out what they and Liberty House customers like and/or want.

"We're not telling anybody anything," Nichols says. "We're asking. 'Cause gosh knows, I don't know all of the answers."

Working the stores

As of last week, Nichols was still living in a hotel and working without an office. She was using a San Diego-based mobile phone, and spending virtually all of her days in various Liberty House stores.

Judy Larch, a Macy's West vice president in charge of merchandising for Hawai'i, has been regular company for Nichols. The two will be just a few of the Macy's executives to be based in Hawai'i.

The rest of the administrative, distribution and management duties are already handled by Macy's West staff in California, which means there will be layoffs of some of their nearly 400 Liberty House counterparts.

Maintaining morale among employees being assimilated by Macy's as some of their co-workers face being left out of a job is a challenge for Nichols and Macy's. Late last month, Macy's West said it will close Liberty House's distribution center on O'ahu as early as November, affecting up to 200 employees.

The one unique element to Macy's in Hawai'i will be a team of local merchandise buyers, a structure not employed in any of the other nine Macy's West regions.

Nichols says this will allow Macy's to continue Liberty House's strength in Island-specific and Hawai'i-made merchandise — items that Macy's might export to other warm-weather store locations.

According to previously outlined plans, Macy's plans on keeping Liberty House business status quo for the next 90 days. After that, the company expects to replace 15 percent to 25 percent of Liberty House merchandise.

Among the additions will be "The Cellar," the Macy's housewares department featuring product and chef demonstrations. Also, Liberty House's shoe department, once maintained by Nordstrom, will be expanded.

Other changes include a national bridal registry and store remodeling. Liberty House's in-store restaurants are being reviewed for possible changes.

Some change is expected for national name-brand and private-label merchandise. Macy's and Liberty House share many name brands such as Calvin Klein, Estee Lauder and Tommy Hilfiger. But because of the greater buying influence of Macy's, it will increase style and size variety.

Product depth also will increase for Liberty House's private-label merchandise, which for the last few years has been supplied by Macy's parent Federated under names such as Alfani, INC and Charter Club.

In directing the changes, Nichols will be drawing on a combined 25 years at The Gap and Federated stores, plus experience in running multiple stores and stores in tourist areas.

Answering retail's call

Nichols was born in Indianapolis, the daughter of the administrative assistant to an Indiana senator. She graduated from high school in Washington, D.C., during the time of the Nixon impeachment trials. She worked as a Senate floor doorkeeper trained to detect bombs. For her, it was interesting work, but retail was her calling.

While back in Indiana studying business in college in 1975, she began working for The Gap folding sweaters on the selling floor.

"It was my first true love," Nichols says, "to have contact with the customer and sell."

Because The Gap kept promoting Nichols, she never completed her degree. She rose from assistant store manager to group store manager to district store manager overseeing 11 stores in Indiana and Kentucky.

The experience, she believes, will help her run Liberty House's smaller stores. "I understand the nuances of running a free-standing store, and that's going to help in making sure that we as a big organization understand the needs of those smaller locations," she says.

While acting as district manager for The Gap, Nichols also served as the supervisory skills trainer for the entire company, which had grown from 140 stores to 1,600 stores during her nine years with the clothing retailer.

"That was their No. 1 need at the time. They were growing so rapidly that they needed to constantly train and bring on new managers," says Nichols, who says she went five years without losing one of her trainees.

In 1984, a former Gap executive recruited her for Federated's midwest division, Rich's/Lazarus/ Goldsmith's. She joined as assistant store manager for one of the company's Indianapolis stores.

When Federated extended its reach into western states through acquisitions and the creation of Macy's West, Nichols inquired about jobs and took a store manager position in Carmel, Calif., a small seaside town and popular tourist destination in Monterey County.

From there she moved to Sacramento as store manager for three years. Nine months ago, she relocated to lead a store in San Diego.

Through all the moves, Nichols has retained a bit of her midwestern accent and calls home the place where she left family and her heart: Indianapolis. But since joining Federated, new homes have regularly become part of her life.

"That's always been a part of my role — being flexible," she says. "I've been relocatable."

In fact, Nichols' household items were already packed and ready to move from Sacramento to San Diego when she found out she'd be moving to Hawai'i.

Nichols' husband, Bill, a semi-retired financial planner and residential real estate investor, arrived in Hawai'i last Sunday. So did her parents, Jaques and Nancy LeRoy, who will move here from Sacramento. Nichols has a stepdaughter and granddaughter living in Kentucky.

"I would certainly like to live here for a while," she says. "My family would much prefer me stopping for a little while longer."

Andrew Gomes can be reached by phone at 525-8065, or by e-mail at agomes@honoluluadvertiser.com.