Less is more for Jo-Ann Inc.

HUDSON, OHIO — With the downsize change in its superstore format, Jo-Ann Inc. is realizing the same or more dollars per store, as well as a more than 20 percent increase on ROI for new store locations.

The superstore format of 45,000 square feet, initiated in the '90s, has been downsized to a more productive 35,000-square-foot store, said Alan Rosskamm, chairman and CEO.

As a result, there have been dramatic productivity gains across the store, he explained.

The present superstore prototype has four customer focal points: home fabrics, quilting, floral design and scrapbooking; with the "cutting counter" viewed as the pulse of the store — the community center, explained Charles Domingue, vice president, general merchandise manager, home décor. "This is where customers gather as fabrics are being cut, they talk with the sales people and each other about projects and compare notes about products."

Home fabrics represent about 6 percent of store volume and turns are about 2.5, faster than the other product categories.

Impact signing guides customers to their destinations, he added.

While fabrics are divided into different categories — home, quilting, apparel — the vast majority goes into the home, Rosskamm related.

Added Domingue, in the quilting segment, for example, the company has a pre-cut packaged program of quarter-yard flats reflecting the way customers buy a quarter yard of many styles to make a special quilt. This way, there are the by-the-yard bolts, as well as the packaged quarter yards; the latter shown in special racks by color, he said.

In home fabrics, Robert Allen@Home, Laura Ashley, Richloom, Waverly, Thomas Kinkade from Ametex and Liz Claiborne from Richloom are key collections, Domingue said.

About 20 percent of the assortment is the Signature Series of private label fabrics, which are direct imports — mostly plains, others created for the company. "It's becoming more attractive to direct source," Domingue said, "but the hurdle is in design. Unless the offshore firm has a strong U.S. design team partner, it is very difficult."

The stores carry 3,500 skus of fabric, 1,000 skus in stock and 2,500 skus on special order, Domingue said. Delivery is within two weeks, some direct from the vendors, other from the company distribution centers.

Key in this category is Home Seasons by Waverly, which is updated every quarter. It's a fashion group plus basics with some new and some past winners.

A major trimmings assortment is from Wright's and Conso and embraces everything from simple gimps to elaborate tassels.

Closeouts are assembled in a "flat-fold" configuration which then are downsized to remnants.

Domingue likens the purchase of home decorating fabrics to the similar pattern in buying furniture. "First the customer has to identify what it is she wants; then they get a swatch to take home; a decision is made; she comes back to the store and makes the purchase. We recommend a fabricator — we act as a clearing house since we don't make products."

Jo-Ann is continuing to upgrade its marketing activities, said Dave Bolen, executive vice president, merchandise, marketing and logistics. Currently, most of the marketing efforts focus on circulars, direct mail and newspapers; but the company is exploring additional marketing routes.

Jo-Ann will open about 30 superstores this year and about 40 in 2005, bringing the total by year-end to 120, Bolen said. "We close one to one-and-one-half traditional stores for every superstore we open," he related. Currently, there are about 780 traditional stores.

With two distribution centers — one in Ohio, the other in California — about 80 percent of the merchandise flows through these facilities, Bolen said. About 95 percent of the mix is in stock.

Looking at the performance of the stores, Rosskamm said, "We do $1.5 million in a traditional store and more than $6 million in a superstore. We're making money in the superstores, but one, in the first year." Softlines, he pointed out, grow three times from the traditional store size to the superstore; hardlines grow six times. "And we get lots of new business from existing markets. We're able to give destination assortments versus convenience assortments."

Rosskamm added, "We have a very real marketing challenge in new-customer acquisition. We use 26 direct-mail pieces a year, and 28 inserts. But we're increasing our involvement with supporting clubs and interest groups in sewing and crafts. We have hobbyists staffing the stores, and they're wonderful in terms of customer engagement."