Family Affair

"We like merchandising; it is in our blood," said the top man in the nation's top department-store chain last week. For cherubic Fred Lazarus Jr., 73, chairman of Federated Department Stores, Inc., this enjoyment of selling has paid big dividends. Last year for the first time Federated edged Allied Stores as the nation's top retailer. Last week Federated reported its best earnings ever: six-month profits of $7.9 million from sales of $280 million.

Fred Lazarus regards Federated pretty much as a family affair. Fortnight ago Fred's son Maurice, 43, was named president of Federated's Boston store, Filene's. Seven members of the Lazarus clan are sprinkled through Federated's top levels.* But "Mr. Fred," as Lazarus is known to the trade, bristles at any mention of nepotism. "Nepotism smacks of favoritism. Everyone in our family has had to earn his position." The young Lazaruses usually start in the basement, work up from stock boys or salesmen, must prove they can sell before moving higher.

Folies to Filene's. Federated has done so well because it tries to make each store a community institution, fits its prices and products to almost every purse. Boston's Filene's is as much a landmark as the Common or Fenway Park, prides itself on being the world's biggest specialty store with the world's most famed bargain basement. Filene's professional buyers picked up Paris dresses at a song in 1940 just before the Germans marched in, emptied out the seagoing haberdashery aboard the Queen Mary when it was converted to a wartime troopship. Filene's customers got these bargains--plus hip-length hose from the Folies-Bergere and smoke-damaged goods from Dallas' Neiman-Marcus--at cut-rate prices that are automatically trimmed 25% after twelve selling days, 50% after 18, 75% after 24. If unsold after a month, the goods are given to charity.

In traditionally unsophisticated Brooklyn, Federated's Abraham & Straus often plugs its goods in sophisticated ads with its slogan ("Do not say you cannot find it until you have shopped at A & S!") spelled out in Latin, Greek, French or Icelandic. It lives up to its slogan by providing such items as lefthanded scissors, cutters for soft-boiled eggs, holders for used tea bags, concave head brushes for bald men (with nylon bristles). While every other major Brooklyn department store has closed or sold out in the past ten years, A & S has grown more prosperous than ever, now boasts the second biggest sales among New York City stores (after Macy's).

Automation for Foley's. The Lazarus flair for merchandising started with Mr. Fred's grandfather, a Prussian immigrant who opened a one-clerk men's furnishings store in Columbus in 1851. Mr. Fred started helping out in the store when he was ten, left Ohio State University at 18 to work there full time. In 1928 he bought out Shillito's in Cincinnati, soon merged his stores with Abraham & Straus and Filene's to form Federated; shortly after, Federated added Bloomingdale's in Manhattan. Lazarus played a major role in welding the loosely knit chain into a powerful one by forming a central research and purchasing office, buying profitable stores around the country and expanding them. He bought Houston's venerable Foley Bros, for $4,300,000 in 1945, built a $12 million new building with automatic gimmicks to make buying easy; e.g., a central chute system so that buyers can pick up all their packages at one time.

Under Fred Lazarus, the chain has also purchased (usually by stock swaps) such strategically located stores as Burdine's of Miami and the Fedway chain in the Southwest. There is little doubt that Federated will continue to move into new areas--if only to make way for all the young Lazaruses who are coming up. Mr. Fred and his brothers have 42 grandchildren, and some are already itching to take over as the fifth generation of the smart-selling Lazaruses.

*Including Fred's son Ralph, 44, president of Federated; son Fred III, 46, executive vice president of Cincinnati's Shillito's; brother Robert, president of Columbus' Lazarus; brother Jeffrey, president of Shillito's.

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