Gordmans, Inc.

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Gordmans, Inc.

12100 West Center Road Suite 1
Omaha, Nebraska 68144
U.S.A.
Telephone: (402) 691-4000
Fax: (402) 691-4001
Web site: http://www.gordmans.com

Private Company
Incorporated: 1915 as Richmans, Outfitters to the Family
Employees: 3,000
Sales: $350 million
NAIC: 448140 Family Clothing Stores; 452111 Department Stores

Gordmans, Inc., is a discount retailer with 55 stores in 12 midwestern states. The company's stores sell name-brand clothing, shoes, accessories, and home fashion merchandise for up to 50 percent below department store prices.

Origins

As an enterprise started by the Richmans and developed into a regional chain of stores by the Gordmans, Gordmans, Inc. represents the work of two families. Gordmans was founded by Sam Richman, who left his native Russia and settled in Omaha, Nebraska, opening his own retail store in 1915 behind a small storefront that was part of a block-long building at the corner of 16th and Chicago. Richman's store, operating under the banner "Richman's, Outfitters to the Family," housed his own family, who lived in the back of the store. Modest in size and purpose, Richman's retail store occupied the same quarters for the next 20 years, never aiming to be more than a small shop until a 1932 Chevy convertible pulled into town driven by an energetic, 22-year-old New Yorker. Dan Gordman was full of purpose, and he used the downtown Omaha shop to fulfill aspirations far more ambitious than those demonstrated by Richman.

In 1936, Gordman quit his job at Bloomingdales department store, packed all his belongings in his car, and set out for California. He was in pursuit of a dream 3,000 miles away, but he only got as far as Omaha, forced to stop because his car needed repairs and he was strapped for cash. Gordman's interest in becoming a successful retailer, meant to be realized in California, was instead fulfilled in Omaha. Within a year of his arrival in that city, Gordman had met Richman, become a full partner in his business, and married his daughter, Esther Richman, thoroughly committing his future to the small storefront on 16th and Chicago. The store quickly expanded as Gordman applied his experience at Bloomingdales to Richman's store, distinguishing himself as a skillful negotiator with buyers and attuned to the needs of customers. Within several years, Richman's store occupied the entire block at 16th and Chicago. A decade after Gordman's arrival, during the years immediately following World War II, a second store was purchased to the south of the original store. In the midst of the expansion, Gordman acquired Richman's interest in the company and changed the name of the company's two stores to "Richman Gordman."

Gordman managed the two Omaha stores for than a decade. During the 1960s, he was joined by his two sons, Jerry and Nelson, and his nephew Bob, the arrival of whom touched off a period of aggressive expansion. The company ventured out of its home market for the first time 1960s, opening a Richman Gordman in Lincoln, Nebraska, as well as three more stores in Omaha. The expansion efforts, which tripled the size of the retail outfit, offered no stumbling blocks, encouraging the family-run company to take its growth plans one step further. During the early 1970s, the company opened its first stores beyond Nebraska's borders, establishing two stores in Des Moines, Iowa, a third in Council Bluffs, Iowa, and a fourth in Topeka, Kansas. In 1974, the company opened a store in Grand Island, Nebraska. Richman Gordman, after nearly 30 years under the influence of Dan Gordman, had become a regional retail chain of note.

A New Retail Concept Is Created in 1975

Gordman's recognition as retailer stemmed not only from the increasing size of his company but also from the manner in which he presented his stores to the public. In Omaha, according to the company, Gordman was the first to introduce central checkouts, shopping carts, and self-service shoe departments to the retail realm. Richman Gordman stores also were credited with introducing the racetrack concept to a retail store's layout, a design that enabled customers to find a particular department by following a path describing the perimeter of a store. Gordman's innovations reached further, touching on a retail concept that recorded tremendous success at the end of the century and changed the dynamics of the retail sector. In 1975, one year after opening the Grand Island store, Gordman was beset by excess inventory. He also owned an empty building. By putting one into another, Gordman created a new business for his family-run enterprise, one that became the central strategic focus of the company in the 21st century.

Discount retail chains flourished during the 1990s, but Gordman enjoyed success with the concept decades earlier. In 1975, he opened a small store in Omaha on an experimental basis, hoping to use the store as way of getting rid of end-of-season merchandise that had been removed from the shelves of his department store chain. The store carried Richman Gordman merchandise, with each item selling for 50 percent less than it had at the company's department stores. Customers flocked to the store, turning the retail experiment into a new retail arm of the Gordman family called The ½ Price Store. Soon, the discount concept became more than an outlet for out-of-season Richman Gordman merchandise as growing demand prompted Gordman to dispatch buyers to negotiate for factory overstocks and in-season buyouts from apparel and accessories companies, which, in turn, spawned a separate corporate infrastructure to support the discount chain. By the end of the 1970s, six additional ½ Price Stores had opened.

The Gordman family retail business grew in two directions during the 1980s, expanding through both Richman Gordman Department Stores, Inc. and The ½ Price Stores, Inc. The two subsidiaries were controlled by the family's umbrella entity, Richman Gordman Stores, Inc. On the department store side of the business, six new Richman Gordman stores made their debut during the decade, additions that strengthened the retailer's presence in Omaha and Des Moines, where it already operated, and provided entry into new markets such as Kansas City, Sioux Falls, South Dakota, and Wichita, Kansas. The Gordman's discount chain expanded at a greater pace during the 1980s, when nine new stores were opened in a five-state territory. By 1990, 75 years after Sam Richman opened his small shop in downtown Omaha, Richman Gordman Stores employed 4,000 workers and operated two retail chains, each comprising 16 stores.

Overcoming Challenges in the 1990s

The company's 75th anniversary marked the return of Dan Gordman's grandson to the family enterprise, a significant event at the beginning of what would prove to be an arduous decade for the Gordman businesses. Jeff Gordman grew up working in the family business, leaving Omaha after high school to attend The Wharton School at the University of Pennsylvania. After earning an undergraduate degree in economics, Gordman moved to New York City, where he joined Lehman Brothers as an investment banker. Following a stint on Wall Street, Gordman earned his master's degree in management from the Sloan School at the Massachusetts Institute of Technology, intending to pursue a career in strategy consulting. However, his plans changed after his grandfather issued an ultimatum. Dan Gordman threatened to sell the company unless his grandson returned to the family business. Jeff Gordman moved back to Omaha in 1990, rejoining Richman Gordman Stores at a critical period in its development.

When Gordman returned, he starting working at the company's stores in Kansas City and Lincoln before moving to the company's central offices, where he became part of Richman Gordman Stores' information technology group. Next, Gordman became a buyer for the company, but the duties associated with his job as well as the tasks assigned to virtually everyone else in the company soon were overshadowed by far more pressing demands. Richman Gordman Stores stood on the brink of insolvency, unable to pay its vendors and creditors. "We lost sight of who we were as a company," Jeff Gordman reflected in a May 13, 2004, interview with the Waterloo Courier, referring to the darkest chapter in the company's existence. After closing four stores, the 26-store company filed for bankruptcy in 1992, awash in debt and lacking the strategic focus that had underpinned its development for decades. The company's two operating subsidiaries, Richman Gordman Department Stores and The ½ Price Stores, filed separate petitions for bankruptcy.

Company Perspectives:

What is Gordmans all about? It's an exciting, fun-to-shop store that offers you a way to save up to 50 percent off prices you would find at a mall. Save on large assortments of name brand clothes for all ages, accessories, footwear, gifts, designer fragrances, fashion jewelry, accent furniture, home fashions and more-at big savings every day! Gordmans family of brand names includes most of those found in leading department and specialty stores. Check our price tags and discover savings up to 50% off department and specialty store regular prices! How do we do it? Unlike other retailers, we don't ask for any of the special considerations that are typically built into the selling price by manufacturers. As a result, we're able to pass those savings on to you. In addition, after having been in business for almost 100 years we've built thousands of strong, long term relationships with manufacturers throughout the country that allow us to negotiate incredibly low prices.

Gordman joined in the efforts to develop a plan for reorganization, applying his investment banking skills to help make Richman Gordman stores a going enterprise. The plan involved exiting the company's original department store business and focusing on one business instead, the ½ Price discount chain. The company emerged from bankruptcy protection in 1993 with its roster of stores winnowed further. Renamed Richman Gordman ½ Price Stores, Inc., the company staged its comeback in the business world with 21 stores operating under the ½ Price banner, but it continued to suffer financially during the ensuing years, reaching a tipping point midway through the decade. Gordman, seeing his family's company spiraling out of control again, decided to spearhead efforts for its salvation, launching his bid to take command of the company in 1996. "The company was in a precarious financial position at the time, which gave me my chance," he explained in an April 12, 2004 interview with the Post-Crescent. "I petitioned the chairman who was part of the creditor's committee. I said, 'Give me a shot at running this thing, otherwise it's going to go away.' " The chairman agreed to let Gordman take responsibility for the company, leading to the appointment of Gordman as chief executive officer in 1996.

When Gordman took the helm, the $220 million-in-sales company was pointed in the right direction but in dire need of major repairs. A number of changes were made over the course of the next several years, including additions to the company's management team, the implementation of policies designed to improve customer service, and the refinement of pricing strategies. Gordman remained committed to the decision to operate solely as a discounter, perceiving this to be the right direction for the company to pursue, but he believed wholesale changes needed to be implemented to support the pricing strategy. Essentially, an entirely new identity needed to be created for the company, prompting Gordman to remodel the stores, add themed sections for children and sports enthusiasts, and, as the final touch to the turnaround program, changing the name of the company. "The ½ Price moniker only represented one dimension of our business, that being price," Gordman explained in a May 13, 2004 interview with the Waterloo Courier. "I did not want to change the name to Gordmans," he continued. "I thought it carried negative equity, but our outside partners and internal associates took great pride in the family name. They were very connected to Gordmans." The company changed its name in 2000 from Richman Gordman ½ Price Stores, Inc. to Gordmans, Inc., omitting the apostrophe in its new corporate title "because apostrophes aren't cool," Gordman remarked in his interview with the Waterloo Courier.

The company's pace of expansion began to accelerate under its new identity as financial stability returned. Gordmans entered the decade with 32 stores, adding eight more stores by 2002, each featuring name-brand clothing, shoes, accessories, and home fashions at up to 50 percent below department store prices. During the next two years, the company opened four more stores and entered three new states, making Gordmans a 44-store chain with a presence in 12 Midwest states. "The future looks promising," Gordman remarked in a May 13, 2004 interview with the Waterloo Courier. "We hope to double sales in the next five years by expanding in new and existing markets, moving east." Gordman's more immediate plans called for expanding to 56 stores by the end of 2005, a goal the company had nearly met midway through the year. The opening of the company's first store in Indiana, a unit slated to debut in Evansville in September, and two stores in Illinois, both scheduled to open the following month, would lift its store count to55. The future of the company, in terms of leadership, rested in the hands of Gordman, the only member of the Gordman family involved in the business. When asked in an April 12, 2004 interview with the Post-Crescent if another generation of his family might succeed him, Gordman responded, "My daughter might. She has some of the same characteristics that her daddy does. She's aggressive, she knows what she wants, she's very outgoing, and she's somewhat demanding, but it's hard to say," he said, before adding, "She's just 20-months old."

Key Dates:

1915:: Sam Richman opens Richman's, Outfitters to the Family in Omaha, Nebraska.
1936:: Dan Gordman arrives in Omaha and becomes Rich-man's partner.
1948:: A second store, located in south Omaha, is acquired.
1960s:: Expansion takes the company outside of Omaha for the first time.
1970s:: The company ventures outside Nebraska for the first time, developing into a more than ten-store chain.
1975:: Dan Gordman opens a discount shop, marking the birth of The ½ Price Stores concept.
1990:: Dan Gordman's grandson, Jeff Gordman, joins the company on a full-time basis.
1992:: The company files for bankruptcy, emerging as a discount chain one year later.
1996:: Jeff Gordman is appointed chief executive officer.
2000:: The company changes its name to Gordmans, Inc.
2004:: Gordmans announces plans to double annual sales by the end of the decade.