Montgomery Ward brand name is back as Internet, catalog retailer

CHICAGO - There is life after death - at least in retail.

Five years after Montgomery Ward went out of business, its brand name has been revived on the Internet and there's even a 21st-century version of the Wards holiday catalog that was standard fare in American households for decades at this time of year.

Without stores, this Wards is a bit different from the chain that thrived for over a century until liquidating in 2001 after Wal-Mart and other discounters and department stores left it badly out of fashion.

But Direct Marketing Services Inc., the catalog marketer that acquired the Wards name out of bankruptcy in 2004, insists it is faithfully carrying on a legacy that dates to 1872 when Aaron Montgomery Ward established the first mail-order business.

Many of Montgomery Ward's old vendors and products and several former employees are part of the new Wards, which sells 46,000 items online ranging from rugs to recliners and home electronics to Rudolph the Red-Nosed Reindeer yard art. And David Milgrom, the private firm's president and founder, notes that the cataloger shares Wards' Chicago roots and retail industry experience.

"As a retailing pioneer, Mr. Ward would be pleased to know that the tradition of excellence which he began continues in an exciting new way with Wards.com," the Wards Web site proclaims.

Still, it's the famous brand name that the direct marketer is counting on most to draw shoppers. In the fierce competition among retailers, industry experts say a trusted brand - even a heretofore dead one - can be half the battle.

"People are always open to believing that however wayward one got, even for a retailer, given proper management you can go back on the right track," said George Rosenbaum, chairman of Leo J. Shapiro and Associates, a Chicago-based retail consulting firm. "Wards was a good enough name, so there's probably a good amount of hope or willingness to believe that they've come back."

Sue Montoya, a longtime Wards devotee who was "devastated" when her favorite chain shut down, says she was thrilled to get a catalog from the resurrected business this year. She promptly placed an order.

"I am sure that if my dear mother was still alive today she would be just as excited, as she is the one who introduced me to the Wards tradition," the 56-year-old Montoya said from her home in Denver.

Wards isn't the only moribund brand to get rehabilitated under new ownership.

FAO Schwarz toy stores, another century-old retailer that landed in bankruptcy after failing to keep up with the likes of Wal-Mart and Target Stores Inc., reopened on New York's Fifth Avenue and in Las Vegas in 2004 after the failing company's remnants were bought for $41 million by D.E. Shaw Laminar Portfolios.

Pepsodent toothpaste, once the No. 1 U.S. toothpaste before fading into oblivion, was purchased by Church & Dwight Co. in 2003 from Unilever and now is a value brand sold in discount stores.

White Stag, a leading maker of ski clothing and sportswear dating to the 1930s and '40s, is now an in-house brand at Wal-Mart Stores Inc. after being bought from Warnaco Group Inc. in 2003.

Not everyone is taken with the brand-revival practice.

Sid Doolittle, a retired retail consultant who worked at Montgomery Ward for 29 years and was president of its catalog division, contends that bringing back the Wards name deceives customers who may not realize it's not the same company they knew.

"It's an old familiar name and there is a halo around the name with some people," he said. "This isn't the old reliable company at all, it's a company leveraging the name."

Milgrom takes exception to that characterization, noting that retailers change owners all the time. He says his company adheres to the Montgomery Ward practice of offering affordable merchandise that's not readily available in retail stores with home delivery, a credit option and a customer satisfaction guarantee.

"We take great pride in offering a wide variety of quality products just like the original Wards did," he said in an interview at the company's two-story offices. "We are in the same lines of business as the original Wards, with many of the same suppliers. The overwhelming majority of customer responses are that they are so happy to see Wards back."

The 48-year-old Milgrom has built a $160 million-a-year company through a strategy of acquiring older, established domain and catalog names. A former lighting products supplier to Sears, Roebuck and Co.'s home furnishings catalog, he licensed the right to use Sears' name on catalogs after founding the firm in 1993 and now mails several Sears specialty titles, gifts book Charles Keath, its core HomeVisions catalog and Wards.

The native Chicagoan outbid several others to acquire the Montgomery Ward name for an undisclosed sum in June 2004, sensing that the historic brand would resonate with middle-income consumers over 40.

"To build a brand today is so expensive. There's only so many Wal-Marts and Amazons out there," he said. "We just picked up where they (Wards) left off."

Within three months, Direct Marketing Services had revived the Web site and begun publishing a slimmed-down version of the catalog that vanished 12 years earlier, culminating in the reappearance of a 150-page holiday book last month.

"The Montgomery Ward name certainly has a lot of brand equity so it makes sense for them to make a serious attempt again, more of a traditional direct marketing approach," said George Hague, senior marketing strategist at J. Schmid & Assoc. Inc., a catalog consulting company in Mission, Kan. "They're able to focus and highlight their best-selling merchandise and use the best industry practices of cataloging to drive traffic to their Web site."

Direct Marketing Services, which has 50 employees in Chicago, still derives the largest portion of its revenue from Sears catalogs. But Milgrom says Wards sales, boasted by nearly 20 million catalog mailings have more than doubled this year to become "a very significant piece of our business." He declined to give dollar figures.

The new Wards' strategy gets a thumbs-up from experts so far. Hague said the Web site has "a nice feel to it" and "a nice brand presence."

Despite all the catalog mailings, the comeback has been quiet and consumers may be surprised to trip over the familiar name from the past during a Web search for home furnishings or bedding.

But Wards' presence is growing. A Montgomery Ward Kids site debuted in June, a Spanish-language version is coming, and the company will soon expand into clothing and shoes.

Explaining the gradual buildup, Milgrom said: "We're rebuilding the brand and we want to do it right."

On the Net

Montgomery Ward at www.wards.com

Montgomery Ward Kids at www.wardskids.com