Pic 'N' Save name to be retired as Big Lots launches store conversion. (Up Front).

What's in a name?

For the owners of Pic 'N' Save bargain stores, a lot. Make that a big lot.

This week, BIG LOTS INC., parent company of 97 Pic 'N' Save stores in Los Angeles, will drop the familiar moniker and rebrand the stores as Big Lots.

The new signs, set to go up this week, represent a $9.5 million gamble for a closeout chain that has seen two straight years of losses after years of strong profits.

"Over time, it's what you do with the name," said Kent Larsson, executive vice president of merchandising and sales promotion at Columbus, Ohio-based Big Lots. "We want to equate Big Lots with closeout shopping."

Big Lots acquired Southern California based Mac Frugal's Bargains-Closeouts Inc., owner of Pic 'N' Save, in a $995 million stock deal in 1998. Last year, it rebranded its Mac Frugal's and Odd Lots to Big Lots.

"They are getting nice sales increases in their converted stores, above and beyond the rest of their stores," said analyst John P. Rouleau of Wachovia Securities.

After seeing sales decline and customers slip away, some to L.A.-based 99 Cents Only Stores, same store sales have been increasing since November. In June they were 13.2 percent, surpassing expectations.

Big Lots, which operated as Consolidated Stores until last year, might find it hard to match that success in an L.A. market that has known the Pic 'N' Save name for five decades.

"They have had success in converting other markets," said Eric Bosshard, an analyst with Midwest Research. "But Pic 'N' Save is more entrenched in the Southern California market".

While changing a store's name is a financial risk, Aubie Goldenberg a partner in Ernst & Young's L.A. office, noted that other chains have done this before and survived.

"There is always a risk you will lose customers," Goldenberg said. "But if you look at the grocery stores, they change names all the time. Who remembers Lucky grocery stores after Albertson's replaced them? In the long run, the name change hasn't hurt those stores".

To smooth the way, the company is investing $9.5 million on the makeover, including spiffing up many of the dowdier stores with brighter lighting, wider aisles, a uniform store layout, better paint jobs and elimination of the forbidding-looking turnstile at the entrance.

"We found one reason that people were shopping less at our stores was because of the physical barriers," said Larsson, noting the decline in customer spending and traffic.

Pic 'N' Save Corp. was founded by William Zimmerman in 1950 when he opened his first store in Culver City. By 1985 it had 90 stores in seven Western states, primarily California. Its hodge-podge of close-out merchandise is ersatz Americana: fake flowers, paperweights, house-wares, cosmetics.

In 1992 it changed its name to Mac Frugal's Bargains-Closeouts Inc. as part of a settlement with National Merchandise Corp., which owned the right to the Pic 'N' Save name. But many of the Pic 'N' Save stores in California were able to keep their name.

"It's the kind of store you have to have an hour to go through because you have to look at all the junk to find the good stuff," said Roberta Tinajero, who has been a long-time shopper.

But Tinajero was confused about the name change. "Big Lots? I don't really get it," she said.

Ad campaign

Big Lots expects the name change to facilitate efficiencies among the 1,350 Big Lots stores across the country, cutting advertising costs and establishing brand identity not unlike Wal-Mart or Ross Dress for Less.

The first national TV campaign will be launched next month. In the past, Pic 'N' Save advertising has been limited to circulars sent in the mail or inserted in newspapers.

Big Lots has been hurt in recent years by its aggressive growth.

After spending $329 million buying KB Toys and Toy Liquidators in the mid-1990s, the company sold its toy division to Bain Capital for $305 million in 2000. The sale resulted in a $478.9 million writedown.

While it had a net loss of $20.2 million last year, the company reported first-quarter net income of $12.2 million, compared with $298,000 for the like period a year ago. First quarter revenues were $904.4 million, compared to $773.6 million the year earlier.

"Clearly the pricing and the product are the two primary attributes to the concept," said Rouleau. "To the extent that Big Lots can deliver quality products at a less-than-market price, that is what will drive business to their stores."