Retail News - Labelscar: The Retail History Blog

Downtown to Become Lifestyle Center

LL Bean Store in Freeport, Maine

According to GlobeSt.com, the flagship L.L. Bean Store–which is open 24 hours a day, 365 days a year and is the epitome of the outdoor lifestyle brand–is going to be redeveloped as a $40 million dollar, 113,000 square-foot lifestyle center, anchored by a revamped L.L. Bean store.

Of course, the original L.L. Bean store is actually located right in the heart of scenic Freeport, Maine, a picturesque coastal town just north of Portland, and it has been the town’s focal point since at least 1917. The store attracts many tourists, and its presence has caused the downtown to fill with outlet stores for many of the most popular mall merchants, including Gap, Banana Republic, and Abercrombie & Fitch. In other words, L.L. Bean is sort of an anchor store of an actual, real life, classic New England town center, the kind of place that lifestyle centers try to emulate. And of course, we’ll now have an actual lifestyle center moving into the very place it’s trying to mimic! Try and wrap your head around that one!

Snark aside, the fact that L.L. Bean is shaking up its mix is worth mentioning. Long a major outdoor lifestyle brand (alongside Cabela’s, Orvis, Bass Pro Shops, and Land’s End in one corner, and Dick’s Sporting Goods, Sports Authority, and others in another), L.L. Bean has been in the process of stepping up their efforts to compete against expanding outdoor brands, especially Bass Pro Shops. Just last week, they began their new roll-out of stores outside of Maine with the opening of a two-level store in the Wayside Commons lifestyle center in Burlington, Massachusetts, and they plan a string of new stores in the new future. What’s in store for these, as compared to the failed concept they rolled out in 2000? Essentially, “mini-me” versions of their gargantuan Freeport flagship, complete with nearly every item currently featured in their catalog. L.L. Bean will likely be attempting to introduce themselves nationally as the more upmarket, granola cousin to stores like Bass Pro Shops, where the emphasis is less on guns and more on butter (and kayaks). Interestingly, L.L. Bean told The Boston Globe last week that they plan to avoid malls and cling to the lifestyle format, relaying an anecdote that customers (understandably) don’t like lugging kayaks through malls. Still, it seems to me that most who shop at the ‘ol Bean are moneyed, yuppie types buying more clothing and housewares–they sell deliciously tasteful dinnerware–than true outdoor gear, though I suppose the lifestyle center format takes dead aim on this particular demographic regardless of what they’re really buying. The canoes hanging from the ceiling may merely be for effect, but I suppose they achieve their purpose.

It’ll be interesting to see if the market can support so many similar competitors. I secretly suspect I’m too young, too poor, and too indoorsy to fall into L.L. Bean’s real target demographic but as a lifelong Yankee, I wish them luck.

Boston Globe Editorial on the Death of the Department Store

Filene's store in Boston's Downtown Crossing I highly recommend checking out this editorial in today’s Boston Globe, written by Jan Whittaker (the author of Service & Style: How the American Department Store Fashioned the Middle Class). It makes for very interesting reading on the week that we’re saying goodbye for good to many of our most beloved regional department store nameplates. Here’s a snippet:

“The stores’ attractions were free and open to all. Of course department stores are businesses that must focus intently on the bottom line, but they built their fortunes on the notion that as their customers prospered and developed more artistically discriminating tastes, they would buy better merchandise and profits would rise accordingly.

By the 1960s, a large US middle class took it for granted that local department stores were reliable links to the mores, manners, and material accoutrements of mainstream American life. But, despite success as social arbiters, the big stores’ high cost of distribution — due in part to special events and lavish services — undermined profits. In city after city they closed or were consolidated in buyouts.

The department store represented a historic confluence of merchandising creativity and social aspirations that may be impossible to replace.”

Wal-Mart Profits Drop for First Time in Decade

I’m a bit slow in addressing the big retail story of the past week, which is that Wal-Mart has posted their first drop in quarterly profits since 1996. This wouldn’t be massive news if it was a chain smaller than Wal-Mart (after all, we aren’t talking about a loss, just a drop in profits). But because Wal-Mart is its own microeconomy and an indicator of the economic health of many Americans, it merits attention.

Wal-Mart blames the loss on some disastrous stores in Germany and South Korea that have been divested, and this may be responsible for much of the problem. But with the current high price of gas, it seems like Wal-Mart’s strategy of targeting working class, rural consumers may be hurting them. Because city-dwellers and suburbanites travel relatively short distances to shop, they tend not to think much of the cost of gas when planning shopping trips. For suburbanites, today’s high gas prices are an inconvenience less than a hardship. But Wal-Mart’s core customer base, who may be traveling 50 miles or more to a Wal-Mart store, may find that the economics of Wal-Mart’s savings may not justify the $3/gallon price tag for gas. In effect, people may well be returning to their local Main Streets in the most rural areas.

Similarly, Wal-Mart’s endless pursuit of the cheap means that they’ve built a customer base that is heavily loaded with many of the most vulnerable consumers, people who struggle to make ends meet and who are being squeezed dangerously by the costs of gasoline, electricity, housing, and more factors that have risen dramatically in the last few years. Because there are other chains who cater more heavily to the mid-range consumer–especially Target, Kohl’s, Sears, and JCPenney–these companies are finding comparatively healthy sales while Wal-Mart’s are struggling to keep up.

In essence, Wal-Mart tied their entire business model to economics, and as such, economic shifts hurt them more than they do their competitors. Increases in costs of most necessities suggest that we may be in an inflationary period, yet the price of most consumer goods has remained relatively steady–largely because of Wal-Mart. But Wal-Mart may be stuck, unable to raise prices for fear of losing customers yet at the same time squeezing themselves out of their already thin margins on many products, especially food. Unlike Target, they don’t try and foster loyalty through improved aesthetics of stores and products, and unlike their grocery competitors, they don’t even attempt to achieve a measure of quality. As a result, all that Wal-Mart offers is the Price Rollback, and historically stores with a value proposition as the price leader have proven to be vulnerable (and this has prevented Wal-Mart from expanding into more expensive American markets like California or the Northeast already)… or at least that’s my take. There are many other possible reasons for this (such as overexpansion or bad publicity), and it may not even be indicative of a larger trend. Feel free to start a dialogue in the comments: What do you think is next for Wal-Mart?

PREIT Purchases Former Strawbridge’s Flagship Store

One of the more prominent retail sites vacated due to the Federated/May merger has been snatched up by PREIT (The Pennsylvania Real Estate Investment Trust). According to GlobeSt.com, the developer has signed a purchase agreement for floors one through six of the former Strawbridge’s anchor store at Eighth and Market Streets in center city Philadelphia.

The historic Strawbridge’s store, which opened in 1931, is attached to the aging, 1,100,000 square foot Gallery at Market East shopping mall. The center–which, somewhat surprisingly, I haven’t been able to visit due to some bouts of bad luck–has reportedly under-performed for some time and failed to serve as the center of the city’s downtown retail district, which is what it was designed to be. In addition to the departed Strawbridge’s, JCPenney and Gimbel’s long ago vacated and now the mall counts Kmart, Pay/Half, and Burlington Coat Factory amongst it’s relatively indistinguished roster of tenants. The top floor of the four-level mall is mostly vacant.

One design feature that stands out about the Gallery at Market East is that much of the mall is sliced in half by the Kmart store, so on certain levels it’s necessary to walk through the Kmart itself to proceed straight through the length of the mall. The mall also has one level below street level, continuing the full length of the mall, while the third level of the mall also continues straight through the mall, leaving the street level sandwiched inbetween. The street level is severed at each cross street, so to access its stores its necessary to come from above or below. Essentially, depending on the floor of the mall, the structure flies over, tunnels under, or dead-ends completely at the crossing blocks. If I’ve confused you, check out PREIT’s detailed leasing plan (which is a PDF). I haven’t seen the Gallery, but am dying to.

Hopefully I’ll make it down in time to see the Gallery, because it seems that PREIT’s motivation for buying the Strawbridge’s store is to prepare for a much needed reset at the entire Gallery at Market East Shopping Mall. Joseph Coradino, president of PREIT Services, tells GlobeSt.com that the Gallery at Market East is “Defensive. It defends itself by turning its back on the street. We want to open it to the street, with cafes and retail that will capture the customers in that area.”

That doesn’t necessarily mean it’s going to become outdoor (the multi-level nature of the mall probably means that wouldn’t make much sense at all) but it does seem to indicate a drastic and overdue repositioning of the mall is in place. If done correctly, it could give Philadelphia the kind of downtown retail destination that helped kick start urban revitalization efforts in Boston or Providence. Work is expected to begin in either 2007 or 2008.

Federated Sells Lord and Taylor for $1.2bil

Federated Department Stores played hot potato with the Lord and Taylor brand earlier today, selling it off almost immediately after acquiring it from May Company.

Federated Department Stores reported today that it would sell its Lord and Taylor division for $1.2 billion in cash. The Wall Street Journal had previously reported that the probable buyer was a partnership between Apollo and NRDC Real Estate Advisors. The buyer already owns the Linens ‘n Things chain as well as 14 million square feet of retail space across the country.

Lord and Taylor was recently acquired by Federated in a merger with May Company. L&T currently has 49 stores, mostly in upscale malls in larger cities in the eastern half of the country.

Now that Federated has divested itself of the Lord and Taylor brand, it can be speculated that they will focus entirely upon their burgeoning Macy’s division. Later this year, Federated plans to finalize the May stores acquisition, which will dissolve eleven regional department store chains (Robinsons-May, The Jones Store Company, Famous-Barr, Marshall Fields, LS Ayres, Filenes, Kaufmann’s, Hecht’s, Foley’s, Strawbridges, Meier and Frank) into the Macy’s name. After this, Macy’s will indeed be a nationwide chain as ubiquitous to malls as Sears and JCPenney. They will have stores from Hawaii to North Dakota to Florida. Because Lord and Taylor is an upscale brand, it is worthy of salvage from conversion to the Macy’s name. Also, converting the L&T stores would be redundant as many share anchor space in malls that will already have a Macy’s after the merger anyway. In addition, L&T is comparable to Bloomingdales, an upscale department store brand that Federated already owns.

Many wondered what might ultimately become of the L&T brand. It seems that, for now, it will be saved. As for the other eleven brands acquired by Macy’s in the May merger, you can kiss those goodbye; they’ll become Macy’s within a few months. So, if you haven’t already, you’ll soon get your Way to Shop….whatever that actually means.

A Strip Mall by Any Other Name…

Artists' renderings of the proposed Loop complex in Northborough, MA

…is a lifestyle center.

It was announced today that Northborough, Massachusetts–a town that sits in the center of the sprawling web of suburbia between Boston and Worcester–will soon be getting one of the franchise “Loop” concept shopping centers. Named after Massachusetts highway 213, which completes a freeway “loop” around the city of Lawrence, it’s a particularly odd choice to use to name an entire string of centers in faraway places like Kissimmee, Florida. While The Loop Northborough will include a housing component, the site plan (available on the website, and reproduced below) reveals that, bar the presence of a few gazebos and decorative lamp posts, the center is (much like its namesake twin in Methuen) really just a strip mall.

I suppose that labeling this a “lifestyle center” helps move it through the permitting process, since these centers aren’t yet as demonized as malls, big box centers, or strip malls. Still, is it really that much to ask that they deliver on their promise? I’ve seen centers that are well-done, with shops organized along a main street promenade (such as Main Street at Exton, in Exton, Pennsylvania), but this is really little more than a strip mall disengenuously being sold as “pedestrian friendly” or, somewhat laughably, as an “inspired streetscape design, [with] wide sidewalks, custom storefronts with colorful awnings, [and] plentiful landscaping.” Furthermore, the site seems to imply that there is a lack of true “pedestrian friendly” shopping in the area, despite that the massive Solomon Pond Mall opened just a few miles away in Marlborough ten years ago. I’m certain some of this is true, but the plot plan shows long rows of stores facing inward towards a sea of parking. How is this evocative of small-town America, or friendly to pedestrians? The caveat is that, at least according to the artists’ renderings, it will have attractive storefronts and wider sidewalks to accomodate pedestrians, so I may yet be convinced. But at least for now, you can color me unimpressed.

Site plan for the planned shopping center The Loop in Northborough, MA

Name Change Has Hurt Macy’s

Macy's Logo

According to an article in today’s Columbus Dispatch (again with the Columbus newspaper! What’s going on?), a study recently completed on Columbus-area Macy’s stores since the changeover from the retired Lazarus nameplate has found that foot traffic was down 4.5 percent in 2005, or nearly 50,000 customers. Columbus is the first city where such a study has been conducted, so it may prove to be an indicator that (as many of us suspected) Federated made the wrong choice in retiring the dozens of regional nameplates around the country in favor of Macy’s.

Anecdotally, it seems that most here in Boston had long preferred Filene’s to Macy’s, who took over the local Jordan Marsh chain in 1996.

Shopping is for the Dogs

Wiley Polaris Fashion Place, Columbus, Ohio

OK, fess up: how many times have you gone out for a shopping spree only to return to your house to find that Fido shredded your curtains? Quite a few? Maybe he was just jealous that he didn’t get to nosh on Sbarro too.

According to a recent article in the Columbus Dispatch, Polaris Fashion Place, the newest and largest mall in greater Columbus, Ohio, is fetching shoppers by letting dogs in. While I can’t imagine this is likely to catch on everywhere quickly, it does fit in nicely with the “new” shopping-as-leisure concept that I blogged about yesterday. If people can bring their dogs along for a social stroll, then they’re more likely to go hang out there, right? Plus, anyone who has taken a walk with an adorable pooch in tow (and, for what it’s worth, that’s my pup Wiley in the picture up there) knows that they’re a great ice-breaker and conversation starter; I mean, talk about a great way to really transform the mall into a social center, where you can even meet new people! The Polaris mall management even says that the issue of, um… accidents, isn’t as bad as you might think. It’s fitting that this fashion-conscious city (both The Limited Companies and Abercrombie & Fitch are based here) would lead the charge on something that certainly makes sense as a potential new trend.

Federated Drops Stores: What We Think Will Happen

According to this article, Federated Department Stores (the parent company of Macy’s) is selling nine former stores to General Growth Properties. This is just a small part of the divestitures occurring in areas where Macy’s had a substantial amount of overlap with a former May chain (such as Filene’s, Kaufmann’s, Strawbridge’s, Robinsons-May, etc.). In many instances, there is no obvious traditional department store to replace the departed May chain in these spaces, and most of the ones who do exist aren’t in a position to expand into these spaces. JCPenney, whose financial situation continues to improve, is a likely candidate for some, but in many malls they already have a presence. Boscov’s (who I would love to see building a presence in New England) has taken all of the locations they can possibly absorb given their size, Nordstrom only makes sense in malls and metropolitan areas with certain demographics, and The Bon Ton is busy integrating the former Saks chains in the midwest that they acquired only a few months back. Dillard’s could take some stores, but they’re very far from many areas like the northeast that have the highest concentrations of May anchors gone dark. Target, Kohl’s, and Wal-Mart may make sense for malls located in dense, more urban areas where land is scarce and development is difficult, but all tend to prefer to avoid malls in most cases.

Filene's Department Store There’s also the problem that many of the shells left dark–whether they were originally a May or Federated space–are far too large by modern department store standards. In New England, Macy’s has tended to prefer to keep the smaller and more modern Filene’s spaces over their own spaces, which were all acquired from Jordan Marsh a decade ago. Many of these former Jordan Marsh stores had in excess of 300,000 or even 400,000 square feet, and sometimes featured four levels of sales floors fronting a one-level mall (The Northshore Mall in Peabody, Mass. and the Warwick Mall in Warwick, RI both spring to mind). There just aren’t any chains in expansion mode that would want to occupy a space like this anymore, so the buildings will almost certainly have to come down.

Because of this shift, many of the former May stores (most of which were owned by May, not by the mall’s management company) are being sold back to the malls rather than to new tenants. In most cases, the malls are promising to rebuild the spaces to hold new tenants or to incorporate more in-line space. A few things that I think we’re likely to see:

Outdoor, faux-“lifestyle” promenades, complete with more upscale retailers and restaurants. Many in-line mall stores who are trending towards an anchor format (Crate & Barrel, H&M, Pottery Barn, Restoration Hardware) will flock towards these areas. My own take on this type of development, however, is that it’s superficial and trendy in the bad way. They don’t really suit the existing development of the mall, turning their backs on the present hubs of activity inside of the mall corridors, and instead turn onto… a sea of asphalt in the mall parking lot. I think the litmus test for successfully creating the kind of outdoor shopping environment that’s necessary for a good “lifestyle center” (and can you tell how much I just hate that name?), should be: Is it pleasant enough to sit outside and have lunch? Are you looking at fountains and pedestrians and landscaping, or a nice view, or are you looking at a parking lot? If the answer is the latter, then it’s doomed, and these lifestyle areas will look dated quickly.
Tear down the existing boxes to make room for new, 21st century tenants. I think this is a generally better idea. We’ve seen a shift away from traditional mall anchor stores and towards big box stores over the past decade or two, but why? While price is certainly an issue (especially with Wal-Mart), I maintain it has more to do with convenience. Americans work longer hours, have longer commutes, and have more choices for entertainment than they used to. If it’s 6pm on a Wednesday night, and you need some essentials, do you want to blow your entire evening at a mall or would you rather pick them up at Target in a half hour? Most would probably pick the latter. The most successful modern malls have realized this shift, and no longer target the convenience-oriented customer but rather the leisure shopper. These people are shopping for fun; buying items they may not need but are probably excited about buying, and are doing so at a leisurely time as a result. This is why stores like Best Buy, Dick’s Sporting Goods, Bass Pro Shops, Steve & Barry’s University Sportswear, and Borders or Barnes & Noble as well as entertainment venues like theatres, destination restaurants, or bowling alleys make such good mall anchors today: they focus on leisure purposes. The bookstores, especially, have done an excellent job cultivating a shopping-as-activity atmosphere, and that can spill over into a traditional mall beautifully if done right. This can also be beneficial in suburban or rural locations that are removed from nightlife or traditional entertainment districts, by creating a regional hub for social activity.
Unusual anchor stores, at least in high-priced real estate markets with high barriers to entry (such as organized anti-sprawl citizens groups or restrictive zoning). Here in the Boston area, for example, Wal-Mart has almost no presence due in a large part to an absence of available land for such large stores and due to some of the most restrictive zoning laws in the country. Because Boston is one of the metropolitan areas hardest-hit by the Federated/May merger, Wal-Mart would be wise to strategically pluck vacant stores to build a stronger presence by moving into traditional, enclosed malls.
More In-Line Space. This is probably a pipe-dream on my part, but the potential exists for some malls (such as the aforementioned Northshore and Warwick Malls) to use these vacancies as an opportunity to create room for more stores. In many cases, the herd of malls has thinned in the past half-decade or so, which may have created new opportunities. In markets where there was once two or three malls but now there is only one, it may make sense for the surviving mall to expand to include more space.

One thing is for sure: as we’ve known for awhile, malls themselves are in trouble. This loss of anchor tenants will likely sink some of them, but the most creative management companies, the ones who set out to create a place to be rather than a place to shop, may help usher in their new era.