For a while there, it seemed as though exciting new retail concepts were an endangered species. With a limp economy keeping the lid on risk-taking, reinventions of junior-apparel stores seemed about as innovative as the industry could get.
My, how times have changed. The past year has brought a flood of new concepts to the market, enough to keep brokers, tenant reps and owners happily occupied for some time to come.
Sure, some of those concepts are new variations on old themes — like Zara and Mango, which sell women's fashions with a Euro beat, and Design Within Reach, whose home furnishings have a modernist pedigree. But who would have thought we'd see a mall-based chain like Nuvo Laser Skin Care, which serves up dermabrasion and Botox over lunch hour? Or Club Libby Lu, where preteen girls can get a makeover, advice and “cool princess paraphernalia,” all in a members-only setting? Or a chain of bowling alleys at which the chocolate martini is more popular than Budweiser?
It's probably too early to describe this freshman class of emerging retailers as “hot.” While most are expanding, they haven't achieved the buzz of American Eagle Outfitters, Steve Madden, P.F. Chang's or Hot Topic — although the latter's bloom appears to be fading, as fickle teens turn elsewhere for their fashion.
It's even possible that none of these new entries will reach a level of sustained popularity. “There's so much going on out there, some of which is worthwhile and some of which is not,” says Kurt Barnard, president of Barnard's Retail Consulting Group, adding, “You know the English writer Alexander Pope? He's the one who wrote, ‘Hope springs eternal in the human breast.’”
Why the burst of innovation? In part, it reflects a better retailing climate, says Gwen MacKenzie, vice president for retail investing at broker Sperry Van Ness's Irvine, Calif., office. “People had been retrenching, closing stores or downsizing. That's turned around now,” she says. But there's something else; a change she says has spurred new apparel retailers: “We got color back in. When pink and orange hit, people starting buying it.” That's led to new concepts.
There are dozens of examples of emerging retail stars, but here are six standouts. Some are making their names in urban East Coast settings, others in western malls, but all have reached the radar screens of the cognoscenti.
Lucky Strike Lanes:
Bowling made chic
Some concepts seem destined for buzz. Consider Lucky Strike Lanes, for example. Here's the idea: Take an activity that's deeply rooted in the suburban lifestyle — bowling — retrofit it with a big dose of urban hipness, including cool lighting, hot music and food that ranges from gourmet burgers to salmon pastrami. Debut the concept in Hollywood, where paparazzi magnets like Cameron Diaz become fans.
Now repeat across the country.
Lucky Strike is the creation of Steven Foster, who opened the first two in California in 2003. By the end of this year he will have eight operations in cities ranging from Boston to Louisville. “We'll open 10 next year, and that pace is pretty much our goal through 2006,” Foster says.
Lucky Strike locations run between 20,000 and 25,000 square feet and are either stand-alone or in malls. So far, three are in Mills Corp. properties — The Block at Orange in California and the soon-to-be-open Vaughan Mills, near Toronto, and St. Louis Mills. A Lucky Strike also opened in downtown Louisville's Fourth Street Live entertainment district, developed by Baltimore's Cordish Co.
Foster rules nothing out. “We look for locations that provide us with a demographic base that suits our concept and that have synergies from the point of view of co-tenancies,” he says.
In a bow to the suburban roots of bowling, Lucky Strike caters to families during the daylight hours on weekends. But at night it turns into an adult venue where hip throngs can get a little exercise while sipping high-end drinks — “very Frank Sinatra,” notes Sperry Van Ness's MacKenzie. Not a real bowler? Don't worry — computers keep score.
Finding a niche in women's activewear
Lucy Activewear thinks there's room for a sports-apparel retailer that has a certain kind of woman in mind — energetic, educated, diverse and, above all, affluent.“We're positioned as the place where style meets sport,” says Mike Edwards, CEO of the Portland, Ore., chain. Gwen MacKenzie puts it another way. “They sell really nice activewear you can wear to work out in and look really sharp,” she says.
Lucy was launched five years ago as an online retailer. In 2001 it opened its first brick-and-mortar store and has a dozen now, most of them in California, with three more slated to open this year and 15 scheduled for 2005. “Most stores will be west of the Mississippi, filling our core markets,” says Edwards. They will be split between lifestyle centers, malls and street locations, though Edwards adds that the latter “can be very tricky. There's a big expense to doing business in those locations.” The stores average 2,200 square feet.
Lucy caters to women who are into running, biking and walking. Its private-label apparel accounts for about half its sales, but the store also offers big brands like Nike and Adidas. A strong selling point: sizes for every woman, including petite and tall.
Edwards concedes that it's a crowded field. “A lot of people are in the women's-activewear business — department stores, women's apparel stores and the manufacturers themselves. Then there's a host of small regional players,” he says.
But by opening in top locations and selling apparel that appeals to quality-conscious women, Edwards believes Lucy can differentiate itself. So far, he says, “we're extremely satisfied with how it's going.”
Lucy makes Al Meyers's list of up-and-comers. “There aren't that many places where you can get function blended with fashion from a sports point of view,” says Meyers, vice president of business development at Retail Forward, a consultant.
Club Libby Lu:
Girls just want to have clubs
They may not seem like high rollers, but girls aged seven to 12 spend more than $6 billion a year on clothing, books and all that stuff they fill their rooms with. That makes “tween” girls a much-coveted demographic.
It's a market that Club Libby Lu thinks it can tap. The first store was opened outside Chicago in 2000 by Mary Drolet (above), a former Montgomery Ward executive. Saks Fifth Avenue bought the concept for $12 million in 2003 and now operates 43 stores, many in the Midwest. It plans to open 60 more by the end of 2005.
Current expectations are to have approximately 100 freestanding Club Libby Lu stores and 50 store-in-store Club Libby Lu shops (within Saks department stores) inside of the next five years.
By joining the club (membership is free), girls — whom the chain calls VIPs, or “very important princesses” — get access to what Saks describes as “a fun, funky atmosphere to hang out and interact.” At the center of the activities are birthday parties, where the girls can dress up, get makeovers and, of course, buy things.
Saks is counting on Club Libby Lu to bring new energy to the struggling company, which reported a second-quarter loss of $28.9 million despite a 9 percent rise in sales. So far at least, the chain has succeeded in getting attention. “It's my kid's favorite store,” says Retail Forward's Meyers. “Everything I've seen about it indicates that it's hot right now.”
Aiming straight for the middle
Janeville, Gymboree's latest concept, squarely targets a group that many believe has been overlooked by women's-apparel retailers: Upscale 30-somethings who are looking for casual, not-too-expensive clothing that isn't designed for a 20-year-old's body — or, for that matter, a 60-year-old's.
“I think Gymboree is making a very strong case that there is an underserved group of women out there that retailers are overlooking,” says Retail Forward's Al Meyers.
In fact, Gymboree is counting on the fact that those women already know the company, which has firmly established itself as a source of clothing and accessories for children. Gymboree has 580 stores, and its newer and more upscale Janie and Jack chain has 32.
So confident is Gymboree about the concept, it's aiming to open 350 to 400 stores over the next seven years or so, mostly in suburban malls but with a smaller number of street locations. The first 3,000-square-foot store opened in April in California, and there are now 10 across the country; 14 more are scheduled this year and between 20 and 25 next year, Gymboree says.
How will Janeville compete in the hyper-competitive women's-apparel market? For one thing, by creating a rich, distinct feel to its stores, which are designed to convey a cottage sensibility. The clothing is eclectic and stylish and intended to serve as a happy medium between Banana Republic and Talbot's. The overall impression: “Sort of a modern-day Laura Ashley,” says Sperry Van Ness's Gwen MacKenzie.
Fresh cosmetics, fresh concept
The British chain Lush is creating a following by acting more like a delicatessen than the cosmetics retailer it is. Products are made fresh every week and labeled with expiration dates. Prices are determined by weight. The soaps and other products are even wrapped individually in greaseproof paper, much like the kind used for ground hamburger at a butcher shop.
Lush's approach has worked well internationally; it has 270 stores worldwide, but only nine in the United States. That's going to change soon.
“We hope to have 15 by the end of the year,” says Shaune Bowers, Lush's “location scout,” who heads North American new business development from his office in Vancouver, B.C. After that, Lush will take a wait-and-see approach, though its record overseas would indicate a willingness to grow.
Lush plays to the growing desire for fresh, organic products that aren't tested on animals; respect for quality and the environment are part of the appeal.
The chain is looking mainly to urban settings for expansion. It already has stores on Newberry Street in Boston, on 34th Street at Broadway in New York City, and on M Street in Washington, D.C.'s Georgetown, all of which run between 1,300 and 2,000 square feet. Bowers says he's interested in other city locations — Los Angeles, Philadelphia and more in New York City. “We've been very active in trying to get a store on Michigan Avenue in Chicago,” he adds.
Not that malls are out of the question. Indeed, Lush is in Honolulu's Royal Hawaiian Shopping Center, and it is in talks for airport locations as well.
But Bowers says Lush doesn't plan to carpet the country with its blackberry soap and solid chunks of shampoo. “The idea of our entry into the U.S. is not to saturate the market,” he says. “We want to keep the brand exclusive.” And because it isn't focused primarily on shopping centers, it's more inclined to the coasts than to the Midwest. Bowers says, “We've found that middle America is very mall-oriented.”
Nuvo Skin Care:
Shopping bags and Botox
With so many young people crowding the average mall, it's easy for adults to feel past their prime. For them, Nuvo Laser Skin Centers offer a handy solution: Laser hair removal, Botox treatments, “photofacials,” dermabrasion, even teeth whitening — all overseen by medical staff and performed in a mall store. (Surgery is not on the menu.)
Not surprisingly, Nuvo is a West Coast phenomenon — so far. The company, based in Henderson, Nev., has opened 32 “medispas” in California, Nevada, Oregon and Washington. Among the prime locations are the Beverly Center Mall in Beverly Hills and L.A.'s West Side Pavilion; next up is Rouse's Fashion Show Mall on the well-traveled Las Vegas Strip.
Sperry Van Ness's Gwen MacKenzie is a fan of the concept. “With people reaching a certain age, the demand for these services is moving from the dermatologist's office to the mall. A woman can go out on her lunch hour and get Botox,” she says.
Fresh concepts help raise a mall's appeal and distinguish it from the competition. Something like Nuvo, for instance, provides a diversity of services that can draw older and more affluent customers. Indeed, Nuvo centers are can be found in some of California's toniest properties.
“Retailers need to come up with something new and exciting to keep shoppers interested,” says Retail Forward's Al Meyers, “and we're finally seeing the retail industry alter its cookie-cutter approach.
It's coming out with much more finely tuned concepts that are more appealing to different groups of shoppers. One size doesn't ft all anymore.”
Nuvo expects to have 60 stores open by the end of the year and to eventually expand eastward. The company envisions 400 stores someday. That may sound like a lot, but given the size of the antiaging market — estimated at $29 billion a year — Nuvo has a shot.
Looking for concepts that are fresh out of the crate? Here are just a few:
Ruehl. Abercrombie & Fitch's latest, targeting the 23- to 30-year-old unisex market, debuted in September at two Westfield America centers. “It's brilliant,” says John Schroder, Westfield joint chief operating officer. “They are going after the J. Crew and Banana Republic customers. It could be a 700-store chain.” He is especially impressed that Ruehl is the fourth that A&F CEO Mike Jeffries has spun out of A&F since it evolved from The Limited.
Metropark. You want really, really new? Metropark is the newest concept from Orv Madden, the man who created phenom Hot Topic back in 1989 (he left Hot Topic in 2001). Schroder describes Metropark as “a grown-up Hot Topic — fast, fun, funky and unisex.” If you want to see it, you'll have to venture either to Westfield Oakridge in San Jose or Westfield Valley Fair in Santa Clara.
C28. A California chain of four mall stores, C28 sells Christian clothing, accessories and music. (The name comes from a passage in the Bible, Colossians 2:8.) Al Meyers, vice president of business development for Retail Forward, thinks C28 has potential, given the $4 billion size of the Christian-products markets. “They're pretty far out on the edge, but the Christian-themed market is huge and growing, so they may be well positioned to take advantage of that trend.”
Naartjie, which means “tangerine” in Afrikaans, is the latest entry into the upscale kids'-clothing field. Two stores opened in California, and the company is planning seven more. Sperry Van Ness's Gwen MacKenzie thinks Naartjie might go places.