Filling the vacant J.C. Penney space in Atlanta's Perimeter Mall, an upper-end regional mall, has gotten more complex. J.C. Penney had a deal with Bloomingdale's but it fell apart, officials with both chains says. The deal would have brought the Atlanta market its first Bloomingdale's.
J.C. Penney had closed its poorly performing store at Perimeter Mall nearly a year ago. But the chain had been in talks with Federated Department Stores Inc., parent to Bloomingdale's.
Now, J.C. Penney is left trying to release its building — and prospects look grim while the economy is in a recovery mode. The department store chain abandoned a long-term lease at the 31-year-old Perimeter Mall when it closed last August, says Chris Carlaw, a senior development director with Maryland-based Rouse Co.
“They're trying to recoup what value they can from the lease,” Carlaw says, adding they're attempting to release it themselves.
The 1.4 million-sq.-ft. Perimeter Mall is also anchored by Nordstrom and two other Federated brands — Macy's and Rich's. “Federated backed off, and we've had no further talks for months,” says Paul Freddo, J.C. Penney's real estate manager for the Eastern region. He says there are no other deals at this time.
While there could be possibilities, it's looking less likely that Parisian could be an option because the chain has a store less than 10 miles away at Phipps Plaza in Buckhead.
Dillard's could be a prospect for the location, though Federated is likely to block such a move. Federated has thrown its weight around because of its majority stake in the area's mall real estate. Many analysts have long suspected that Federated is attempting to keep Dillard's at bay in the Atlanta market.
While Freddo did not comment on why the deal was canceled, some observers wonder whether three Federated chains — Bloomingdale's, Macy's and Rich's — can survive together in one mall, Perimeter Mall, or even in metro Atlanta.
That's the real question, says analyst Wayne Hood of Prudential Securities in Atlanta. “You really have to question three nameplates in the same mall when there is a fair degree of overlap already,” Hood says.
When Federated purchased Macy's in the early 1990s, it gave the company two department store brands in this market. That left industry experts wondering if Federated would change the Macy's nameplate to Bloomingdale's, because Rich's and Macy's offer mostly the same merchandise.
Rich's has always been a stronger Atlanta moniker, with local roots dating to 1867, when Morris Rich opened the first downtown store.
Kurt Barnard, retailing analyst and president of Barnard's Retail Trend Report in Upper Montclair, N.J., says two department store banners with the same merchandise is a losing proposition.
“It's deadly in retailing,” Barnard says. “The store has to pull its weight at the door and reasonably at the bottom line. If it doesn't, you have to make changes.”
Slipping department store sales have also led to much industry speculation about consolidation. Hood says he wouldn't be surprised to see store-swapping between Macy's and Dillard's.
“Macy's will have to figure out what it will do in metro Atlanta,” Hood says. “I wouldn't rule out Dillard's, and I wouldn't be surprised if it swapped with one of those divisions, Macy's or Rich's.” If that happened, it would be a big change.
Federated spokeswoman Jean Coggan says the company will not discuss its strategies, though the company continues to investigate sites for Bloomingdale's in metro Atlanta, she added.
One thing is clear: store growth opportunities for Macy's may be waning. Federated hasn't opened any Macy's stores in the market at any of the newer malls, including Mall of Georgia, Arbor Place and Mall at Stonecrest.
“When you run out of areas for new store growth, you have to look at ways of improving productivity of existing stores,” Hood says. At Perimeter Mall, it's still just a hole waiting to be filled.
Renée DeGross covers retail business and development for The Atlanta Journal-Constitution.