With developers flooding the market with new projects and new space, there is a growing need for retailers to fill in-line shop space.
As a result, retailers across the board — from Abercrombie & Fitch down to Spanish import Zara — are rolling out new concepts. The past two years have witnessed the incubation of dozens of new ideas, many of which are getting ready to hit the big time now. The concepts are reactions to trends across the board. With the American population aging, concepts aimed at older shoppers are being tested. And, with fashion being fickle, there is also a host of all new brands targeting the lucrative teen and tween markets.
But the challenge is keeping existing customers excited. If a concept has played out and innovation flags, the future can be embarrassing. “The darlings of today are the deadbeats of tomorrow,” notes Faith Hope Consolo, Prudential Douglas Elliman's Chairman of Retail Leasing and Sales.
Here, Retail Traffic provides a rundown of 19 developing concepts. We've asked a few experts to chime in with their thoughts on what will work, what won't and what retailers are responding to.
Many are new brands being rolled out by old standbys, such as Gap's Forth & Towne. International concepts are also represented. And then there is a handful of eye-openers, such as Coca-Cola's mysterious Far Coast concept, which many anticipate will attempt to take a bite out of Starbuck's market.
Within the wide variety of ideas, however, there are common themes:
- Cater to the Baby Boomers — This demographic, previously neglected by retailers, is ripe with disposable income. “Most of the expanding firms are multi-branded, but the cutoff is 40 years old,” says Karen Bellantoni, senior vice president with Robert K. Futterman & Associates. Chico's Soma and the Gap's Forth & Towne are answering the call.
- Keep the customer for life — Don't lose them when they graduate from high school or college, or wait for them to grow up. American Eagle Outfitters' Martin & Osa, and Abercrobrombie & Fitch's Ruehl No. 925 are positioned to meet the maturing tastes of their audience. Meanwhile, Ralph Lauren's Rugby attracts a younger crowd than Polo's traditional audience.
- Appeal to different pocketbooks — Williams-Sonoma went above and below Pottery Barn with the luxurious Williams-Sonoma Home and value-oriented West Elm, while tween-oriented Too, Inc. rolled out Justice, a less-expensive version of its Limited Too brand.
- Think globally — “Europe is looking at us as the land of opportunity, and they're right,” says Joanne Podell, Senior Director of Retail Services at Cushman & Wakefield. Overseas giants like Uniqlo, Zara, Mango and Reiss have all made waves in the American market. “We've got retailers doing $3,000 per square foot in Times Square,” remarks Jeffrey Roseman, Executive Vice President and Principal at Newmark Knight Frank Retail. “When international retailers hear that, they take notice. I see international as a big play in the next few years.” Rumors abound that U.K. hit Topshop is also looking for real estate in New York.
Forth & Towne
Parent: Gap Inc.
Current stores: Five, which debuted in August 2005.
Planned openings: 10 in 2006.
Average store size: 8,000 to 10,000 square feet.
Target audience: Women over 35 looking for casual, business and formal wear.
Buzz: “Not all Baby Boomer women want to shop at a trendy store like Scoop,” says Bellantoni. According to MarketResearch.com, Boomers' aggregate income will reach $2.5 trillion in 2007, well beyond the buying power of the younger strata. “Forth” represents the group's fourth brand, while “Towne” gives a sense of place. The concept features four brands under one roof: Allegory, Vocabulary, Prize and Gap Edition.
Far Coast?
Parent: Coca-Cola
Current stores: 0.
Planned openings: The company anticipates at least one, a 4,000-square-foot space in Toronto's Yorkville shopping district.
Target audience: The usual Starbucks' clientele, i.e., laptop-wielding professionals and caffeine addicts.
Buzz: On April 1, Coke launched Coca-Cola Blak, a carbonated version of Classic Coca-Cola combined with an “essence” of coffee. The company also has plans to roll out a Godiva coffee brand this year. Coke is keeping the project details under tight wraps. But, with a 10,000-store head start and $5 billion in revenue last year, can Starbucks be dethroned or rivaled, even by a behemoth like Coke? Observers also have concerns over whether the store designs and products will reflect a sophisticated brand culture or disappoint with coffee shops cluttered with tired Coca-Cola merchandise.
Free People
Parent: Urban Outfitters
Current stores: Seven
Planned openings: Unknown.
Average stores size: 2,000 square feet.
Target audience: Women in their late 20s looking to be more upscale than Urban Outfitters.
Buzz: Free People began as a brand sold in Urban Outfitters and department stores, and eventually leapt to a retail store concept in late 2002. It is earthy yet colorful, feminine yet boyish. Urban Outfitters and Anthropologie have struggled as of late with sagging profits and swelling inventories. Although fashion missteps have been cited, Free People is holding its own, with same store sales increasing 14 percent in the first quarter of 2006.
Friends 2B Made
Parent: Build-A-Bear Workshop, Inc.
Current stores: Seven, including a 25,000-square-foot flagship store in Manhattan.
Planned openings: Five in 2006.
Average store size: About 1,200 square feet.
Target audience: Same as Build-A-Bear.
Buzz: Picture Build-A-Bear with multi-faceted dolls instead of just bears. Children choose from 15 base dolls to create fashionable dolls according to their tastes, selecting from a variety of accessories and personalities. Then comes the spa treatment and wardrobe fitting. Prices average $12 per doll, with accessories costing between $2 and $5 and complete outfits between $8 and $15.
West Elm
Parent: Williams-Sonoma.
Current stores: 14.
Planned openings: Expanding, but Williams-Sonoma won't elaborate.
Average store size: 9,000 to 37,000 square feet.
Target audience: It's Pottery Barn for the young, hip and less affluent. Prices range from $6 to $699.
Buzz: The brand was launched in 2002. West Elm led the home furnishings industry with a 53.6 percent gain in sales in 2005.
Ruehl No. 925
Parent: Abercrombie & Fitch.
Current stores: 10.
Planned openings: Between five and eight in 2006.
Target audience: Recent college grads who can't wear lewd t-shirts to job interviews.
Buzz: Its prices are 30 percent higher than Abercrombie & Fitch's. It features apparel alongside lifestyle merchandise like CDs, books and perfumes, à la Urban Outfitters. “Ruehl has mixed reviews. I don't think it's doing that well,” Podell says.
Henri Bendel
Parent: The Limited, Inc.
Current stores: Two.
Planned openings: Eventually 200.
Average store size: 37,000 square feet.
Target audience: Young, hip female shoppers looking for luxury items.
Buzz: The Limited, Inc. acquired the Fifth Avenue flagship store in 1985. It opened a second store near its Columbus, Ohio, headquarters. It's upscale and edgy with unique accessories. “Bendel expansion has been a rumor for so long,” says Podell. “I wish they would.”
Jimmy Z
Parent: Aeropostale.
Current stores: 14, with the first opening taking place in July 2005.
Planned openings: Five in 2006.
Average store size: 3,500 square feet.
Target audience: The college crowd, men and women ages 18 to 25, looking for fashion apparel.
Buzz: Jimmy Z grew out of Aeropostale's desire to retain its 11- to-18-year-old clientele as it aged.
Justice
Parent: Too, Inc.
Current stores: 100 since first opening in 2004.
Planned openings: 65 to 75 in 2006.
Target audience: Tween girls, ages 7 to 14.
Buzz: Its merchandise is 25 percent cheaper than sister concept Limited Too, which targets the same age range. Justice is looking to compete with Old Navy, Target and Kohl's. Offers in-store birthday parties as a gimmick. Too, Inc. pulled the plug on Mishmash, the intended inheritors of the Limited Too clientele once they reach the 14- to 19-year-old age range, never caught on. Too Inc. has hit the mark with Justice by targeting a younger group with different price points.
Mango
Coming from: Spain.
Current U.S. stores: One, a 9,000-square-foot flagship store in Santa Monica.
Planned Openings: Eight more in 2006. By 2010, Mango plans to have 200 to 250 in the U.S.
Average store size: 6,000 square feet.
Target audience: Women 18 to 35 looking for fast fashion. T-shirts retail for $20, jeans for $90.
Buzz: With a worldwide presence of 850 stores in 80 countries, Mango is finally hitting U.S. shores this fall. It made its North American debut in Canada in 2005. Outside of major fashion hubs, Mango will look to malls to fuel its expansion. But it faces tough competition. “They are going to go head-to-head with H&M. Same product, same age group,” says Bellantoni.
Uniqlo
Coming from: Japan.
Current stores: Three in New Jersey that opened last fall.
Planned openings: Announcement planned for May 25. The company has set its U.S. sales goal at $1 billion in revenue by 2010.
Average store size: 8,000 to 10,000 square feet.
Target audience: Young and old men and women looking for very affordable casual clothing.
Buzz: “The Japanese Gap”: Founder Tadashi Yanai opened the first store in Hiroshima, Japan, in 1984. The brand took off and now has 680 stores in Japan, China and the U.K. The company has a goal to hit $1 billion in annual sales by 2010.
One Thousand Steps
Parent: Pacific Sunwear.
Current stores: Three, two in California, one in Minnesota.
Planned openings: Three in 2006, eventually 600 to 800 stores.
Average store size: 2,500 square feet
Target audience: 18-to 24-year-olds looking for value.
Buzz: Inspired by L.A. fashion boutiques like Fred Segal, Kitson, American Rag and Madison. Pacific Sunwear has deals to sell brands including Tsubo, Puma, Diesel, Charles David, Steve Madden and Kenneth Cole Reaction.
Williams-Sonoma Home
Parent: Williams-Sonoma.
Current stores: Five. The first opened in October 2005.
Planned openings: Expanding, but Williams- Sonoma won't elaborate.
Average store size: 18,000 to 20,000 square feet.
Target audience: The more established and discerning, who enjoy chatting with in-store consultants over free cappuccino and who have no shortage of disposable income.
Buzz: The luxury version of Pottery Barn. Self-described as “sophisticated design and attainable luxury.”
Soma
Parent: Chico's.
Current stores: 15.
Planned openings: 20 in 2006.
Average store size: 2,000 square feet
Target audience: Women between 35 and 55 looking for intimate apparel. Bras range from $32 to $52.
Buzz: So far, the stores are usually located next to Chico's in outdoor malls or lifestyle centers. Think Victoria's Secret for the Baby Boomer market.
RUGBY
Parent: Polo Ralph Lauren.
Current stores: Four.
Planned openings: Polo won't say.
Target audience: Upscale shoppers ages 18 to 25, looking for sporty apparel that's more affordable than Polo.
Buzz: It's got a “sexier approach than Polo,” with lower waistlines, shorter skirts and sportier cuts. “There are stores we think can do no wrong, like Ralph Lauren,” Consolo says.
Zara
Coming from: Spain.
Current U.S. stores: 18
Planned U.S. openings: Six this year, including San Francisco, Los Angeles and Miami; four to six new stores per year thereafter.
Average store size: 10,000 square feet.
Target audience: “The working woman who doesn't want to go to Ann Taylor,” says Bellantoni.
Buzz: Parent company Inditex posted $8.15 billion in sales last year, beating out European rival H&M at $7.87 billion. Siblings include Massimo Dutti and Bershka. Worldwide, the company operates 820 stores in 60 countries. Zara produces 12,000 designs a year in small batches that move from design to shopping cart in as little as two weeks (compared to six months for most retailers.) Customers return frequently to check out new arrivals, styles are insanely up-to-date, and any flop has minimal impact.
Martin & Osa
Parent: American Eagle Outfitters.
Current stores: 0.
Planned openings: Four in fall 2006, 10 to 15 in 2007, 300 by 2016.
Average store size: 5,000 to 7,000 square feet
Target audience: 25- to 40-year-olds who have outgrown American Eagle
Buzz: The concepts takes its inspiration from a pair of early-20th-Century American adventurers, Martin and Osa Johnson from Chanute, Kansas. Think active, outdoor, and post-college. “The European flair they've brought to Martin & Osa makes it a very exciting concept,” Consolo says.
Madewell
Parent: J. Crew.
Current stores: 0.
Planned openings: Two in 2006.
Average store size: 3,000 square feet.
Target audience: Women 18 to 25 looking for youthful styles at lower prices than J. Crew.
Buzz: A previously defunct New England manufacturer of quality workwear, the Madewell name was purchased by former Gap CEO Millard Drexler shortly before taking over as J. Crew CEO in January 2003. The first store will open in Dallas.
Reiss
Coming from: London.
Current stores: One, a flagship store in SoHo.
Planned openings: Three by the end of 2006, eventually 50 in the U.S.
Average store size: 3,000 square feet.
Target audience: Men and women ages 25 to 35.
Buzz: The SoHo location is widely popular, according to Bellanton. Roseman also considers Reiss a name to watch. Observers say it has a “hip design” and “well-crafted image.”