Cashmere for toddlers, handmade lotions and soaps from an agricultural cooperative in northern Israel and tuxedos for Gen-Y males are just a few of the new products retailers are designing new concepts around.
The retail industry has become so saturated with me-too concepts that new retailers, in order to succeed, need to have a laser focus on their market segment and open stores different from those already in the market.
“We are seeing people take one thing and try to become really good at it,” says Mike Tesler, partner and principal of Retail Concepts. The Norwell, Mass.-based firm consults with new business owners to help them establish their chains. “If you get known for being the best at that one thing, you've won the game in retail.”
For example, Sabon, an Israeli-based chain that sells bath and beauty products, has a more narrowly defined market than mainstream competitors Bath & Body Works and the Body Shop. Sabon's array of handmade soaps, shower gels and body lotions are produced in northern Israel at an agricultural cooperative. The products, which range in price from $6 to $35, are made from a myriad of flowers, vegetables and leaves including amber, rose petals and eucalyptus.
Sabon's success speaks to another trend among new concepts — that of new retailers coming from overseas into the U.S. market, says Joanne Podell, senior director in the retail services group for Cushman & Wakefield. Podell herself is consulting for two mid-market concepts coming over from Korea and Singapore. “They are really taking their time and learning how the customers will see them,” she says.
Gaining traction
Retailers often test new retail concepts in stores to help fledgling operations gain traction before rolling them out as stand-alones.
Last year, J. Crew Group spun off a children oriented division of its adult apparel namesake J. Crew, named crewcuts. Twelve in-store boutiques and two stand-alones sell apparel for children ages 2 to 10 modeled off its adult lines. Its racks are filled with cashmere sweaters for $118 and $40 pastel button-down shirts.
As women have children at a later age, when they are more financially secure, Robert Cohen, executive vice president of Robert K. Futterman & Associates LLC, says, “people are willing to pay more for themselves and their kids and it's not a very crowded field.”
J. Crew is tapping into the booming baby market, according to Jeff Green, of Mill Valley, Calif.-based consulting firm Jeff Green Partners. And other concepts are targeting that same market, which includes everything from maternity wear and upscale furniture to accessories and apparel. In fact, in 2006, children's apparel sales in the United States brought in $30 billion, an 8 percent increase over $27 billion in 2005, according to the NPD Group.
Rather than position crewcuts as just another children's clothing store, or even an upscale children's apparel store, J. Crew is marketing it as a “sophisticated” children's clothes retailer.
Its Dallas stand-alone store resembles a New England seaside cottage, replete with wainscoting, sky blue and bright green color schemes, which is also carried over to the store's upholstered benches.
“Crewcuts is doing fantastic because it's very targeted,” says Tesler. “They don't pretend to be everything to everybody.”
So what's on tap next?
Experts and brokers point to an assortment of new concepts that either only operate a handful of stores or are getting ready to open their first. Here Retail Traffic has collected more than 30 examples of new chains still in the development stage that developers should watch. They run the gamut from grocery concepts and apparel chains to bath and beauty products and accessories. Some are international while many are spinoffs of successful existing brands. Enjoy.
PGA TOUR Superstore
Category: Sports
Parent: Golf & Tennis Pro Shop, Inc.
Current stores: Eight, the first opened in Myrtle Beach, Fla. in April 2004.
Planned openings: Between 6 and 10 stores a year for the next several years. Eventually, the firm would like to have more than 200 locations nationwide.
Average store size: 60,000 to 65,000 square feet
Target audience: It is aimed at avid golfers and tennis players of all ages, though it also caters to novices. “The average age for a golfer is 35 to 65,” says Jorge Cora, vice president of merchandising with the firm. “We are trying to break the mold by bringing in all kinds of people.”
Buzz: PGA Tour Superstore wants to be to tennis and golf what Bass Pro Shop is to fishing and hunting. Stores feature full-size swing simulators, putting greens and tennis courts, as well as a line of apparel and golf carts. The chain's strategy so far has been to take second-hand big boxes in power centers and stand-alone locations and retrofit them, but it is also starting to look at lifestyle centers.
Fresh & Easy
Category: Grocery
Coming from: United Kingdom
Parent: Tesco PLC
Current stores: 0
Planned openings: 100 on the West Coast by February 2008. Initial locations expected in Los Angeles, Las Vegas, Phoenix and San Diego by the end of 2007.
Average store size: 10,000 square feet
Target audience: American consumers wanting to experience something new.
Buzz: Tesco's entry into the United States is likely to revolutionize the local food market, according to Retail Concepts' Tesler. “It's going to be a slam-dunk success, because our supermarkets are so averse to change,” he says. Tesco has certainly done its homework — last summer, it sent 50 senior directors and researchers to live with California families for three weeks to better understand the habits of American consumers. The company plans to spend $2 billion on its U.S. operations over the next five years.
Legacy
Category: Leather goods and accessories
Parent: Coach, Inc.
Current stores: 0
Planned openings: Two by next year in New York and Los Angeles.
Average store size: 1,200 square feet
Target audience: The traditional Coach customer interested in limited edition items.
Buzz: Legacy will serve as a test laboratory for new products before introducing them at Coach stores.
Dale & Thomas Popcorn
Category: Confections
Parent: Dale & Thomas Popcorn
Current stores: 12
Planned openings: Six this year
Average store size: 800 to 1,600 square feet; the larger ones can host popcorn parties
Target audience: People who like gourmet popcorn.
Buzz: The 200,000-square-foot production facility in New Jersey could supply a nationwide chain of thousands of stores, says Ivan L. Friedman, president and CEO of New York-based Retail Consulting Services, the exclusive broker for Dale & Thomas. Trivia: the Thomas in Dale & Thomas is New York Knicks president Isiah Thomas.
Whittard of Chelsea
Category: Tea and coffee
Coming from: United Kingdom
Current stores: One
Planned openings: 30 over the next two years.
Average store size: 1,000 to 5,000 square feet
Target Audience: Health-conscious Americans looking for an alternative to Starbucks.
Buzz: The 120-year-old chain employs professional tea and coffee merchants to collect the best brews from around the world. While the customer is in the store, the staff offers lessons on how to blend different teas in a showroom area called the tea zone. “Basically, they think Americans are oversaturated with coffee and they want to start making us into tea drinkers,” says Ben Fox, president of New York-based Winick Realty Group.
aerie
Category: Intimate apparel
Parent: American Eagle Outfitters, Inc.
Current stores: Three test locations opened in 2006 in South Carolina, Alabama and Illinois.
Planned openings: 15 by the end of 2007.
Average store size: 2,500 square feet
Target audience: Women between the ages of 15 and 25 shopping for bras, panties, pajamas and sweats.
Buzz: A possible competitor to Limited Brand's PINK concept, aerie could reach $500 million in annual revenues over the next three to five years, writes Dorothy S. Lakner, an analyst with CIBC World Markets. American Eagle Outfitters launched the line in the fall of 2006.
Brooks Brothers Country Club
Category: Apparel
Parent: Brooks Brothers
Current stores: The first one opened in May in Sandestin, Fla.
Planned openings: Six by the end of 2008, including four by the end of this year in Tucson, Ariz., Southampton, N.Y. and Sarasota, Fla.
Average store size: 2,000 to 6,000 square feet
Target audience: Brooks Brothers' regular customers looking for country club clothes.
Buzz: The chain is looking for locations within resort settings. Its merchandise is styled for visits to country clubs and dining. The inspiration for the stores' design will be Vanderbilt-era Newport, R.I.
Sabon
Category: Bath and beauty products
Coming from: Israel
Current stores: 13. They first opened in New York's Greenwich Village in 2003.
Planned openings: 100 locations in the United States by 2012. A quarter of its stores are planned for the New York region.
Average store size: 500 to 800 square feet
Target audience: Primarily women with disposable income. However, 25 percent of Sabon's customers are men.
Buzz: The company, which tags itself as “affordable luxury,” reports sales of $1,000 per square foot. It is currently looking for stand-alone locations in prime downtown shopping areas and high-end malls.
Custo Barcelona
Category: Apparel
Coming from: Spain
Current stores: Seven, including locations in Las Vegas, New York and Los Angeles
Planned openings: Four to five new stores a year starting in 2007, with an eventual rollout of 20 to 30 locations.
Average store size: 1,000 to 1,500 square feet
Target audience: Fashion-forward men and women ages 35 to 50.
Buzz: A competitor of Juicy Couture, the brand likes to position itself within luxury shopping centers like the Bal Harbour Shops in Bal Harbour, Fla. But it's somewhat more affordable than the likes of Prada and Chanel, says Rober K. Futterman's Cohen, who is Custo's real estate broker.
Michal Negrin
Category: Jewelry and accessories
Coming from: Israel
Current stores: Eight
Planned openings: Five to seven stores annually, worldwide, until they reach a grand total of 100 locations.
Average store size: 2,000 square feet
Target audience: Well-to-do women with a penchant for antiques and jewelry.
Buzz: With beautifully designed stores featuring healthy doses of custom-made jewelry, Retail Consulting Services' Friedman thinks the chain will be a big success in the United States. “I really think they've got legs to travel,” he says.
346
Category: Apparel
Parent: Brooks Brothers
Current stores: 11, including locations in Virginia Beach, Va., Schaumburg, Ill. and Toledo, Ohio. The first opened in 2006
Planned openings: One, at the Pearland Town Center in Pearland, Texas, to come online in April 2008. The company is taking a cautious approach to expansion.
Average size: 5,000 to 8,500 square feet
Target audience: Men and women seeking a lower price point than the typical Brooks Brothers customer.
Buzz: Catering to a more casual lifestyle than its parent, 346 markets items including jeans and T-shirts, as well as oxford shirts and chinos. The chain is looking for locations in lifestyle centers, to capture younger and more carefree consumers.
PINK
Category: Intimate apparel
Parent: Limited Brands, Inc.
Current stores: Three test locations opened in the fall of 2006 in San Francisco, Birmingham, Ala. and Novi, Mich.
Planned store openings: Unknown.
Target audience: Teen girls and women in their 20s looking for undergarments and sleepwear.
Average store size: 2,045 to 7,076 square feet
Buzz: Formerly a sub-brand of Victoria's Secret, PINK owns 5 percent of the market share in the lingerie sector. Since its launch two years ago, the brand's revenues rose 40 percent from $500 million in 2005 to $700 million in 2006 and are projected to reach $900 million this year. By 2010, PINK has the potential to become a $1 billion business, estimates Bear Stearns analyst Randal Konik.
Road
Category: Apparel
Parent: Shah Safari, Inc.
Current stores: Seven. The first opened in Seattle in September 2005.
Planned openings: Between 10 and 16 over the next two years.
Average store size: 2,000 square feet
Target audience: Active, sophisticated men age 30 to 55. CEO Raj Shah describes the typical Road customer as someone who has outgrown J. Crew, but is not yet ready for Brooks Brothers.
Buzz: The company is looking for locations in lifestyle centers and vibrant downtown areas. One of the retailers' product selling points is Road designers take into account men's changing body shapes. “Everybody knows that a woman's body changes once she is out of her 20s, but nobody has ever considered that the same thing happens to guys,” says Shah.
G by Guess
Category: Apparel
Parent: Guess?, Inc.
Current stores: 15
Planned openings: 17 by the end of the year.
Average store size: Less than Guess' typical footprint of 3,000 to 6,000 square feet.
Target audience: Fashion-conscious consumers who are not prepared to pay Guess' premium prices. The company describes its target demographic as shoppers of price points “between factory and retail.”
Buzz: Brokers think this is Guess' attempt to break into the market currently dominated by Abercrombie & Fitch and American Eagle Outfitters. “Their apparel will be popularly priced and feature more mainstream styles,” says Fox of the Winick Realty Group.
XXI
Category: Apparel
Parent: Forever 21, Inc.
Current stores: One is set to open at the Hollywood & Highland Center in Hollywood, Calif. this summer.
Planned openings: Unknown, but with Forever 21 already operating more than 400 stores around the country, Winick's Fox believes the company will be able to roll out up to 100 new locations.
Average store size: 10,000 square feet
Target audience: Young consumers who want to buy trendy clothes without emptying their bank accounts.
Buzz: Not much is known about the new spin-off, but both Fox and Cohen think XXI might be aiming at a slightly older demographic than its current 20-something clientele and will feature an expanded line of clothes for men.
Juicy Couture
Category: Apparel
Parent: Liz Claiborne, Inc.
Current stores: 18, as of December 31, 2006. The first opened in Las Vegas in October 2004.
Planned openings: As many as 20 in 2007, according to sources.
Average store size: 3,000 square feet
Target audience: Women in their mid- to late 20s looking for trendy sportswear with a saucy edge.
Buzz: One of the strongest Claiborne brands, Juicy Couture posted net sales of $350 million in 2006, a 30 percent increase, compared to the company's overall net sales increase of 3 percent. Its signature tees and tracksuits, emblazoned with the Juicy logo, have reached an almost iconic status with young female shoppers.
Pottery Barn Bed and Bath
Category: Home accessories
Parent: Williams-Sonoma
Current stores: Three opened in November 2006 in New York City, Orlando, Fla. and Portland, Ore.
Planned openings: Unknown.
Average store size: 5,500 to 9,500 square feet
Target audience: Pottery Barn's core clientele, looking for narrowly defined product offerings.
Buzz: Encouraged by the success of its Pottery Barn Bed and Bath catalog, the company wants to try its luck with brick and mortar venues. Williams-Sonoma's direct-to-consumer business revenue increased by 4.5 percent in 2006, bringing in $67.5 million.
Relax
Category: Apparel
Parent: Tommy Bahama Group
Current stores: The first one opened in South Naples, Fla. in April.
Planned openings: Unknown.
Average size: 2,000 square feet
Target audience: Primarily men looking for casual resort and weekend wear. Women will be able to pick up swimsuits and accessories.
Buzz: The south Naples store will serve as a test for the concept.
American Girl Boutique and Bistro
Category: Toys
Parent: American Girl, Inc.
Current stores: 0
Planned openings: Two, to open at the Galleria Dallas in Dallas and at North Point Mall in Atlanta, Ga. later this year.
Average store size: 12,000 to 22,500 square feet
Target audience: Girls ages 3 through 12 from middle-income families, with indulgent parents.
Buzz: The upscale doll chain posted disappointing sales growth of 1.9 percent in 2006, compared to 15 percent in 2005. Its new boutiques could help it regain its lost traction. Smaller than the American Girl Place stores, which occupy 40,000 square feet, they will carry a limited number of dolls and accessories, but will feature a Doll Hair Salon and a café. There will be rooms for parties and various mother-and-daughter activities.
Paul Smith
Category: Apparel
Coming from: United Kingdom
Current stores: Three, in New York and Los Angeles
Planned openings: Unknown, but Cohen says, the chain is exploring new locations in Boston and San Francisco.
Average store size: 3,000 to 5,000 square feet
Target audience: Wealthy, educated men ages 35 to 60. The store's merchandise is particularly well suited for tall men with a slender physique.
Buzz: The chain is poised for a major expansion. It already has more than 230 stores and $599 million in annual revenues.
GEOX
Category: Footwear
Coming from: Italy
Current stores: 12. The first opened in New York in March 2004.
Planned openings: 10 in 2007.
Average store size: 1,000 to 1,400 square feet
Target audience: Men, women and children.
Buzz: Last year, almost 60 percent of GEOX's sales were from its international operations, including those in Germany, France, Spain and the United States. The company is best known for its “breathable shoe” technology, which allows air to pass through tiny holes in the shoes' plastic soles.
crewcuts
Category: Children's apparel
Parent: J. Crew Group, Inc.
Current stores: Two. The first opened in Dallas, Texas in May 2006.
Planned openings: Two in 2007.
Average store size: 2,500 square feet
Target audience: Preppy parents looking for pint-sized polos and khakis for offspring ages 2 through 10.
Buzz: With Americans having children later in life, J. Crew CEO Millard Drexler is wagering they'll spend more on their bundles of joy. With cashmere sweaters and vintage-washed tees, crewcuts seeks to bring “a certain sophistication” to the children's apparel market.
Bratt Décor
Category: Children's furniture and accessories
Parent: Bratt Décor, Inc.
Current stores: Two. The first one opened three years ago at Belvedere Square in Baltimore, Md.
Planned openings: 20 within the next five to seven years, including locations in Los Angeles, Chicago, Dallas and Boston.
Average store size: 3,000 to 5,000 square feet
Target audience: Affluent new parents in the 25- to 40-year-old age bracket with extravagant taste.
Buzz: A hit with celebrities, including Marcia Cross and Sean Combs, Bratt Décor offers handmade furniture for the little people. The chain is looking for locations in lifestyle centers, next to high-end apparel stores and restaurants.
CB2
Category: Home furnishings
Parent: Crate & Barrel
Current stores: Two, both in Chicago.
Planned openings: The company won't elaborate, but at least one new store is opening in New York this September and a search is currently on for locations in Southern California.
Target audience: Younger urban consumers who are more price-conscious than Crate & Barrel's typical customer.
Average store size: At least 8,500 square feet
Buzz: Even though many furniture chains are currently struggling, Fox thinks CB2's reasonably priced products could be the key to the retailer's success outside Chicago.
Te Casan
Category: Footwear
Coming from: Spain
Current stores: One. It opened in New York City last November.
Planned openings: One is scheduled for the fall of this year in either Las Vegas or Miami. By 2012, the company plans to grow to 50 locations in major metropolitan areas worldwide.
Average store size: 7,500 square feet
Target audience: Women looking for designer shoes at “attainable” luxury prices, i.e., $400 to $850 a pair.
Buzz: Bloggers are raving about the store's vast selection of footwear and friendly, knowledgeable salespeople. The company plans to concentrate on limited edition products, changing the store's merchandise every couple of weeks.
Footquarters
Category: Footwear
Parent: Foot Locker, Inc.
Current stores: The company unveiled 29 locations in April, including stores in Philadelphia, Atlanta, and Jacksonville, Fla.
Planned openings: At least 35, but possibly as many of 60 by the end of 2007.
Average store size: 4,000 to 6,000 square feet
Target audience: Families looking for moderately priced sneakers and shoes.
Buzz: The company, which previously ran Footquarters as a discount concept before closing it in 1998, is looking for locations in malls and shopping centers.
CH Carolina Herrera
Category: Lifestyle
Coming from: Spain
Current stores: Six. The first opened in 2003.
Planned openings: Approximately four per year, with an eventual number totaling 15 to 20 stores.
Average store size: 2,500 to 3,500 square feet
Target audience: The chain has something for everyone, including the family dog, says broker Robert Cohen.
Buzz: Described as a haven for “aspirational” shoppers, CH Carolina Herrera is looking for locations next to other high-end retailers, including Prada and Louis Vuitton.
Top Secret Files
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Gymboree Corp. is planning to open 10 locations later this year for an unnamed concept. All it has said is that it will target a different consumer than its existing Gymboree and Janie and Jack stores. It did mention it sees opportunities to grow in the baby and newborn category and in the plus-size children's apparel market.
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Borders Group is also keeping its new spin-off under wraps. The first locations are slated to open in early 2008. The firm has given one hint, though. The bookseller promises that the new stores will incorporate a number of new components including some technology enhancements tied to efforts to launch its own e-commerce site.
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Ann Taylor Stores Corp. is opening a small number of stores in fall 2008 that will take advantage of a “very attractive untapped opportunity in the market.” This is different from the chain's plans to launch a beauty and bath products collection and an Ann Taylor Loft maternity line. One guess? Lingerie. “Victoria's Secret has such tremendous market share in that area. I wouldn't be surprised if Ann Taylor wanted a piece,” Cohen says.
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Abercrombie & Fitch has something code-named ”Concept 5” and will open three locations in January 2008 followed by another four in March 2008. One rumor is that the venture will focus on lingerie and many insiders expect Abercrombie will try and capture shoppers in their late 20s and early 30s. “I would say they are probably looking to compete with J. Crew and Banana Republic,” Cohen says.