A number of new concepts, both domestic and international, will begin to dot the U.S. retail landscape as a result of retailers' precarious expansion plans. A prevailing theme common among them is that their new concepts will focus on the in-store experience as much as the product.
“You can't just put merchandise in a store nowadays — you have to put action into it,” says Mike Tesler, partner and principal with Retail Concepts, a Norwell, Mass.-based consulting firm.
Abercrombie & Fitch, for example, created a story line about Gilly Hicks, a teenage girl who opens a lingerie shop in the 1920s in Sydney, to create an emotional bond with the targetted audience. Gilly Hicks, an intimate apparel spin-off of Abercrombie & Fitch, has planned a 450-store rollout.
Meanwhile, House of Hoops, a new basketball athletic gear concept co-branded by sports giants Nike, Inc. and Foot Locker, Inc., aims to complement its selection of merchandise with appearances by professional athletes and local and national basketball events at its stores. The concept debuted in Harlem, N.Y. The backers hope to bring 50 new stores into markets throughout the U.S. during the next three years.
House of Hoops and Gilly Hicks are just two examples of concepts that developers looking to fill space should be watching. At a time when store closings and retailer bankruptcies are on the rise — the latest estimates are that 7,000 stores will close this year — expanding concepts are gold. In the next few pages, Retail Traffic offers profiles of 18 up-and-coming chains actively looking to spread their wings in the United States.
Foreign retailers are enticed by the economics, although many no longer consider the U.S. marketplace as their top choice for expansion, says Naveen Jaggi, senior managing director of brokerage services with Los Angeles-based global brokerage firm CB Richard Ellis. According to its April Global Emerging Markets Survey, 40 percent of the 300 international retailers it surveyed said they will concentrate their growth efforts in emerging markets, such as India, Ukraine and Russia.
Still, the majority of the chains planning to test new concepts in the U.S. marketplace are foreign entities including such names as Who.A.U., a South Korean apparel retailer and Canadian body products maker Fruits & Passion. “You are seeing boutiques open up, but not like in previous years,” says Tesler.
A few domestic stalwarts are also launching new concepts, including Urban Outfitters Inc. and American Eagle Outfitters, Inc., which are both venturing into new product categories. However, some of these concepts may face challenges of their own. Morningstar's Kimberly Picciola notes that the current housing downturn could thwart Urban Outfitters' plans to launch Terrain, a home and garden concept aimed at affluent baby boomers. And, worries abound that American Eagle's new children's division, 77kids, selling trendy clothes for the offspring of its American Eagle customers, is being launched at the wrong time. Will these concepts succeed? Or will they go the way of Gap's ill-fated Forth and Towne? Only time will tell.
GILLY HICKS
Category: Intimate apparel
Parent: Abercrombie & Fitch
Current stores: Five, including locations at the Natick Collection in Natick, Mass., and at the Mall of America in Bloomington, Minn.
Planned openings: 15 by the end of 2008; eventually as many as 450
Average store size: 7,000 to 10,000 square feet
Target audience: Females ages 14 to 35
Buzz: The concept is built around the fictional story of Gilly Hicks, an English teen who moves to Australia with her family in the 1920s and opens a lingerie store. The stores all feature a portrait of the legendary Gilly. “The bulk of undergarments used to be sold by department stores,” says Mike Tesler, partner and principal with Retail Concepts. “By injecting fashion into it, it's not just a basic, so young women are buying and owning more than they used to.”
UTERQUE
Category: Accessories
Parent: Inditex Group
Coming from: Spain
Current stores: None
Planned openings: Unknown. The firm plans a U.S. rollout in the second half of this year following its initial launch in Spain, Greece and Portugal.
Average store size: 2,150 to 2,700 square feet
Target audience: Fashion-conscious women
Buzz: The chain wants to secure high-profile storefronts along destination retail corridors and in class-A malls to sell its handbags, footwear and eyewear.
HOUSE OF HOOPS
Category: Sports Parents: Nike, Inc. and Foot Locker Inc.
Current stores: One that opened in Harlem in January
Planned openings: 50 over the next three years, including locations in Las Vegas, Chicago, Houston and Los Angeles
Average store size: 4,000 square feet
Target audience: Avid basketball players and fans
Buzz: The stores will sell high-end and limited edition basketball apparel, footwear and equipment from brands including Nike and Converse. As consumers shop for gear, they will be entertained by 65-inch TV screens looping Nike commercials, an electronic board posting scores from local basketball games and even personal appearances by professional athletes.
ILORI
Category: Eyewear Coming from: Italy
Parent: Luxottica Group
Current stores: Seven, including one in New York City and one in Beverly Hills
Planned openings: 150 over the next two years
Average store size: 4,500 square feet
Target audience: Those with a taste for luxury eyewear and deep pockets
Buzz: Translated as “special treasure” from the Yoruba language, Ilori will showcase sunglasses selling for up to $10,000 a pair. The company expects an average annual turnover of $1 million.
CALVIN KLEIN
Category: Apparel
Parent: Phillips-Van Heusen Company
Current stores: Five, including one at the Natick Collection in Natick, Mass.
Planned openings: Based on the success of existing stores, it will open another five locations in 2008 at malls in major markets, including New York, Boston, Las Vegas, Miami and Chicago.
Average store size: 10,000 square feet
Target audience: Men and women aching for new Calvin Klein designs
Buzz: The chain will sell the designer's collection of sportswear, jeans, outerwear, underwear, footwear, eyewear, watches and fragrances.
RIDEMAKERZ
Category: Toys
Parent: Build-A-Bear Workshop, Inc. is a partner and investor in the venture.
Current stores: Seven, including locations in Indianapolis, Myrtle Beach, S.C., and Fredericksburg, Va.
Planned openings: 10 stores by the end of 2008
Average store size: Under 5,000 square feet
Target audience: Boys ages 6 and up
Buzz: Described by the Chicago Tribune as the American Girl Place for boys, the chain offers little car enthusiasts the chance to customize their own toy rides with a choice of colors, tires, wheels, lights and various options. Each car ranges in price from $12 to $28 and comes with a certificate of title, personalized license plate and assembly tools. Like American Girl Place, Ridemakerz also hosts birthday parties.
MONOGRAM
Category: Apparel
Parent: Gap, Inc.
Current stores: One, in New York City's Greenwich Village
Planned openings: Unknown
Average store size: 2,500 square feet
Target audience: Men and women who like the Banana Republic style, but want a more tailored fit and are willing to pay a 30 percent to 40 percent premium
Buzz: The Greenwich Village location will serve as the prototype for nine months.
77KIDS
Category: Children's apparel and accessories
Parent: American Eagle Outfitters, Inc.
Current stores: None
Planned openings: Unknown. Management has indicated there will be fewer than in its aerie division, which currently operates 39 stores.
Average store size: Unknown
Target audience: American Eagle fans looking for trendy clothes for their children, ages 2 through 10
Buzz: It will debut online sometime this year, followed by a bricks-and-mortar location in 2010.
FINISH LINE LTD.
Category: Sports
Parents: Nike, Inc. and Finish Line
Current stores: One, at the Chandler Fashion Center outside of Phoenix
Planned openings: Unknown
Average store size: 4,500 square feet
Target audience: Teen athletes
Buzz: The stores will be divided into three sections — running, sport style and training — and will feature a wide array of products ranging from Nike footwear to iPod Nanos. Customers will have the chance to test the numerous Nike products before buying them.
BLUMARINE
Category: Apparel
Coming from: Italy
Current stores: One, at the Village of Merrick Park in Coral Gables, Fla.
Planned openings: Three to four over the next several years, including locations in New York, Los Angeles and Las Vegas
Average store size: 2,000 square feet
Target audience: Fashion-savvy women with plenty of discretionary income — a dress from the store can cost upward of $3,000
Buzz: The designer, Anna Molinari, is targeting discerning women who are outgoing and like bold clothes — which is why she chose Florida as the inaugural location for Blumarine.
TERRAIN
Category: Home and garden products
Parent: Urban Outfitters Inc.
Current stores: None
Planned openings: One, in Concordville, Pa., in early 2009. It plans to follow up with 50 more nationwide.
Average store size: Unknown. Officials have indicated stores will be large and freestanding.
Target audience: Baby boomers, as well as Urban Outfitters and Anthropologie shoppers looking to furnish their homes
Buzz: The chain, which will sell live plants and flowers, indoor and outdoor furniture, pottery, antiques and landscape design services, aims to capture some of the $85 billion home and garden market dominated by Home Depot and Lowe's. John Kyees, Urban Outfitters' CFO, says the stores have the potential to bring in $20 million annually. However, “the timing of the launch might be a challenge, given the weakness in the home improvement sector in the wake of the housing market decline,” wrote Morningstar analyst Kimberly Picciola.
FRUITS & PASSION
Category: Home and body
Coming from: Canada
Current stores: Three, including locations at the Aventura Mall in Aventura, Fla., and the Natick Collection in Natick, Mass.
Planned openings: Between 50 and 200 over the next three years
Average store size: 750 to 1,400 square feet
Target audience: The primary household caretaker
Buzz: This French Canadian chain sells natural items and products for a wide range of household needs, from shampoo for puppies with sensitive skin to cleaners for kitchen countertops.
CROSS
Category: Office accessories
Parent: A.T. Cross Company
Current stores: Two; Natick, Mass., and Las Vegas
Planned openings: Unknown
Average store size: 900 square feet
Target audience: Lovers of fine-quality writing instruments
Buzz: The oldest manufacturer of pens and pencils in the U.S. sells 1,500 products ranging from pens and clocks to cufflinks and eyewear.
WHO.A.U.
Category: Apparel
Parent: E.Land
Coming from: South Korea
Current stores: One. The company has signed letters of intent for stores at the Garden State Plaza in Paramus, N.J.; the Palisades Center in West Nyack, N.Y.; the Mall at Short Hills in Short Hills, N.J.; Queens Center in Elmhurst, N.Y. and Roosevelt Field Mall in Westbury, N.Y.
Planned openings: As many as 18 stores in 2008. Another 50 within the next five years
Average store size: 4,000 to 7,000 square feet
Target audience: Teens and young adults looking for California-style clothing
Buzz: Having built the concept around the American surfer lifestyle, E.Land expects to compete with domestic giants Abercrombie & Fitch and American Eagle with a footprint of as many as 450 stores nationwide.
AURA
Category: Cosmetics Parent: L'Oreal
Coming from: France
Planned openings: 100 worldwide by 2009
Average store size: Unknown
Current stores: None
Target audience: Women seeking skin care products and personalized attention
Buzz: The stores will feature diagnostic stations where salespeople help customers pinpoint the product best suited for their skin type.
DIVIDED
Category: Apparel
Parent: Hennes & Mauritz (H&M)
Coming from: Sweden
Current stores: None
Planned openings: Unknown
Average store size: 8,000 square feet
Target audience: Teens looking for cool, cheap streetwear
Buzz: H&M is still in the preliminary stages of its U.S. rollout (there are five Divided locations in Europe). With H&M's success in North America, it's only a matter of time before the new concept hits the United States.
PAPERCHASE
Category: Stationery
Parent: Borders Group, Inc.
Coming from: United Kingdom
Current stores: Two, including Newbury Street in Boston and in Glendale, Calif., at the Americana at Brand
Planned openings: Up to eight freestanding stores in 2008
Average store size: 1,500 to 2,000 square feet
Buzz: The chain, which already operates in more than 300 Borders bookstores, sells high-end design greeting cards, stationery, gifts and holiday decorations.
GAMER DOC
Category: Video games
Current stores: None
Planned openings: The company is scouting locations in Orange County, Calif., and in Florida, specifically Tampa and Orlando, but has not announced a number of targeted openings.
Average store size: 650 to 1,800 square feet
Target audience: Avid and novice video game players
Buzz: The franchise chain plans to make it easy for customers to find video games, consoles and accessories, offering as little or as much customer service as necessary.