US Retailers Slim Down For Bigger Sales; Bloomingdale's Is Latest
April 25 2011 - 12:23PM
Dow Jones News
In the latest sign that retailers are taking smaller steps to
reach customers, Macy's Inc. (M) is opening three more outlet
stores for its high-end Bloomingdale's chain.
The Bloomingdale's outlet stores are part of a trend for
high-end retailers such as Nordstrom Inc. (JWN) to open smaller
sales outposts, while mainstream department stores such as Kohl's
Corp. (KSS) make their own forays into smaller-format stores.
The moves by upper-end retailers are a way to reach a
more-aspirational shopper who may not be able to afford the prices
available at a true luxury store. And mainstream department stores
are making their moves after finding that most large geographic
areas have already been developed and that they can reach further
into suburbia by building smaller-format stores.
"The common denominator here is retailers are being forced to
rethink their parameters to reach new audiences," said Peter Brown,
chairman at global management consultancy Kurt Salmon.
The new Bloomingdale's units will bring to seven the number of
outlet stores that Macy's operates for its high-end chain.
Macy's spokesman Jim Sluzewski said the company sees smaller
Macy's stores as a possibility, with the Bloomingdale's outlets
taking precedence for now. "We are learning how the outlet store
operates and how we can participate," Sluzewski said.
The Bloomingdale's outlet stores, which are set to open this
autumn, will run about 24,000 square feet in size. A typical
Bloomingdale's is five times that size. Like other high-end outlet
stores, the Bloomingdale's store will carry a mix of clearance
merchandise from larger Bloomingdale's stores and products made
just for the outlets.
"Our first four outlet stores have helped us to learn this
business and refine our merchandising and in-store presentation,"
Bloomingdale's Chief Executive Michael Gould said. "We continue to
see opportunity for growth."
Other high-end retailers including Saks Inc. (SKS) and Nordstrom
have been making major inroads into the outlet-store business over
the past few years, with Saks now operating more outlet stores than
full-line stores and Nordstrom having an ambitious roster of
openings.
Mid-market department-store chain Kohl's is moving forward with
more smaller-scale stores, in the 64,000-square-foot range. The
retailer appears to be able to remain a "department" store despite
a considerably smaller size. The retailer operates stores as large
in size as 125,000 square feet.
A Kohl's spokeswoman wasn't available for comment.
Kohl's sees the smaller stores "as a growth vehicle," said
Citigroup analyst Deborah Weinswig.
The smaller-format stores generate higher gross margins due to
their product mix and have lower fixed costs and advertising
expenses, Weinswig noted.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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