NEW YORK — Whether it’s for clout or cachet, certain retailers top everyone’s list as the most coveted tenants.
The roster of mall desirables is heavy with category killers, which focus on a single category of product and then dominate that market with big-box stores. Mall owners are clamoring over Tweeter, Best Buy, Dick’s Sporting Goods and Barnes & Noble, especially.
And the clamor is getting louder with ongoing consolidation at retail with deals such as Kmart Holding Corp. buying Sears, and Federated Department Stores acquiring May Department Stores.
“A store like Dick’s is a destination for shoppers,” explained Ira Bloom, director at Kushner Properties, which owns 2.1 million square feet of retail in the Northeast. “But once they come to the mall to buy a tennis racket, they’ll stay to have lunch, then stop in the other shops. The increased volume helps everybody.”
The reign of big-box stores, however, isn’t exclusive to single themes. One of the hottest mall concepts in the country grew from a category killer in the college-branded clothing world into a more genteel apparel retailer for men, women and children.
Long Island, N.Y.-based Steve and Barry’s University Sportswear sells exclusive private label, high-quality clothing for men, women and children. Its department stores aren’t exactly luxe, but they do feature high ceilings, hardwood floors, neat displays and young, not-quite-trendy takes on basics like T-shirts, denim, and hooded sweatshirts. Nothing in their stores costs more than $10.
“We have a genuine, real reason for existing,” said Barry Prevor, co-founder of Steve and Barry’s. “These goods aren’t available anywhere else, and we sell them at a price-value proposition that is unmatched.”
Shoppers may want bargain prices but don’t necessarily feel good about shopping at a big mass merchant, Prevor explained. “People would rather shop in a nice environment,” he said. “On the other hand, we have shoppers that would normally buy a Polo shirt at Ralph Lauren, and then he comes into our store and feels our shirts, and realizes it really is exactly the same thing. So we win that customer as well.”
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Prevor and childhood friend and co-founder Steve Shore are winning over mall owners too.
Glimcher Realty Trust and CBL & Assoc. Properties, two of the largest mall owners in the country, count themselves as huge Steve and Barry’s fans. The retailer is opening two different anchor spaces in Glimcher’s malls in the second quarter of 2005, which the company said will give positive momentum to the malls. CBL is also chasing after it.
“We’ve done several deals with Steve and Barry’s, who has taken some portions of mall anchor spaces and done tremendous sales volumes,” enthused Stephen Lebovitz, president of CBL on a company conference call.
Steve and Barry’s high-class, low-cost retail concept currently has more than 60 retail fronts, and nearly 100 new stores are planned for 2005. The stores range between 50,000 to 150,000 square feet, and aside from a few college-campus-based stores — a throwback to the pair’s early days, when they sold only college-branded gear — they are all anchors or junior anchors of regional malls. This March alone they have three mall openings planned.
“It’s a very, very big country and a very, very big world,” said Prevor. “Our growth rate has been very high, but we’re not anywhere near the size of a retailer like Old Navy, for instance. There’s no particular limit on growth in the short or long term.”
“In terms of apparel, Steve and Barry’s is the hottest big-box concept there is out right now,” said Greg Maloney, president and chief executive officer of Jones Lang LaSalle Retail, which manages 35 million square feet of retail nationally. “If you’re an owner that has a large space that isn’t paying top rents, it’s a great retailer to get in there.”
With high-volume destination anchors like Steve and Barry’s in place, mall owners are just as aggressively pursuing emerging small concept stores to distinguish their properties from the competition. Like a teenager and her iPod, for mall owners sometimes only the newest version of a retailer will do.
Simon Property Group, for example, is chasing after Reuhl by Abercrombie & Fitch, Henri Bendel by Limited Brands and Rugby by Polo Ralph Lauren. Reuhl also tops General Growth Properties Inc.’s list of new stores to secure in its 200-plus malls. In a company conference call, General Growth also hinted that emerging concepts from American Eagle, Pacific Sunwear, The Gap and any of the new stores by Best Buy — including Escape, Studio D, and EQ-Life — could find a home in its malls.
For Taubman Centers Inc., which owns primarily luxury malls, capturing retailers for their first mall stores is a major coup, though it also pursued Reuhl in particular. In 2004, it signed deals for the first mall entries by Iridesse, Tiffany & Co.’s new pearl store; Gardener’s Eden, Brookstone Inc.’s garden and patio store; and Nautica Kids.
“It used to take a long time for things to go out of fashion,” said Maloney. “Now, overnight, a retailer can just disappear. Owners are aware of that, and they move fast.”
The pearls at Iridesse may be a far cry from the sweatshirts at Steve and Barry’s, but according to Prevor, the two retailers’ philosophies may be more similar than different — a good indicator of a longer lifespan.
“Things change so quickly,” he said. “We don’t really see ourselves as a trend leader. We’re interested in making product that is timeless, that is in everyone’s closet. Stuff that was popular for 25 years and will be for the next 25 years.”