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Business Observer Monday, Jan. 3, 2011 10 years ago

Do Things Different

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Retailers big and small have been on adjust-and-adapt mode for the past year. For some, finally, the new year could translate to growth mode.
by: Mark Gordon Managing Editor

INDUSTRY OUTLOOK: RETAIL

Risk is back in vogue in retail.


Examples dot the Gulf Coast, from independent retailers to national chains.


Take LeeAnne Swor, who runs L. Boutique and L. Kids in Sarasota, just south of downtown. Swor expanded in 2010, when she added a spa to the women's and children's clothing side of the business.


Now she's counting on a big 2011 for all sides of the business.


“It seems to me people are shopping more,” says Swor. “People are tired of being broke.”


Swor's optimism led to the L. Spa, which opened in June. Swor says the spa was the result of conversations with boutique customers who wanted more than the massage chains sprouting up around town, but not something that would be a weekend-long, ultra-expensive extravaganza.


“I wanted to make a spa that's something I would go to,” says Swor. “I wanted it to be a mix of luxury and comfort.”


That mix, however, turned Swor's six-employee company into a 24-employee operation. She says the June opening, in the off-season for Sarasota, gave her time to work out the kinks.


Swor has lots of company in the area of expansion and growth. Eileen Fisher, a national high-end women's clothing chain, plans to open a store a mile away from L. Boutique in January, for instance. The store is in the heart of Main Street and a key part of the revitalization of Pineapple Square, a mixed-used project that stalled in the recession.


Other national retail chains zeroed in on International Plaza in Tampa for expansion. New stores signed in 2010 for the supersized mall include Urban Outfitters, a lifestyle clothing and home goods chain; Zingara, a swim gear chain with stores in Central America; Ed Hardy, a trendy T-shirt store that carries clothes worn by Hollywood celebrities; and Tory Burch, an upscale women's clothing and accessories chain. The Ed Hardy and Tory Burch openings were Tampa debuts.


The underlying reason behind both the expansion trends and the bursts of optimism is price point, says Chris Ramey, a Coral Gables-based marketing consultant who runs the Luxury Marketing Council Florida. “The affluent by definition are still affluent,” says Ramey. “They have just gone back to Midwest values.”


Adds Ramey: “If you are selling the same product at the same price as 2007, the world has passed you by.”


Ramey's business has grown in lockstep with retailers. In fact, the Luxury Marketing Council, which has a chapter in Tampa and a presence in Sarasota, added 20 brands/clients in the fourth quarter of 2010, Ramey says. That follows a flat 2009 and first nine months of 2010, when the council barely grew at all.


“Up until recently people were hanging on by the their fingernails,” says Ramey. “Those who survived realized they have to do things differently.”


Two of the largest Gulf Coast-based retailers, Beall's Inc. in Bradenton and Chico's FAS in Fort Myers, also have reasons to be optimistic in 2011.


Chico's, which has more than 1,000 stores in 48 states under three brands, reported earnings growth in several categories for the 2010 third quarter, which ended Oct. 30. The company earned profits of $28.8 million for the quarter, up from $22.7 million in the 2009 third quarter. Overall company sales hit $483 million for the quarter, up 8.1% from 2009.


The tone at Beall's, with divisions that include a Florida-only department store sector and a budget-conscious outlet unit, is also upbeat. The department store side even shows signs of life, which executives consider a victory given the recession.


“There is some activity with department stores, albeit slim,” says Beall's vice president Jim Simpson, who spoke on the state of the company at a recent commercial real estate panel discussion in Manatee County. “The growth strategy there is cautious.”


Executives expect an even better 2011 for the outlet division, which has 450 stores in more than 15 states. “We are projecting a pretty healthy increase,” says Conrad Szymanski, president of the outlet division.


Specifically, Szymanski says the total square feet of retail space for the outlet unit will grow by at least 10% in 2011, from 900,000 square feet to more than 1 million square feet. He also projects same-store sales in the mid-single digits.


The outlet division's growth is actually a continuation of its last fiscal year, when the outlets surpassed the department store in revenues for the first time ever. Beall's Inc. had $1.07 billion in 2009 revenues.


Of course, challenges within Beall's loom, hurdles that can impact any retailer, no matter the size. Szymanski points to the price of apparel, for one. He notes the price of cotton, which had been flat for 20 years, recently spiked from 50 cents a pound to a $1.40 per pound.


“That's especially challenging to us,” says Szymanski, “sitting on the low end of the spectrum.”

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