By  on November 23, 2005

DALLAS — Avenue, a moderate and better plus-size chain with 505 stores in 37 states, is taking a fashion-forward approach to increase sales, gain market share and address the lifestyle needs of its target shoppers, which increasingly include younger women.

The chain hopes to add an abundance of new stores in the coming year, which could bring the number of units up to 1,000. The company undoubtedly sees a receptive market.

There are 40 million women over size 14, spending $25 billion a year on clothing, accounting for at least one-quarter of all apparel sales, according to American Demographics.

United Retail Group, the Rochelle Park, N.J.-based parent company of Avenue, posted sales of about $400 million in 2004 and has rung up double-digit comp-store sales almost every month this year, including an 11 percent comp-store gain in October. This means the company, whose only division is Avenue, is ready for expansion, said Raphael Benaroya, chairman and chief executive officer at United Retail Group. It plans to do so through acquisitions, although so far, those attempts have been unsuccessful.

"We're always looking at potential acquisitions. Our infrastructure and distribution facilities can accommodate 1,000 stores, and our 100-acre campus is open to development for any expansion or acquisition we may decide to do," Benaroya explained. "Our MIS [management information system] is fairly advanced and able to accommodate many-fold growth — it's very scalable without much effort. Our hardware is out-sourced with IBM and with a phone call we can double the capacity without any burden on the associates here. Basically, an acquisition from a merchandising point of view is not a problem. In the last couple of years we tried to acquire Lane Bryant and New York & Co. but were not successful."

Benaroya said there is an increasing number of women demanding the product that Avenue offers, however, they are asking for more fashion-forward merchandise.

"We're focused on catering to the younger customer with a young outlook and her fashion demands, and we always think about ways to expand the business and increase market share," Benaroya said.

Avenue's target shoppers range in age from 25 to 55 years old. Fashion lifestyle assortments run the gamut from dresses and sportswear to footwear and bodywear and are increasingly edited to appeal to women in their late 30s and early 40s.Avenue stores average 4,500 square feet of selling space and ring up about $185 per square foot.

"Our intent is to push the volume forward. We are not taking our eyes off the bull," Benaroya said. "With rising competition in the market, the challenge is how to increase our share of the market by increasing the dollars per square foot in our existing real estate and also look at opening more stores and renovate some, as well. We always reinvest our money back into the business, which also includes opening stores in new markets or even new concept stores when the time is right. We follow the population and grow where our customer is."

Avenue stores include a niche business called Soft by Avenue that launched this fall and includes softly tailored casual sportswear. The response so far has been positive.

"The next stage of development for Avenue is really planting seeds for new concepts, including the innerwear and body business, which are also doing quite well as a niche business within our Avenue stores," he said.

All Avenue fashion is private label and is manufactured in-house. "The Avenue brand is a collective collection of styles that represents one attitude. While we look to be fashionable and forward, we are also not seeking to be on the edge of fashion and to catch trends as they come off the runway. Our merchandising groupings have a fairly steady continuation and predictability to them. Customers appreciate the emotional congruency in knowing that they can come back to us again and again to get this stability," said Benaroya.

Avenue offers sizes 14 to 32, and prices range from $9.99 to $99.99.

For fall and holiday, Avenue stores and its Web site are playing up silk sequined skirts at $39.99, embellished kurta and peasant tops at $29.99, cuffed denim capris at $49.99, reversible wool coats for $94.99, velour V-neck dresses at $59.99 and beaded metallic tops for $29.99, among a range of other styles.

"Our styles are all proprietary, including colors, prints and silhouettes. We put restrictions on our designers not to imitate market goods and not to adapt prints that are readily available in the market. We want customers to have a reason to shop us and us alone. We will not go to Seventh Avenue and buy ready-made lines of clothing. The proprietary nature of our assortments is very important to us and our shoppers," said Benaroya."We've invested in enlarging our customer database to know more and more who they are and what they want to find at Avenue, including a big emphasis on direct mail," said Benaroya.

Much of the company's consumer research has come from its own Web site. Avenue.com's business is an increasingly vital segment of the business. So far this year, online sales are up 112 percent, a substantial boost from the first half of 2005, when the site's sales were up 90 percent.

"Now that online selling is profitable and the site's platform is sound and scalable, we are focused on increasing the traffic to the site by an order of magnitude," Benaroya stated in a May 2 letter to shareholders. "We have great expectations of making this a meaningful 'shop.'"

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