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May Co. Takes an Intimate Approach

IRVINE, Calif. — Testing the maxim that good things come in small packages, May Co. officially unwraps its first smaller store concept today under the Robinsons-May banner at the Irvine Spectrum Center here. <br><br>As customers give it a whirl,...

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IRVINE, Calif. — Testing the maxim that good things come in small packages, May Co. officially unwraps its first smaller store concept today under the Robinsons-May banner at the Irvine Spectrum Center here.

As customers give it a whirl, executives will be doing their own dry run of the “lifestyle store,” as it has been dubbed, determining its viability as a prototype for May Co. stores.

“We set out to find a dozen stores to create laboratories,” Gene Kahn, May Co.’s chairman and chief executive officer, said Friday. “These are laboratories for us to learn from.”

As reported, the Robinsons-May prototype is the first of eight to 12 test stores the St. Louis-based department store operator will open in the next 30 months as part of an aggressive plan to plump up sagging sales at the 125-year-old retailer. Its stable includes Lord & Taylor, Hecht’s, Strawbridge’s, Foley’s; Robinsons-May, which also operates Meier & Frank units; Filene’s, which also runs Kaufmann’s stores; Famous-Barr, L.S. Ayres, and The Jones Store.

Two more lifestyle stores are scheduled to bow this month: Hecht’s in Greensboro, N.C., next Wednesday, and a Filene’s in Leominster, Mass., near Boston, on Oct. 23. May will launch other test stores, which will fall under its divisions determined by region.

The new concept arrives at a time when May’s department store divisions are clawing their way out of tough economic times and even tougher competition.

In 2001, May Co. net income fell 17.8 percent to $706 million as sales fell 1.1 percent to $14.2 billion, a performance Kahn said there were “no excuses” for. Net income in the first six months of 2002 dipped 8.6 percent to $201 million, although sales for the half are on a slightly better trajectory, decreasing 0.3 percent to $6.25 billion.

After determining that consumers were increasingly favoring lifestyle centers over regional megamalls, executives chose to place the new concepts at destinations like the Irvine Spectrum, an outdoor retail-tainment center about 50 miles south of Los Angeles. The new store is the center’s first retail anchor.

Analysts project the unit will do $15 million in its first year.

For the 57-unit Robinsons-May, the Spectrum also fills an untapped category between nearby larger units at South Coast Plaza in Costa Mesa, Calif. and The Shops at Mission Viejo in Mission Viejo, Calif.

As the paint dried on the new 140,000-square-foot store (most of its units are between 170,000 and 300,000 square feet), WWD got a glimpse of the refreshed look, featuring gleaming marble floors, organized merchandise assortments, clear signage and ample light.

May’s primary goal with this new lifestyle store is to attract a younger customer while not alienating baby boomers.

There’s no shortage of the 19- to 44-year-old set at the Irvine Spectrum. Established in 1994 as one of the first retail-tainment venues in the country, the Spectrum attracts 8 million people in this age group annually, according to mall management. Wet Seal, Limbo Lounge and Oakley are among the 100-plus specialty stores there.

“We found ourselves without younger customers,” Kahn admitted. “They chose to go elsewhere. Baby boomers are still the largest growing group, and our most important customer. So everything we’re doing is not making them secondary. It’s complementing them.”

The store set out to fulfill Kahn’s initiatives revealed to shareholders at the company’s annual meeting last May. They include:

A greater emphasis on casual styles.

Lifestyle-driven assortments across the board.

More fashion for teens, tweens and young contemporary shoppers.

A store that’s easier to shop.

Trendier displays providing guidance on how to put styles together.

A strengthened gift category for add-on sales.

The changes are evident. Two-story glass windows with oversized images of merchandise mark the entrance, pouring natural light into the store — an anomaly in the usually fluorescent monoliths.

Inside, artificial lighting is bright but soft. Wattage has been turned up between 15 and 20 percent over levels in older stores. The new unit also pumps in light from beacons behind frosted glass in some areas.

The interior is expansive and open. Gone are interior walls and, in their place, panels that can easily slide or be removed for a quick environment change. The panels, painted from bright yellow to a warm cinnamon, are bathed in different colors on opposite sides.

“You’ll find the environment really flexible,” Kahn said. “We’ll be able to change and modify the look of the store.”

The goal is to add changes so subtle that customers won’t notice outright but will respond to on a purely emotional level, according to Richard Tao, president of May design and construction.

“They’ll subconsciously have a sense that something fresh has happened,” he said.

Another new feature is a marble walkway laid along the perimeter of the store to help drive traffic to the back merchandise walls of the store. Previously, the area was a carpeted “dead zone,” said Tao, with no delineated pathway.

“Ease is everything,” Tao said. “We’ve tried to strip away superfluous architecture.”

The first floor features fashions for young customers with juniors, young men’s, boys, teens and tweens, denim and children’s. Here, stainless steel rolling panels with blue and green stripes impart an industrial feel.

Labels that appeal to a younger customer are prominent, including Polo Jeans, Amy Byer, Tommy Hilfiger, Roxy and Tony Hawk.

After determining that customers wanted dressing rooms as close as possible to selling areas, May placed blocks of unisex rooms cordoned off with chain-mail curtains and vibrant graphics in the middle of the young men’s department.

“We might have worried before that perhaps customers would see a piece of clothing thrown on the floor,” Tao said. “But now we ask, ‘What does the customer want?’”

Rounding out the first floor is cosmetics, accessories, women’s wear and shoes. In an open-sell presentation, fragrance sits on backlit shelves with eye-level signs delineating the brand name. Alongside Chanel and Clinique, the store has added hipper brands like Smashbox and Urban Decay.

Six stainless steel express checkout counters replete with mesh shopping bags and high-tech shopping carts recall the supermarket look of Old Navy. Individual cashiers remain, but they are more home bases for floor associates than set up for sales transactions, Tao said.

As for young contemporary and misses’ departments, May’s new private label brands, introduced to full-line stores in August, have star status. Kahn has stepped up private label development since he became ceo in 1998, when he succeeded David F. Farrell. Kahn called private label an effective way to add fashion at a good price. May’s new sportswear private brands Be (targeting 19- to 30-year-olds), I.E. and I.E. Relaxed (31 to 44), as well as the reintroduced Valerie Stevens label (35 and up), are front and center.

The second floor mirrors the layout of the first floor and is home to a sizeable men’s department, a large intimate apparel section, toys and home goods.

Tao conceded May executives have “listened” to the competition. Rival Federated Department Stores introduced smaller, more specialized units in a few locations two years ago.

“We didn’t copy much of anything,” Tao said. “We digested what people are doing and drew our own conclusions, creating a new paradigm for May Co.”

Most analysts lauded May’s changes, noting it’s healthy for a chain to rethink its strategy.

“It’s certainly a good sign they are trying to be proactive about a recent loss of market share, and trying to capture this younger customer who has been leaving them for small specialty stores over the last several years,” observed Jeffrey P. Klinefelter, an analyst with U.S. Bancorp Piper Jaffray.

Tony Cherbak, a partner at Costa Mesa-based Deloitte & Touche, said May chose the right location for its prototype.

“I think it’s a good location for them,” he said. “All you have to do is come on a Friday night and find it’s difficult to find a parking space.”

Retail in California is poised to get especially tricky next spring when Kohl’s begins rolling out upwards of 40 stores in Southern California, Phoenix and Las Vegas. Criticizing May’s all-things-to-all-people mentality, Jack Kyser, chief economist of the Los Angeles Economic Development Corp., said, “This is the conundrum: If you want to put something in a shopping cart, you will go to a Kohl’s or a Target. If you want something unusual, it doesn’t go into a shopping cart at all.”

Observers are also waiting to see how the industry will recover from the ongoing port lockout, stalling shipments of goods too close to a critical holiday shipping period. “We’ve had contingency plans and believe it will have minimal impact,” Kahn said. He declined to elaborate.

May executives plan to gradually weave elements of the concept into the company’s portfolio of 443 department stores, as well as new stores or remodels, as they crop up. Last year, 11 new nonlifestyle stores bowed and 31 units were remodeled. This year, another 11 new stores, 18 remodels and 14 store expansions are set.

According to Kahn, the lifestyle concept will not overshadow the company’s other businesses. “Our commitment to this concept and to larger format stores is equal,” he said.

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