SAK’S MILLER MAPS GROWTH PLANS

Byline: Sharon Edelson and Mark Tosh

NEW YORK — Saks Fifth Avenue plans to open 10 additional Clearance stores over the next 18 months, establish a multi-level presence in Mexico, replace its Houston and Palm Springs stores with new units, and significantly increase its West Coast presence, Philip Miller, chairman and chief executive officer of the specialty chain, said Tuesday.
Speaking on a panel at the National Retail Federation convention, Miller outlined Saks’ strategies for growth. The panel, “Re-engineering Retail Growth in the Nineties,” was moderated by Isaac Lagnado, publisher of the Tactical Retail Monitor. Participants included Stanton Bluestone, president and ceo of Carson Pirie Scott, and Melvin Simon, chairman of Simon Property Group.
Miller said that in addition to the 163,000-square-foot Saks unit opening in Mexico City in October 1996, the company plans to open Resort stores, Clearinghouse stores and a Folio catalog business in Mexico.
Saks wants to have more than one full-line store in Mexico and is considering Monterrey and Guadalajara as locations, Miller said, although he declined to give a time frame for opening additional stores.
According to Miller, Saks did $1.4 billion in sales in 1994, a 7 percent increase over 1993, with profits up more than 7 percent. The Fifth Avenue flagship, which did $365 million last year, is growing by double digits, Miller said, adding that the store does about $1,100 a square foot.
As reported, the four I. Magnin stores that Saks acquired last month in Beverly Hills, Carmel and San Diego, Calif., and Phoenix, are being shut by Magnin’s parent, Federated Department stores, as a result of Federated’s merger with R.H. Macy & Co.
The Magnin units, along with the expansion and renovation of Saks’ San Francisco store, will increase the retailer’s West Coast real estate to 765,00 square feet.
According to Miller, Saks’ volume in Beverly Hills could double to $80 million after the Magnin unit across the street is converted to a Saks Men’s Store.
Miller said Saks plans to replace its stores in Houston and Palm Springs, Calif., with new stores. The company is also opening a new Resort store in Charleston, N.C., and exploring Sarasota, Fla., as another Resort location.
The eight Clearinghouse stores will do $120 million this year, Miller said. With the addition of 10 stores, Miller predicted the Clearinghouse business could quickly reach $200 million. The 25,000- to 40,000-square-foot stores do about $500 a square foot.
Stanton Bluestone, president and ceo of Carson Pirie Scott & Co., said Carson’s “most significant” opportunity to increase its size is through organic growth, or by raising the sales productivity of existing stores.
Renovating existing stores is also part of Carson’s growth strategy. Eight stores were remodeled last year.
Bluestone said sales at remodeled stores have increased “at more than double the rate” of sales at non-renovated stores.
Other opportunities for building the regional department store chain include new stores in existing markets, adding to its new, freestanding furniture retail business and acquiring regional competitors, Bluestone said.
As reported, Carson is attempting to acquire the Des Moines, Iowa-based Younkers Inc. Bluestone declined to discuss the Younkers bid, but said Carson’s prefers to “acquire like department stores operating in contiguous markets.”
Bluestone said Carson’s has had little opportunity to add stores in existing markets because it already “does a pretty good job of covering its markets.” He also cited a recent slowdown in mall development.
At the store level, Bluestone said he expected private label sales to increase from 10 percent of the company’s sales to 15 percent over the next three years. Private label is an important means for Carson to “enhance profitability,” he said.
National brands, however, are “what differentiate us from lower end and national chain competitors,” he said.
Simon, whose Minneapolis-based real estate firm is one of the largest mall developers in the country, underscored entertainment as a method to increase mall traffic and fuel sales growth.
“People are spending less time in malls,” Simon said. “We’re stressing an entertainment component as a way to get people to spend more time in malls.”
Simon defined entertainment as anything from music to sports concepts, where celebrity athletes make appearances.
Simon said his company is experimenting with later hours. The Forum at Caesar’s Palace in Las Vegas had tremendous traffic at 11 p.m., he said, so its hours will be extended to 1 a.m. At more conventional malls, Simon would like to see closing time moved from 9 p.m. to 10:30 p.m.
One of Simon’s more unconventional concepts came under the heading of “life enhancement,” which he described as vitamin therapy, alternate forms of medicine and weight reduction.
“We could have blood pressure machines in the mall and examples of how open-heart surgery is done,” Simon said. “All these concepts have merchandising possibilities.”

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