L.A.’S VERTICAL RETAILERS
Byline: Nina Malkin, with contributions from Kim-Van Dang
LOS ANGELES — Despite the setbacks they suffered as a result of January’s great earthquake, West Coast manufacturers with their own stores intend to continue expanding.
ABS USA, a bridge sportswear firm, has 10 retail stores. Its first, on Montana Avenue in Santa Monica, opened in 1988. Subsequent stores sprang up in California, New York and New Jersey, and there were openings this year in the South Beach section of Miami Beach and South Coast Plaza in Costa Mesa, Calif.
“I wanted to test-market the collection that the design team was working on because I really wasn’t getting an accurate point of view from the retailer,” said Allen B. Schwartz, chief executive officer of ABS, about his initial intent to open stores.
“I’d sell one thing to one store, and the same item wouldn’t sell to another,” he said. “I was upside down as far as who my customer was. I knew who I was targeting, but I wasn’t quite sure exactly who I was catering to and if she was accepting or rejecting what we were doing.”
Schwartz chose the upscale Santa Monica location because of its demographics.
“It gets a cross-section of women who do wear all the designer lines that we’re hung with in the stores,” he said. “We learned fairly quickly that our customer is who we thought she was: A designer customer, 35 and over, classic, not trendy, and a very independent woman who understands value and style.”
Beyond customer identification, Schwartz said the ABS stores provide “a very fast read on what’s selling.”
“It’s like a built-in research center and proving ground for fabrics, for style, for length, for everything I need to know,” he added, “which in turn helps me inform the buyers we sell to on what to key into.”
ABS stores are between 1,500 and 2,000 square feet and feature clear lighting and minimalist decor. Salespeople, recruited by a personnel director, solicit “gently but firmly,” according to Schwartz. “They inform the customers as to what just came in, what’s selling, what the trends are.”
Schwartz contends the firm is not competing against itself.
“We avoid that by only having freestanding stores,” he said. “We don’t go into malls. I believe that there’s a trend going back to the neighborhood specialty stores; plus, the stores help enhance our image and give the line greater label acceptance.”
As for profitablity, Schwartz said, “Last year was pretty flat. Store for store, we were just about even, which isn’t great, but we opened two other stores, so our volume went up, but the new stores didn’t have any figures to go against. We’re doing business, but the extra business isn’t there right now. I have, however, seen it pick up in just the last couple of weeks by about 15 percent.”
Schwartz wants to open more ABS stores.
“We’re looking at the warm-weather belts, places like Arizona and Florida,” he said. “We’re very selective. I’m not just opening stores to open stores. We’re only going into areas where we think people are moving into.”
Leon Max also has expansion plans. Currently, there are 11 Max Studio stores, nine in California and two in New York. The first Max Studio bowed in Santa Monica eight years ago, and the company opened its newest store on Rodeo Drive in Beverly Hills last month.
“We wanted to perfect the mix, perfect the product, and with a boutique you get a direct look at what the customer is buying and a statistical backdrop,” said Leon Max, president of the Los Angeles-based firm.
“We had an increase of about 20 percent at the stores last year, but the earthquake set us back, and it took about three to four months to recover. We’re absolutely looking to open more stores, and are researching every major market. “We have a pretty good distribution in the shopping malls, so what’s of interest to us now is freestanding stores.”
One of the younger West Coast designers getting into retail is the Los Angeles-based Lee Saelee. He opened a 1,200-square-foot Saelee boutique two and a half years ago on Santa Monica’s Main Street and hopes to add another at 1,700 square feet, larger — west side store as early as October and no later than next February.
A designer whose collection sells at such high-end stores as Nordstrom and specialty shops like Shaya in Glendale and Century City, Saelee nonetheless sought to open his first boutique because “big department stores buy a lot of Calvin Klein and Donna Karan, and while they buy from us also, sometimes they don’t leave enough space for us.”
“In a business sense, if a manufacturer opens a retail store, he has a better margin,” said Saelee.
But the designer insists the store also serves a more personal and creative purpose. “I get to see real women in my clothes, and it’s important for a designer to get feedback from real women, not just the fitting model with the perfect body,” he explained.
The boutique, which offers certain items exclusively, allows Saelee greater creative freedom.
“The wholesale customer tends to expect a certain look from me, and if I want to do something different, they may say, ‘No, we don’t want that.’ For my own store, I can do what I want: I can do a skirt 15, 16 inches,” he said, “but for the wholesale customer I may have to do it 19 inches.”
How does he keep from competing against himself?
“I have to concentrate on getting into the right location so I don’t interfere with my wholesale, because basically I’m a wholesaler who does retail on the side,” he said. “With two stores selling my clothes in the Beverly Center, there’s no way possible I can open in the Beverly Center. It would kill my wholesale.
“In 1993, we did about $400,000 at the Main Street store, and for ’95 it will probably be about the same. It’s not a great number, but then we don’t put a lot of energy into it; by that I mean, we did not do major advertising. The clothes sell themselves on Main Street.”
He added that it took a while for the store to bounce back after the earthquake and pointed out that the Santa Monica location does a somewhat seasonal business.
“Santa Monica is almost like a resort area,” he said. “In the summer, we have tons of people, but in the winter I depend more on people who live in the area and my steady customers.”
Rampage, the junior and contemporary sportswear company here that in 1993 grossed $155 million in wholesale volume, is also planning a major retail push. The first Rampage store opened in Reno in March. It was followed by a Houston unit in June.
On Aug. 13, a 5,500-square-foot Rampage store will open at the Beverly Center here. It will be unveiled along with the company’s first children’s retail venture, a 2,200-square-foot store called Friends, in the same mall. Both stores will feature the company’s products as well as other labels. Rampage products run the gamut from casual to young career looks, including dressy styles.
Rampage owner Larry Hansel, who bought the junior retail chain Judy’s from bankruptcy court in March 1993, is renovating its 46 units too. Judy’s generated $40 million in 1993. The redo, expected to take three years, involves replacing the stores’ black, white and chrome color scheme with warm wood and pewter. Some Judy’s units will be converted into Rampage stores. The first of these — Judy’s at Westside Pavilion here — will debut as Rampage on Saturday.
On Aug. 20, Judy’s units in West Covina, Calif., and at South Coast Plaza in Costa Mesa, Calif., will be transformed into Rampage-Friends stores, carrying juniors and children’s merchandise. “We just want to capitalize on the Rampage name where we can and keep the Judy’s name where we have developed a loyal Judy’s clientele,” Hansel said. “We are constantly evolving. Junior stores out there are in trouble because they don’t evolve.”
Rampage projects a volume of between $250 million and $300 million this year in both its wholesale and retail operations.
Rising star David Dart is the latest — and among the most ambitious — entrant into the retail arena. The designer opened two stores in the Los Angeles area in 1993. The first, a modest 800-square-foot space in Santa Monica, bowed in June, and a lavish 3,800-square-foot Beverly Hills location opened five months later.
Settling amid such neighbors as Neiman Marcus, I. Magnin and Saks Fifth Avenue — which all sell Dart’s uniquely Californian, laid-back-but-professional creations — is a testament to the designer’s confidence.
“I think we’re enhancing each other’s business,” Dart says. Dart’s reasons for branching into retail echo those of his peers, but he also cites having a forum for the entire collection as an asset. “It’s just not realistic for stores to buy complete collections, but our shops can showcase it in its entirety,” he said.
Although Dart has definite expansion plans, he tempers his enthusiasm with caution. He’s considering sunny climes exclusively — South Coast Plaza in Orange County is one possible location, and the designer is also looking into Maui and Florida.
“It’s important for us to go into areas that have the California lifestyle, attitude and weather,” Dart said, adding, “I’d rather have a few key stores in good areas. Anything else would be out of control. I couldn’t spread myself that thin.”