KMART DETAILS PLANS FOR MANHATTAN ENTRY
Byline: Mark Tosh
NEW YORK — With a new store in the Bronx already producing sales records, Kmart Corp. executives Wednesday outlined plans for the discounter’s first unit in Manhattan and hinted about additional store openings in the city.
The company’s first Manhattan store will be about 145,000 square feet at One Penn Plaza near 34th Street and Seventh Avenue, a site catty-corner from the R.H. Macy & Co. flagship.
It will occupy four levels and be Kmart’s largest conventional discount store in the U.S., officials said.
But Kmart might not stop there. “We have three or four more [New York City] sites that we’re looking at,” Joseph E. Antonini, chairman, president and chief executive officer, said at a news conference. “But nothing is finalized.”
Antonini said it is “not out of the realm of possibility” that Kmart would open a second unit in Manhattan. “It depends on the location,” he said.
Antonini said the new Kmart will “change the way New Yorkers shop forever. Now instead of slipping out of the city on weekends to Jersey or Westchester County to shop, New Yorkers will be able to come right here to Kmart and enjoy an incredible shopping experience in Manhattan.”
Kmart’s other stores in the city already have had an impact. The discounter opened a 132,000-square-foot store in Co-Op City in the Bronx on Nov. 21 and the unit has quickly become one of the 2,350-store chain’s highest-volume units.
“It is breaking all company records,” Antonini said, but he declined to provide a sales figure.
With its expansion in New York City, Kmart is running up against some of its traditional suburban competitors. And the competition, which includes moderate-price department stores and off-pricers, is not only for shoppers, but for real estate as well.
Bradlees Inc. opened its first Manhattan store Nov. 6 at Union Square and the discounter is searching for sites in the other four boroughs. Sears, Roebuck & Co. and J.C. Penney Co. also are looking to expand in the metro area, and reportedly are the leading contenders to take over an Abraham & Straus location at Herald Square. Another recent addition to the Manhattan landscape is Filene’s Basement, which recently signed a lease to open its third Manhattan unit next spring.
In addition to its planned Manhattan store, Kmart operates a store in Fresh Meadows, Queens, which it opened in 1992 in a former Bloomingdale’s location, and two stores on Staten Island. The Fresh Meadows location also ranks among Kmart’s top 10 in terms of annual sales.
The volume of the Penn Plaza store, which may open as early as next November, will be “four to five times greater” than a typical Kmart store, Antonini said.
Based on a sales estimate of about $180 per square foot at a typical Kmart store, the new Manhattan unit would produce annual volume of more than $70 million if it meets Kmart’s projections.
Across the street, Macy’s Herald Square flagship store has annual sales of $500 million, a Macy’s spokeswoman said. She declined to address the impact Kmart’s arrival might have on the department store, but said Macy’s will continue to provide a broad range of products to its customers. “We think we’re well-positioned in the market here,” she said.
Antonini said three factors explain why Kmart’s move into Manhattan “is doable today and it wasn’t possible 10 to 15 years ago.”
He cited first the availability of real estate and, second, said Kmart has “become smarter” in terms of operating multi-level stores instead of one-floor facilities. “And thirdly, the technology now and the logistics that we have are so much better as far as flowing the product and keeping costs down that it allows us to pay rents that are a little higher than normal in markets such as New York,” he added.
Antonini declined to provide an estimate of Kmart’s investment in the Manhattan store, but he said it is “quite extensive.”
Kmart’s new store in Manhattan will cover four levels with about 100,000 square feet of selling area. Three of the four levels will be below ground. The ground level, which will occupy the site of a former Woolworth’s store, will feature women’s fashions. It is the smallest of the four levels with about 24,000 square feet. The next two mezzanine levels will each occupy more than 40,000 square feet and the bottom floor will have about 30,000 square feet.
The merchandise split will be about 60 percent hard lines and 40 percent soft lines. Antonini said the apparel mix “might be slightly different,” because in major cities Kmart attempts to carry more on-trend product.