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Shopping Centers Today -> May 2001
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BOMBAY LIGHTENS UP ITS MERCHANDISE MIX
By Kimberly Pfaff
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The
Bombay Company has changed its name to Bombay and altered
its merchandise mix.
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If you think you know The Bombay Company, think again. The retailer that built its business on traditional, classic furniture has lightened up its looks with a fresh, new style.
Where furniture once dominated the mix, today the assortment is about 55% accessories and 45% furniture. The firm’s emphasis on smaller items such as candles, decorative pillows, picture frames and tassels, has allowed Fort Worth, Texas-based Bombay to capitalize on gifts and impulse buys. Prices now range from about $10 all the way up to $1,900 for a leather sofa. In between, there are four-poster mahogany beds (for under $1,000), linens and rugs, ceramics, lighting, prints and much more.
And while you’ll still find traditional cherry looks here, the store now sports a contemporary classic flair, with lighter finishes and airy, metal-and-glass combinations. Even the logo is fresh, having evolved from The Bombay Company to, simply, Bombay.
“Our customers tell us there’s a great feeling of exploration in our stores,” said Mark Lefkin, creative director. “They love to wander through and find treasures.”
Spearheading the change has been Carmie Mehrlander, who came in as president and COO three years ago, and now is also chairman of the board. Her changes in senior management, merchandising and creative approach have led to a more casually elegant Bombay.
Industry watchers applaud the new approach.
“I certainly think they’re headed on the right path,” said Lynn Detrick, vice president of research at Houston-based Sanders Morris Harris, an investment company. “It’s been very wise of them to try to exploit the impulse purchase side of their business, and add more goods and accessories to take advantage of mall traffic. That’s very smart.”
It has also added up to some positive numbers. Sales for 2000 were $421.7 million, compared with $390.9 million for 1999, and January same-store sales rose 7%. Total sales for 2001 are expected to be about $450 million to $460 million.
“We started to see an increase in their sales in the spring of 1999; since then we’ve seen a 10% increase in their sales,” said Jim Napoli, executive vice president of leasing for Indianapolis-based Simon Property Group, which has about 70 Bombay stores in its shopping centers, and is adding more. “They’ve clearly started to do some good things. Instead of the more staid, masculine approach, they began to appeal more to a wider range of customers, with different styles. Now you can see some very interesting and eclectic items there.”
Analysts also point to Bombay’s performance this past Christmas season, which for many retailers fell short of expectations.
“Mall traffic was weak in general, but they did very well,” said Alex Rotonen, an analyst with Dallas-based Southwest Securities, an investment firm. “They had 8% comps in December; they were probably in the top 5% of all retailers. Only a couple of retailers had higher numbers, and none of them were mall-based. That was phenomenal.”
Currently, about 92% of the retailer’s 400-plus stores are located in malls, with the remainder primarily in lifestyle centers and a handful in street locations. Now, Bombay faces some critical site-selection decisions: Over the next three years, about 70% of the company’s leases will come up for renewal, and that means individually evaluating these locations to decide whether to keep, move, expand or simply renovate each store.
With those changes in mind, a year ago Bombay partnered with Thompson Associates, a real estate consulting group based in Minnesota. The firm has developed comprehensive site-selection and market-analysis tools for Bombay, using not only real estate data but also consumer surveys and focus groups.
“We have a lot of real estate decisions to make,” said Brian Priddy, senior vice president of store operations for Bombay. “The mix will absolutely change; certainly we won’t stay 90% in malls. But I want to be clear, we don’t want to leave malls. Mall locations are what’s going to drive Bombay’s sales.”
Still, he noted, lifestyle centers and other high-end retail venues have also become increasingly attractive.
“We’re always going to go for the best possible location that we think serves our customer the best,” he said. “As for how the numbers might change, I could see a combination of 80% malls and 20% off-malls.”
At the same time, the company will also standardize its retail formats, which currently feature eight floor plans in sizes ranging from 1,300 to 6,000 square feet.
“We’ve certainly broadened our assortment, and had a lot of accessory growth, and we need that space to show our product well,” said Priddy. “Ideally, we’re looking for spaces between 3,000 and 5,000 square feet.” The number of floor plans will be streamlined from eight to three.
Insiders agree that the firm’s overall direction makes good retail sense.
“They have a good core customer group that’s used to shopping with them at malls, so for them to go away from that doesn’t make sense,” said Rotonen of Southwest Securities. “But to expand on that, and to have more stores in lifestyle centers, or high-end strip centers in higher end neighborhoods — some of those would be ideal locations. They’ve tried it here in Dallas, and it’s been very good for them.”
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