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A STORE OF ITS OWN

DANISH APPAREL CHAIN BLUE WILLI’S EXPLORES OPERATING ITS OWN STORES IN THE MIDWEST

By Hortense Leon

Blue Willi’s USA, the American subsidiary of a family-owned Danish apparel company, is opening some boutique-style stores, but it is not shouting from the rooftops about it.

The company has opened just five of these 1,000-to-2,000-square-foot stores over the past few years in American markets such as Iowa and Minnesota. Two are company-owned, and three are franchised. The company plans to open two more over the next 12 months, in the Chicago area and Denver. At that leisurely pace, the Lacey, Wash.-based chain is unlikely to become a mall fixture anytime soon. And that’s fine with Blue Willi’s.

“We are mainly a distributor,” said Carlos Martin, president of Blue Willi’s USA. “We never thought we’d become actual retailers. But we wanted to become more aware of demands and activity at the consumer level as well as help build a brand image.”

Blue Willi’s clothes — casual yet pricey shirts, pants, skirts, sweaters and jackets made of natural fibers — are distributed in 25 countries and designed to appeal to women between 40 an 70.

But though the stores may remain a rare sight in the U.S., at least, management intends for the clothing to become familiar to shopping center patrons. The company is providing some select retailers with wall units to be used exclusively for displaying Blue Willi’s apparel. These so-called shop-in-shops are offered at no charge to those retailers that sell the most Blue Willi’s apparel.

“We are looking for the low-hanging fruit: existing [retailers] who want to graduate to having shop-in-shops,” said Martin. He expects to set up two more of these units, which generally take up about 250 square feet, over the next 12 months. There are currently 75 Blue Willi’s shop-in-shops in the U.S.

The company has been less tentative with its boutiques in Europe or Asia, but its caution is understandable, says Howard Davidowitz, chairman of Davidowitz & Associates, a New York City-based retail consulting firm. Still, the risks involved in setting up a shop-in-shop are significantly less than those that come with opening a boutique, says Davidowitz, noting, for one thing, that Blue Willi’s can feed off the host store’s advertising. “Plus, because [the concept stores] are a new venture in this country, it is good to start slowly,” said Davidowitz.

To be sure, the Blue Willi’s franchise strategy yields certain benefits. Franchisees sign the store lease and make an initial investment of about $250,000, says Gayle Appel, sales representative for Blue Willi’s in Florida.

And if a franchisee cannot sell the entire inventory, the company will allow item exchanges but not returns. “If you have a franchise store, the risk is greatly reduced, but a shopping center developer may not take the signature of the owner alone,” said Davidowitz. “He may insist on a countersignature by Blue Willi’s.” With a freestanding store, that is less likely to be the case, he says.

The decor for Blue Willi’s concept stores and shop-in-shops consists of honey-colored hardwood floors and display tables, plus white stone panels on the walls. The clothes — with a U.S. price range of $80 to $600 — are simple garments made of cotton, wool, flax or silk. Many of the items come in the company’s signature indigo blue and are dyed using a proprietary process that allows them to age well over time, says Martin. The durable fabrics also contribute to the long life of Blue Willi’s clothes, he says.

But though Blue Willi’s duds may have a classic, upscale appeal, there is massive competition for this price point and age group from the likes of Abercrombie & Fitch, American Eagle Outfitters and Gap, Davidowitz says. Fortunately, the company’s indigo knitwear sets it apart, he says. If an apparel company lacks a narrow niche, it is hard for it to distinguish itself among the many retail brands, many of which come from Europe, such as Spain’s Zara from or Sweden’s H&M.

Three of the existing Blue Willi’s concept stores are in malls — in Bellevue Square, outside Seattle; Galleria, in Edina, a suburb of Minneapolis; and West Glen, in Des Moines, Iowa — and there are freestanding stores in Naples, Fla., and Sausalito, Calif. The stores in Edina and Bellevue are company-owned, the others are franchises.

Beyond its own stores, Blue Willi’s has about 300 retail outlets in the U.S. These are independent stores, with and without shop-in-shops. Many of these are boutiques in resort areas; others are in malls or in grocery-anchored shopping centers. The company also has some department store business, says Martin. “We deal with Nordstrom on and off, although not in all seasons,” he said.

Blue Willi’s sells well in the Midwest, says Martin, which he attributes to the region’s conservative taste in clothes. “In Edina, Minnesota, the Blue Willi’s concept store is in the small, exclusive mall called Galleria, which is not huge, but is upscale,” he said. “We try to end up in places with the right kind of people who have money.”

On the franchise side the company looks for retailers that have already sold Blue Willi’s merchandise through their own stores and have good staff and strong credit ratings.

As for the shop-in-shops, the company provides those retailers with marketing materials, advertising programs, special inventory prices and a range of other incentives. To be eligible, a retailer must sell over $10,000 worth of Blue Willi’s merchandise per six-month season, says Martin. Ambiance is important too. “If the store has a country-club setting with dark wood, that wouldn’t go well with Blue Willi’s, because our fixtures are light-colored,” said Martin.

The shop-in-shop retailer commits to buying a certain amount of merchandise, and that wall unit can accommodate $15,000 worth of product (wholesale), says Martin. Further, Blue Willi’s reserves the right to pull the fixtures if a store fails to maintain a certain volume of business, though the company is careful to distinguish between seasonal fluctuations and long-term declines.

Martin says the company will establish more concept stores in the U.S. in due time, though there is no rush. “In Europe, Japan and Canada, [concept stores] have been more the result of a fanatical following than a concerted effort on our part,” he said. “We are responding to demand.”

None of this need perturb landlords. What with shop-in-shops and other retailers selling high volumes of Blue Willi’s merchandise, they could virtually be hosts to Blue Willi’s stores anyway. They just may not realize it.