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New outlets

Chains look to liquidation units to keep fresh goods flowing

By Donald Finley

Reprinted from Value Retail News

Luggage retailer Bentley's opened its sixth clearance center, this one in the new Great Lakes Crossing in November.

Finish Line, Bentley's Luggage and Sempliner's Tuxedo World are three chains that are opening clearance stores in direct proportion to their full-price growth. These three retailers opened liquidation stores in Taubman Co.'s 1.4 million-square-foot Great Lakes Crossing, which opened near Detroit in November.

A value-sector newcomer, part of Taubman's leasing strategy is to draw chains that tenant its upscale malls into its value megamalls with clearance concepts now made familiar by JC Penney, Neiman-Marcus, and others. Profiles of these three retailers follow.

Business has been so good for Finish Line, an aggressively expanding chain of full-price athletic shoe and apparel stores, that its merchandise department wants the company to open more clearance units. The Indianapolis-based company already operates six clearance units, four of them in value malls, to dispose of excess and out-of-season inventory from its more than 340 full-price stores in 39 states.

Finish Line management is trying to determine the best mix between clearance and full-price units.

But with the chain expecting to open as many as 65 full-priced stores in 1999, more clearance units will be needed, said Steve Schneider, senior vice president of finance for Finish Line. The chain opened 53 full-price stores last year, and this year's total of new stores will be about 60.

Schneider said the 22-year-old company is still trying to determine the best ratio of clearance units to conventional stores. Currently, it's roughly one clearance unit for every 56 stores.

"That's a hard ratio to determine," Schneider said. "But our merchandise department [headed by Joe Wood, senior vice president of merchandising] is pushing us to have more clearance stores."

Finish Line's newest clearance unit is in Great Lakes Crossing, and Schneider said as many as five additional clearance units may be opened this year, including some in outlet or value centers, "because that is where consumers are looking for the good buys and where we can move some product."

He said prices in the clearance units are 30% to 75% below regular retail.

Four of the six existing clearance stores are in value centers: Great Lakes Crossing in Auburn Hills, Mich. (15,000 square feet); Plano (Texas) Market Square (7,813 square feet); Gurnee (Ill.) Mills (9,437 square feet); and the Great Mall of the Great Plains in Olathe, Kan. (10,748 square feet). The other two are in the Eastgate Consumer Mall in Indianapolis and Consumer Square Mall in Reynoldsburg, Ohio.

The clearance stores are not designed to be profit centers, Schneider said.

"We look at clearance stores as very important for moving product," he explained. "We're not going to be in business in these stores trying to make a lot of money. Our key concern is to keep costs as low as possible because we know we're going to lose money. Once we move inventory into clearance centers, many times it is already at cost or below."

Schneider said the Finish Line stores in Gurnee and Olathe are the exceptions because "we put a fair amount of first-line products in these to make a little bit of money."

Finish Line's predecessor company, Athletic Enterprises, began in Indianapolis in 1976 as an Athlete's Foot franchisee operated by two boyhood friends, Alan Cohen and David Klapper. The friends, seeing a bright future in the fledgling niche, launched Finish Line as their own retail company in 1981 and, in 1982, brought in as full partners Larry Sablosky (another boyhood friend), and Dave Fagin, a manufacturer's rep who had been selling to them.

Cohen is now president and CEO of the company and the other three partners are executive vice presidents. The publicly traded company's annual sales, according to Wall Street estimates, are about $540 million.

Bentley's, an aggressively expanding retailer that is already the largest chain of luggage and business leather-goods stores in the United States, opened its sixth clearance center, in Great Lakes Crossing in November.

"We thought the Detroit area would be a great market," said Kenny Young, president of Miami-based Bentley's. "It just made sense for us to open at Great Lakes Crossing."

As Bentley's continues to expand beyond its current 112 full-price stores in 22 states and Puerto Rico, it will open additional clearance units as needed to sell discontinued, off-season and other excess inventory at 10% to 70% off retail, said Young, son of Stanley Young, the company's late founder.

The chain opened five new full-price stores this year and plans to open 10 to 15 more units in each of the next two years. All but one of the full-price stores are mall-based, with 51 of them in Florida and eight in Michigan.

There are also four Bentley's Luggage Outlet stores in three of The Mills Corp.'s megamalls: Gurnee (Ill.) Mills (two units); Potomac Mills in Woodbridge, Va.; and Sawgrass Mills in Sunrise, Fla. Bentley's also has a unit in another value megamall: Belz Enterprises' 100 Oaks mall in Nashville, Tenn.

Young said the 4,000-square-foot Great Lakes Crossing unit is larger than most of the company's stores. The full-price units average about 2,500 square feet and the other five Bentley's Luggage Outlet stores are a little larger than that.

Sales per square foot average about $375 in Bentley's full-price stores and slightly more in the clearance units, Young said.

The chain specializes in luggage, business cases, small leather goods and gifts from leading international manufacturers such as Atlantic, Bosca, Cross, Hartmann, Kipling, Mont Blanc, Samsonite, Travelpro, Tumi, Waterman and Zero Halliburton. Price points range from $10 to $600 for luggage and from $40 to $500 for briefcases.

Most of the retailer's full-price stores are Bentley's Luggage & Gifts units, but last year the company launched two new concepts: Bon Voyage, described as "a high-tech travel store," and Kipling, which sells "the hip, hot fashion brand of backpacks, handbags and travel gear from Europe."

In addition to Florida, Michigan and Puerto Rico, Bentley's has full-price stores in Alabama, Arkansas, Delaware, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia and Wisconsin.

The roots of the company go back to 1947 when Stanley Young began working in his father-in-law's luggage store, the Pullman Bag Shop, in New York City. In 1961, Young and his wife Stella bought Steinmullers luggage in the Bronx and, in 1965, bought a second luggage store in Manhattan and renamed it Stan-Stell Luggage.

In 1975, the couple sold Stan-Stell Luggage and retired to Miami, leaving their son Kenny to operate Steinmullers Luggage in New York City. But in Miami, the elder Young re-entered the industry by becoming a sales representative for a large luggage manufacturer. One of his accounts was Bentley's, a chain of 12 luggage stores that was having financial difficulties. Stanley Young acquired the 12 stores and pulled them out of their financial problems, leading to the growing chain that exists today.

Speaking about Bentley's corporate philosophy, the younger Young said, "Our aim is to become -- in fact we already are -- the premier luggage, travel goods and business case dealer in the United States. We hope to get even better than we are now."

Sales of the privately held company are average about $100 million per year, he said.

Sempliner's Tuxedo World, a chain of 29 full-price stores in three Midwestern states, has opened its first value-oriented unit, in the new Great Lakes Crossing mall in Auburn Hills, Mich.

The Great Lakes Crossing unit sells and rents tuxedoes, vests, cummerbunds, ties and other formal wear and accessories at about 30% below prices in Sempliner's Tuxedo World's other stores. Top brands include Chaps Ralph Lauren, Perry Ellis, Oscar de la Renta, Christian Dior and Pierre Cardin.

The new clearance store, which opened along with the mall, is 2,400 square feet, about twice the size of Sempliner's Tuxedo World's full-price units, which are scattered throughout Michigan, Indiana and Ohio.

"We tend to think this store will be a huge success," said Alan LaFave, marketing director for Sempliner's Tuxedo World. "But we would like to see how well this one goes and adjust it as needed before we decide if there is a need for additional off-price stores."

LaFave said Bay City, Mich.-based Sempliner's Tuxedo World decided to open a store at Great Lakes Crossing after he and other officials visited Glimcher Realty Trust's 1.2 million-square-foot Great Mall of the Great Plains in Olathe, Kan., and saw how well outlet and other value stores did there.

Although most of the formal wear carried by Sempliner's Tuxedo World is for men, marketing efforts for rentals are aimed largely at women age 18 to 34 because more than 85% of brides "are making most of the decisions for weddings," LaFave said. For retail sales, however, marketing is aimed at men age 25 to 54.

Some sales are to women who must wear formal uniforms when they work as servers in fine hotels and private clubs. Some children's tuxes are also in stock for rental to boys who have roles, such as ring bearers, in weddings.

Tuxedo World had its beginnings in 1886 when William Sempliner opened a soft goods and general store in Bay City, Mich. In 1965, descendants of the founder branched out into the formal wear business by opening the first Sempliner's Tuxedo World in downtown Bay City.

E. William Leifer, a grandson of William Sempliner, is president of Sempliner's Tuxedo World. The vast majority of the chain's business was rental until recent years, when it began expanding its retail sales of tuxedoes and accessories. It also wholesales to other tuxedo retailers throughout the Midwest.

"We have now started to look seriously into retail as a big part of our business and how profitable it might be," LaFave said.