Monday, November 06, 2006

AAHHH! Lord & Taylor to Leave NYC??

As some of you may have read here a couple of weeks ago, I am a BIG Lord & Taylor fan.
I just spotted this tragic article in Crain's this morning about the store leaving the city altogether. President Richard Baker claims they "want to be where people live, not where they work..." Did anyone tell him there are 8 million+ people in NYC? Sigh...well, in my view, it's really their ineffective marketing that is causing this drastic step to be considered. But it's that same ineffective marketing that made me like shopping there so much -- nobody knew where they were or what they were selling, so Guerillas could go in and feast on the treasures without hassle or bother! Alas...
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CRAIN'S New York Business
Lord & Taylor may abandon Manhattan
Suburban gains revive famous chain; smaller NY location possible
Published: November 5, 2006 - 6:59 am

Lord & Taylor's new owner may abandon New York City and turn the venerable retail chain's Fifth Avenue flagship into condominiums or office space.Private-equity firm NRDC Equity Partners, which bought the 180-year-old department store chain last month, had spoken publicly about reducing the flagship's retail space, but President Richard Baker now says he is considering more drastic plans. Purchase, N.Y.-based NRDC may move the store — a landmark on Fifth Avenue and West 39th Street for 92 years — to another Manhattan location. Or it could leave town altogether, moving its flagship to the suburbs."It's nice having a Manhattan store, but I wouldn't call it key," Mr. Baker says. "We want to be where people live, not where they work." He gave no timetable for making a decision.Although the idea of sacrificing their Manhattan foothold would give many retailers nightmares, Lord & Taylor's leaders have lost little sleep over the possibility. Chief Executive Jane Elfers spent the past six years remaking the once-dowdy department store chain into a popular shopping destination for middle-aged women living in smaller cities and suburban areas. Cleanup womanSince landing the top spot in 2000, when the chain was owned by May Department Stores, Ms. Elfers has closed underperforming locations, replaced 80% of the product offerings to bring in higher-quality merchandise and improved customer service. She managed these tasks even as May prepared to merge with Federated Department Stores, which then sold the Lord & Taylor chain to NRDC for $1.2 billion. "We were never trying to imitate Neiman Marcus or Saks," Ms. Elfers says. "I'm looking for a different customer."As a result of the upgrades, Lord & Taylor's 38 stores are wowing soccer moms throughout the Northeast. The average customer is 41 and has $100,000 in household income, in sharp contrast to the norm six years ago, when the store's average shopper was over 50 with just $60,000 in income, Ms. Elfers says. In addition, sales have increased: In stores open at least a year, sales grew by about 8% in August and September, and about 5% in October. Lord & Taylor generated revenues of $1.6 billion in 2004, the most recent year for which data are available.Candace Cortlett, a principal of consulting firm WSL Strategic Retail, liked what she saw during a recent visit to the New York City store."They had a great mix of urban trendy and suburban classic," Ms. Cortlett says. "I was really impressed and look forward to going back."Even so, the flagship continues to falter. The Fifth Avenue giant generates just 9% of the chain's sales. By comparison, the flagship for Saks Fifth Avenue generates 20% of that retailer's revenues.The 600,000-square-foot Lord & Taylor would need a serious makeover to compete with New York's plethora of high-style retailers. NRDC Equity Partners, a joint venture between National Realty & Development Corp. and Apollo Real Estate Advisors, may still decide to simply trim the store to a more manageable 200,000 square feet and build condos above it. Other possibilities include relocating the flagship to a smaller site in the city, opening a smaller store here and moving the flagship to a suburban spot such as Scarsdale, and leaving New York City altogether. If Lord & Taylor were to leave Fifth Avenue, few New Yorkers would miss it. The location is already out of the way for many residents, and tourists rarely shop in the neighborhood. Though locals who haven't been to the store in a while might like the changes — the reduction in clutter, the fresh brands and better service — they're more likely to shop at Macy's or Bergdorf Goodman. "Most New Yorkers don't even know Lord & Taylor's exact cross streets," says Marshal Cohen, chief analyst at trend-tracking firm NPD Group Inc.Clamoring for spaceNRDC could make a lot of money by redeveloping the Fifth Avenue site and setting aside retail space for lease. Scads of retailers are begging to pay sky-high rents to gain a foothold in Manhattan. Top Shop, a U.K.-based department store, and Neiman Marcus are both rumored to be looking for space in the city. Regardless of what happens to the Lord & Taylor flagship, estimated to be worth at least $300 million, NRDC plans to spend a lot of money marketing the chain, expanding into new locations and sprucing up existing stores. "We bought the company because we're big supporters of the brand," Mr. Baker says. "We're very excited about the future." Comments?

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