- The Washington Times - Wednesday, May 31, 2006

Attention shoppers: Your anchors are changing. It’s out with Sears, Hecht’s and J.C. Penney and in with Target, Whole Foods and Barnes & Noble.

Anchors, the big name stores that bring customers to the small retailers in shopping centers and strip malls, are changing in response to rapid consolidation of traditional department stores and the growth of alternative shops.

“Most mall owners have woken up to the fact that the department store industry isn’t the traffic driver in 2006 that it was when many malls opened,” said Paco Underhill, president of Envirosell, a New York retail research and consulting firm. “The higher end the shopping mall is, the higher end the department store is, the less the department store is depended on for traffic.”

A store like Neiman Marcus can feasibly get by on 10 good customers spending $50,000 each for a day, he said, while discounters and grocery stores, which need many more customers, put more effort into drawing foot traffic.

These days, foot traffic comes from discounters such as Target, high-end restaurants, grocery stores, and big box stores such as Best Buy, Crate & Barrel, and Bed, Bath and Beyond.

“Those tenants are generating higher sales per foot than department stores,” said Grant Ehat, principal at JBG Rosenfeld Retail’s Chevy Chase office. “The department store era is — I hate to say it — over.”

An upscale restaurant, such as a 15,000-square-foot P.F. Chang’s China Bistro Inc., can generate up to $10 million in sales, or $667 per square foot, Mr. Ehat said. In comparison, an 80,000-square-foot department store does sales of about $250 per square foot.

Local shopping center expansions and construction have included the new anchors:

• Tysons Corner Center opened anchor tenants Barnes & Noble and AMC Movie Theatre late last year as part of a 362,000-square-foot expansion of 20 stores in a space that used to be a J.C. Penney store.

• Westfield Annapolis shopping center is in the early stages of a 240,000-square-foot expansion that is slated to include a Williams-Sonoma anchor and two mini-anchors — stores that are supposed to draw large numbers of shoppers but aren’t as big as traditional anchors.

• The two shopping centers under construction in the District, DCUSA in Columbia Heights, and Skyland Shopping Center in Southeast, both plan to open a Target. (Skyland has a verbal agreement from the retailer.)

• In Annapolis, the Towne Centre at Parole is under construction with a Whole Foods and Target on the drawing board.

Consumer demand is driving the move to new anchors, according to some in the industry.

“There’s been a shift in terms of what the customer is looking for,” said Carol Kaufman-Scarborough, a professor of marketing at Rutgers School of Business who studies retail trends. Shoppers want to check off everything on their to-buy lists at one stop, she said.

A stop at Bed, Bath and Beyond or Linens ‘n Things, stores dubbed “category killers” because their vast selection and stock overwhelms the comparatively small bedding department at nearby department stores, is more likely to have the product a shopper is looking for than a department store.

“Part of the issue is that the demand for some of these category killers is still unfulfilled in many neighborhoods,” said Cynthia R. Cohen, president of retail consulting firm Strategic Mindshare in Miami. “You would not say that the demand for department stores is unfulfilled.”

In the local shopping center boom of the ‘60s and ‘70s, developers needed big-name stores such as Sears to sign on to their mall before smaller tenants would agree to move in or any bank would lend money. The mall thrived with a strong anchor such as Montgomery Ward, Woodward & Lothrop or Macy’s, and failed if it closed.

Today, department stores are consolidating, closing down and, in some cases, shedding poorly performing stores.

More than 40 U.S. department store chains exist today only in memory, including Montgomery Ward, Woodward & Lothrop and, in September, Hecht’s.

Federated Department Stores Inc. acquired May Department Stores Co. in August, eliminating Hecht’s and 14 other regional chains while creating the largest department store company in the country.

Bon-Ton Stores Inc., a chain in York, Pa., acquired 31Carson Pirie Scott stores in the Midwest last year when it bought Saks Northern Department Store Group, but hasn’t opened a new store since late 2003.

Other companies such as Saks Fifth Avenue are selling their least-productive stores. The New York chain closed eight stores last year and plans to sell more.

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