Boscov's Rolling out Expansion

The Baltimore Sun

As Boscov's department store chief Kenneth S. Lakin stood last week among the buzz of workers preparing to open three new stores in the Baltimore area, he was reminded of advice an uncle once offered while building the 95-year-old family retail chain.

"You can always get married again," Al Boscov once said. "But you can only open a store once."

Boscov's executives, in the midst of the company's largest expansion in its history, are bringing new stores to the Baltimore area Oct. 28 in Marley Station Mall, Owings Mills Mall and White Marsh Mall with $12 million in renovations. The Reading, Pa.-based department store chain has a store in Westminster but the opening-day weekend around Baltimore will help Boscov's further introduce itself to a market where it's still relatively unknown.

"They have one shot to really connect with area shoppers," said Amanda Nicholson, an assistant professor of retail management at Syracuse University. "It's just so competitive nowadays that people will walk in and have a look, and if they're not happy they won't come back. We're very critical because we have so much choice."

Boscov's expands in the Baltimore market during a difficult time for department stores, which have lost market share to high-end retailers on one end and discounters like Wal-Mart and Target at the other. Boscov's old-time charm in selling everything from appliances to apparel is a throwback to a business model that eventually suffered at several chains, including Hecht's and Marshall Field's. And launching the Baltimore expansion in the holiday season is a challenge because it forces Boscov's to stock up on inventory in a market where it doesn't know its customers' shopping habits as well as it does in other markets.

But the privately held company looks at its Baltimore effort as an opportunity to expand in a market it has long coveted. Described by some retail analysts as a step above J.C. Penney with merchandise and below Macy's in terms of prices, company executives believe they can fill a niche that is underserved in Baltimore.

Although some may call it old-fashioned, Boscov's executives believe their strength is the company's one-stop-shopping philosophy. The design of the stores is no more unique than its competitors. But Boscov's has a quarter more departments than a Macy's or a J.C. Penney.

A toy department is built next to children's clothing. A shopper can buy homemade fudge upstairs and Anne Klein jeans downstairs. There's a service department for appliances. Boscov's also carries mattresses and curtains, items many department stores no longer sell. Lakin said its prices are better than its high-end competitors' and its merchandise is of better quality than at discounters.

Being different

"You almost always look over your shoulder to see what your competition is doing," said Lakin, a grandson of the company's founder who is now Boscov's chairman and chief executive officer. "You have to make yourself different so the customer doesn't want to go somewhere else in the mall or down the road."

It's a concept that hasn't worked for many other retailers. Today's consumers will go wherever the price and location works best, retail analysts said.

"They do have some obstacles," said Nicholson, the Syracuse professor. "I wouldn't pretend for one minute that it's going to be an easy job. There is a very competitive landscape in retail in general and even more so in the department store area. The department store has been squashed between the growth in the specialty area and the growth in the discount area, both of whom are vying for its customers."

Boscov's recipe dates back nearly a century to Solomon Boscov, a Russian immigrant who opened his first store in the coal town of Reading, Pa. The chain, which at the end of the year will have 50 stores in six states, has prospered mainly by sticking to mid-size cities that offer consumers fewer shopping choices and competition.

Adjusting to change

Its life changed this year when the department store chain closed a deal with Federated Department Stores Inc. to buy 10 stores that Federated was unloading as a part of its recent merger with May Department Stores Inc.

As a result of the deal, Federated also converted all the area Hecht's stores into Macy's. The 11-store expansion this year and next - besides the Federated spots Boscov's opened a new store in Altoona, Pa. - will increase locations by almost 30 percent.

In the aftermath of Federated's changes, Boscov's acquired properties in areas such as Pittsburgh and Baltimore that are larger retail markets than the company's typically smaller locales. While most department store companies have morphed into huge national companies, Boscov's had grown more slowly, opening a few stores a year from New York to southern Virginia.

Boscov's has remained distinctive by not following the trends of traditional department stores, retail analysts said. Local names such as Woodward & Lothrop and Hutzler's have disappeared over years of consolidations and mergers. Boscov's has fended off buyout offers to keep the business in the family.

Lakin was upbeat as he checked on the progress at the White Marsh store recently. Dozens of employees carted racks and boxes off tractor-trailers lined up in the parking lot. Workers filled displays. In one corner, two women folded towels. In another, a trio of women unpacked Christmas trees and ornaments. The site manager pointed out a '70s-style chandelier above the escalator that Boscov's has decided to keep. It was left from the former Macy's.

"Customers will come in and look for this," he said.

Lakin said that expanding in the market makes him both nervous and excited.

"My worst fear is that on opening day, nobody shows up," he said.

But Lakin said the company has been studying the Baltimore market for years - it opened its Westminster store in 2003. And Boscov's once came close to signing a deal for space in Owings Mills, but the Rouse Co., which owned the mall at the time, backed out at the last minute in favor of Lord & Taylor, Lakin said.

Boscov's Carroll County location has enjoyed success at TownMall of Westminster. It's in an area where there are a limited number of shopping choices.

"I'm not sure people knew who they were at first," said Denise Beaver, deputy director of the Carroll County Department of Economic Development. "But they were active in the community from the start. My impression is that they've been very well received and people do shop there a lot."

Lakin said Boscov's would focus on providing service that is missing from most stores today. For instance, the department store will fix appliances bought at Boscov's.

The stores will also have many in-store sales promotions and, in an ode to Hecht's, it will offer eclectic coupon deals.

Boscov's was once known for its dowdy fashions, but has improved its merchandise mix over the years. It sells most major brands, such as Calvin Klein and Tommy Hilfiger.

"Boscov's is a pretty good, scrappy, department store chain," said Erik Gordon, an assistant professor of marketing at the Johns Hopkins University. "They're well-positioned in terms of price. They're not super-expensive and they're not cheap. Boscov's has invested a lot of money to get away from that old small-town store they used to be, to be just as good as any other retailer."

The chain spent more than $4 million on renovations at each of the new Baltimore stores. The dark walls of the former Macy's were painted a bright white. Beige tile was replaced with white tile and the amount of light was doubled.

"The whole store was this dark dungeon," Lakin said. "When people walk into the store we want them to see something that is completely different from what was there before."

Opening at holidays

The Boscov's stores are opening just as the Christmas holiday season begins, the time of year when retailers bring in their biggest profits.

Some analysts said this could be risky from the operations side, given the larger inventory that stores must possess to meet consumer demands. Lakin said it's the time to capture a large number of shoppers and that Boscov's is small and nimble enough to deal with any problems that could arise.

Constantly updated technology will help them figure out quickly where the kinks are and what is selling and what is not, he said.

Boscov's has been introducing itself to customers through mailings. It will also bring people out with advertisements in newspapers and on television and radio.

Those familiar with Baltimore's retail market said Boscov's has a chance to survive because its moderate prices offer a contrast to the more upscale Macy's.

"They've spread their wings and now they're facing some formidable competition," said Mark Millman, founder of executive search firm Millman Search Group. "But they have a good story to tell. They'll do fine in this market."

Charmaine Lawrence, general manager at Marley Station, said many customers are familiar with the Boscov's in Pennsylvania and excited about the opening.

"It certainly will be a big draw for the mall," Lawrence said.

The Boscov's name and logo erected outside the new stores has already prompted curious reactions from area shoppers unfamiliar with the chain.

"Never heard of them," Sheron Hopkins said while having lunch with a mothers' group at Marley Station last week.

That wasn't the case with Rhonda Androsky and her two friends, who were shopping at Marley Station and discussing the new store.

"We'll just have to wait and see," said Androsky, a Severn office manager. "I always look forward to a new place to shop."

Karen Sadangis said her relatives in Delaware are big fans of the store. "I'm thrilled it's coming," she said. "My daughter-in-law thinks it's the best thing that ever happened."

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