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Big hopes for ministores

The Baltimore Sun

Retailer Sears has struggled for years to get shoppers to go to its stores for more than drills and refrigerators.

But remakes pitching the "softer side of Sears" didn't do the trick

So now Sears is trying another tactic -- creating complete Lands' End stores-within-a-store -- in the hope that it can capitalize on the brand.

Sears' latest strategy is an expansion of a sales tool that has been used by other retailers for at least two decades.

Department store chains such as Macy's were among the first to use the concept, setting up designer brands such as Ralph Lauren Polo in their own sections of a store. The cosmetics store Sephora recently set up small shops inside JCPenney stores.

Cellular phone companies such as Sprint and Verizon also have widely used the concept, with ministores in discount warehouse clubs and electronics chains such as RadioShack. GNC sells its nutritional supplements in ministores at Rite Aid.

Sears is taking the idea further. At its store in Hunt Valley Towne Centre, the retailer has dedicated about half of the first floor, about 24,000 square feet, to Lands' End, a preppy outdoor and apparel brand. Pillars are painted in Lands' End trademark navy blue and white. There are men's, women's and children's departments, and the ministore has its own checkout. Clerks wear navy blue Lands' End polo shirts.

That's a big shift. When Sears bought the Wisconsin catalog and Internet retailer in 2002 to bolster apparel sales, it scattered Lands' End merchandise through its stores.

"Now it has one focus," said Michele Casper, Lands' End director of public relations. "You don't have to hunt and peck all over the store to find Lands' End merchandise."

Department stores say the ministores give consumers another reason to shop at their stores.

Companies such as Polo, Sephora and Sprint say setting up in larger stores gives them access to prime real estate. They also said their products sell better in ministores than if the merchandise were scattered around various departments.

"It gives them a large number of locations they couldn't have gotten at the same level if they had done it themselves," said Lynn Gonsior, executive vice president of Design Forum, a retail consultant that has helped brands with store-within-a-store concepts. "And they obviously believe it will draw a customer that wouldn't shop their product today."

Analyst Howard Davidowitz said ministores work best when the brand is unique to the retailer. For a while, the concept stopped working in department stores because the stores were all carrying the same brands. But now stores are signing exclusivity agreements. For instance, Tommy Hilfiger recently signed a deal to sell only in Macy's.

Davidowitz said the ministores need to stand out.

"The supplier has to be doing something special," said Davidowitz, chairman of Davidowitz & Associates Inc. a national retail consulting and investment banking business.

The ministores, which once amounted to little more than signs promoting a brand, have become much more extravagant in recent years.

Under Armour sets up ministores in Dick's Sporting Goods that include dressing rooms that look like gym lockers. Under Armour mannequins have the muscular physiques of football players and other athletes, rather than waiflike models. Pictures of athletes featured in company television commercials are suspended from the ceiling.

The ministores let Under Armour tell its story, said Steve Battista, Under Armour vice president of marketing.

"It's grown more upscale, and more money is spent on furnishings and creating a shopping experience," David A. Fields, managing director of Ascendant Consulting LLC, said of the store-within-a-store concept.

The Lands' End store at Sears in Hunt Valley and six other stores around the country are double the size of the first ministores, which the retailer began opening three years ago.

It has smaller versions of the store-within-a-store concept at The Mall in Columbia, White Marsh Mall, Westfield Annapolis Mall, Harford Mall in Bel Air and Marley Station Mall. The Sears Grand in Ellicott City also uses the concept.

Sears, once a retail juggernaut, would not provide details on how well the Lands' End ministores have worked.

"We don't speculate and talk about strategy," Sears spokesman Kim Freely said. "All I can say is that Lands' End has resonated very well with our customer."

Analysts said Sears' continuing weak sales -- the company announced a restructuring and the departure of its chief executive officer last month -- indicate that Sears might be depending too much on Lands' End.

"My opinion is that it doesn't work to the extent that the company expected," said Charlie O'Shea, an analyst at Moody's Investors Service who tracks Sears. "The company hasn't been able to get together a coherent apparel strategy for a while."

But O'Shea said the expansion of the Lands' End shops is not necessarily a bad strategy.

"It's always been a real solid brand," O'Shea said. "Given the fact that they're suffering in apparel and Lands' End is the best thing they have, they should try to get what they can out of it."

Sears shoppers at Hunt Valley Towne Centre called the Lands' End shop a plus. They said they like the high quality of the clothes.

Tracey Gill, a 36-year-old clinical research assistant, said the store-within-a-store is easier to navigate.

"Before, you had to walk around to get stuff," said the pregnant Gill, who was buying a sweat shirt and pants to wear to the hospital when it is time to give birth. "This is much better."

Janel Marvel, 37, of Hampstead said she likes being able to buy the clothes in person and not from a catalog.

"When you get it from a catalog, you don't always know what you're getting," she said.

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