Department Stores Look For Growth Outside The Mall

Sep 27, 2004

By George Anderson

Department store chains such as Sears, JCPenney, Dillard’s and Foley’s have decided their path to growth leads outside the mall.

After having watched for years as competitors from Kohl’s to Wal-Mart siphoned off previously mall-bound customers, the department store chains have embarked on expansion programs
focused on standalone locations and placement in open-air shopping centers.

Larry Costello, a spokesperson for Sears told the Dallas Business Journal, “What we are finding is that growth is in the suburbs, and we want to be close to the customers,
so we are look to grow off-mall. This is not a mark against malls, because people still do shop at malls, but we are looking for ways to grow organically and through acquisitions.”

Sears recently purchased 45 Kmart locations in its expansion move. JCPenney’s plans involve building up to 100 new standalone units over the next several years.

Moderator’s Comment: The move to off-mall locations suggests department stores see location as one of the biggest,
if not the biggest, impediment to sales growth. Are off-mall stores the answer department stores have been looking for?

JCPenny chief executive Allen Questrom’s strategy for standalone stores seems in some ways similar to how Wal-Mart is using Neighborhood Markets to support
its Supercenters.

The Dallas Business Journal quoted Mr. Questrom telling an audience at the company’s annual shareholders’ meeting in April that the standalone locations
give the chain the ability “to go back to cities that we believe are growth cities in America and fill them in that we didn’t properly fill in, in the past.”

George Anderson – Moderator

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