Federated Department Stores plans to convert a former Lord & Taylor store in Delaware into a showcase for catalog and online retailers that traditionally have not had storefronts.
Called The Epicenter Collection, the concept will offer 180,000 to 200,000 square feet of retail mall space to non-bricks-and-mortar retailers. In exchange for the lease, Federated will acquire a stake in the venture and sit on the developer's board of directors.
"At this point, we're looking at a test in one store to see how it works," Jim Sluzewski, spokesman for Federated, told the Cincinnati Enquirer. "This is a new concept. It's interesting and innovative."
The former department store in Newark, Delaware, will be converted to the new format during the next year and open for customers by fall 2008.
The Gordon Group of Greenwich, Conn., which will develop the Epicenter Collection through its Convergent Retail division, has created high-end entertainment retail before, including The Pier at Caesars in Atlantic City, the Beverly Center in Los Angeles, the San Francisco Center, and Bridgemarket in New York City.
"In a multi-channel world, consumers expect merchants to have retail stores," said Antony Lee, chief executive of Convergent Retail, told the Cincinnati Enquirer. "Epicenter provides online merchants and brands with a way to open successful stores."
Epicenter Collection expects up to 60 e-tailers, catalog companies or brands to congregate under the roof of the former department store with each merchant operating a distinct location. No tenants have been announced.
In addition to traditional point-of-sale stations, Epicenter will use mobile point-of-sale devices to mimic the online and catalog buying process. Using Epicenter's proprietary hand-held, self-checkout device SpreeGo, consumers will be able to shop Epicenter merchants with the same point-and-click functionality they have on the web. Shoppers will be able to order products for free home delivery or purchase items to take home.
Mr. Lee told Multichannel Merchant that the typical cost to open a store within Epicenter Collection will range between $50-$75 a square foot, and is about a third the cost of traditional retail space within a mall. Up to 100 Epicenter Collection sites may be built if the pilot project is successful, backers said.
The Epicenter Collection effort comes as mall operators and their anchor department stores look for ways to rebuff challenges from smaller lifestyle centers. In part because of those centers, mall customer counts have fallen by 30 percent in the past five years, Britt Beemer, chairman and founder of America's Research Group, told the Cincinnati Enquirer.
"In some markets, it's as high as 38 percent," Mr. Beemer said. "The more lifestyle centers that open, the more that rips the fabric away from the mall, particularly with people who are under the age of 35."
The plan to marry online and catalog retailers with bricks-and-mortar stores may also reflect challenges store landlords like Federated are having finding tenants for former department store buildings.
"That may be the reality of it all," Mr. Beemer said. "Somebody had to come up with a unique concept to fill that space."
Discussion Questions: What do you think are the opportunities and the challenges in The Epicenter Collection web/retail concept? Do you think such a concept can revive mall traffic? Also, what do you make of Federated's investment?