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Boscov’s Keeps Things in the Family

BY CSA STAFF

Albert Boscov, chairman and CEO of Boscov’s Department Stores, began his retail career at the ripe age of 6 when his father Solomon Boscov, the company’s founder, ‘hired’ him to catch flies in the family-owned store in downtown Reading, Pa. Little Albert didn’t have to travel very far: The store, founded in 1911, was located upstairs in the building where he and his family lived. 


Today, Boscov’s is a 39-store chain with doors in five states. It is one of the few family-owned regional department store chains in the country. It also is one of the last remaining full-service department stores. Its merchandise offerings include clothing, accessories furniture, toys, candy, housewares and electronics. Stores also feature salons, restaurants, and even catering and travel services. 


Given its long history, it’s not unexpected that Boscov’s has had its ups and downs over the years. But its darkest time occurred back in 2008, when the chain found itself on the verge of collapse. Pushed into bankruptcy from rapid store expansion during an ailing economy, it was headed for liquidation. Albert Boscov had retired in 2006 and cashed out his holdings to pursue other interests, including starting a tech firm, Directlink, and philanthropic work for the City of Reading. However, he could not sit idly by and watch the demise of his family’s firm. He and his brother-in-law Edwin Lakin, the former president, both came out of retirement and jumped in to fight to save the company. In the end, a Delaware court approved a hard-won mix of some $300 million in private and public financing, putting Boscov’s back in their hands.


Today, some three years later, all signs point to the chain remaining a family business. In April 2011, Albert Boscov’s nephew, Jim Boscov, was named vice chairman. 


“With Jim’s retail experience, intelligence and people skills, he was a natural choice,” Albert Boscov said in a statement at the time. “While I have no plans to retire, I want to assure our coworkers and business partners that Boscov’s will remain Boscov’s for many years to come.” 


Albert Boscov, now 82, talked to Chain Store Age recently about bringing Boscov’s back from the brink and how it is currently.

Why did you step in to save Boscov’s?

One, it was not wanting to see a company fail that I worked so hard to build. Two, for the many people I had hired over the years, I felt a responsibility to make sure they had jobs.

What did you do?

I was on the phone from morning till night. When you are trying to save something, you just go from one desperation thing to another. It was difficult getting banks interested. They saw us as a big risk. We convinced them by putting up about $50 million in family money, and with the help of then Governor Ed Rendell securing federal economic development loans through state and local governments. Six communities that we had long relationships with guaranteed $7 million each. We had to get them all to trust us that we would pay them back.


How is the company doing today?

We are getting ready to open our 40th store, in Monmouth, N.J. Hopefully, the company will hit $1 billion in sales again this year. I had reached that goal before I retired in 2006. But when I came back, sales were down to $850 million. We had a great year last year — up to $930 million.

We are now running sales at about $212 a square foot that went up from last year by about $14. Our customers have been remarkably loyal. After coming out of bankruptcy, that first December they bought everything we had even though our inventory and selection wasn’t great.

Boscov’s has a reputation for high employee retention. What is your secret?

We recognize that our people are important. They are the secret weapon. If you make them a part of the company and make sure they know what is going on, their loyalty is amazing. All of our buyers and assistant buyers attend a meeting every Friday. We go over inch-by-inch what our profits look like. Last year we were able to give everyone a raise, the first in a couple of years, along with a Christmas bonus. We also like to do picnics and parties.

How would you describe your management style? 

I talk to everyone — the buyers, the merchandisers, the people on the floor. I ask them, ‘Do you have any ideas?’ Our people are just as bright as me, probably brighter. I am not a great delegator, which is why I am up to my neck in paperwork. I grew up in a store where I did everything, from selling to doing the windows.

We like to hire people who like other people. People who care. We always do things for our customers to make it special. If a customer comes in three times a week, they get a bargain. If they come in 12 times a month, they get a gift. We try to have a little fun. If a customer brings anything, we always take it back. If we don’t have a size, the associate calls another store and has it shipped to the home. You won’t make a sale if you don’t have associates.


What role does e-commerce play in Boscov’s overall strategy?

It is a growing part of the business. The hard thing is learning how to be profitable in it, with the returns and shipping costs and all those things. This year, it will become our biggest store, surpassing our Atlantic City store, which does about $45 million. We don’t have a separate warehouse for online. We send the orders to the stores that have merchandise to fill it.

Are there any other family members in the business?

Yes. Jim Boscov, my nephew, is the vice chairman. Ken Lakin, director of operations, and Peter Lakin, executive VP, are the sons of Ed Lakin, my brother-in-law. I have three wonderful daughters, but they have chosen their own careers.

What does the future hold?

We will grow at the rate of one, maybe two stores annually as we did in the past.We need to grow sales 4.5% to have a good year, which would allow us to give everyone a raise and meet insurance costs and other bills. When the company went into bankruptcy, the bank forced it to cut people. Now we can start building back.

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Focus on: Del Mar Highlands Town Center

BY By Katherine Field Boccaccio

When Donahue Schriber made the decision to renovate its Del Mar Highlands asset two years ago, the objective was far different than the customary shopping center rehab. 


The 20-year-old Carmel Valley property was already the flagship of the Costa Mesa, Calif.-based developer’s portfolio, so the renovation wouldn’t be about fixing something that was broken, but rather improving an already successful center.


Changes in the area, such as a residential population that exploded over the 20-year span, average annual household income of $160,000, and 4.4 million sq. ft. of office space that sprang up within one mile of the shopping center, led Donahue Schriber to carefully consider how Del Mar Highlands could better leverage its setting.


“When you look at the evolution of the area, you can see the gaps that created opportunity for us,” said Elizabeth Schreiber, VP and general manager, Donahue Schriber. “We had a gem in the shopping > center but asked ourselves what we could do to make it stronger and better.”


Enter what the team calls the re-imagination of Del Mar Highlands. More than a renovation, the project became a re-imagining of what the center could be. In 2009, Donahue Schriber conducted intercept surveys, asking customers what they liked about the shopping center and what they didn’t. The responses led the developer to make several key changes.


Customers wanted better parking and traffic flow, so Donahue Schriber hired a civil engineer to find every inch of potential parking space. “By cutting into a planter by a foot and by adding retaining walls in the hill sides, for example, we were able to add 76 parking stalls,” Schreiber said. Unusable compact stalls were converted to full-size slots to accommodate the SUV demographic, and traffic flow was altered to provide access to a formerly off-limits parking field.


Customers wanted more restaurant choices, and the developer responded by launching a search for the best of San Diego. It brought in the Asian cowboy-themed Burlap, created by celebrity chef Brian Malarkey, which opened this July, as well as a lineup of additional new-to-market dining options.


And, finally, Del Mar Highlands customers wanted better gathering places. Donahue Schriber converted an existing amphitheatre into a two-tiered gathering area, and added fountains and an outdoor fireplace. 


Two grocery stores anchor Del Mar Highlands Town Center — Ralphs Fresh Fare and Jimbo’s Naturally — and Donahue Schriber brought in San Diego’s first luxury theater, which opened July 22. The new, nearly $7 million Cinepolis Luxury Cinemas was plugged into the former UltraStar Cinema, representing the Mexico-based operator’s first foray into the United States. 


The theater has proven to be a huge draw for the center, as guests enjoy a full bar, VIP seating in a luxury setting, high-end food options and full concierge service.


“We turned up the volume on everything we did,” Schreiber said. “Before we launched the re-imagination, Del Mar Highlands was a successful community daily-needs shopping center, and $20 million later it is a state-of-the-art destination and the premiere shopping center in San Diego.”


[email protected]

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della12134 says:
Jun-24-2013 12:20 pm

I really love this beautiful and artistic work. Thanks a lot for posting this precious blog post.I guess looking back at it, that may be true (or at least truthy) but writing about what we have now as if it was the only thing we could have had but it just took a while is what triggered my comment. William

della12134 says:
Jun-24-2013 12:20 pm

I really love this beautiful and artistic work. Thanks a lot for posting this precious blog post.I guess looking back at it, that may be true (or at least truthy) but writing about what we have now as if it was the only thing we could have had but it just took a while is what triggered my comment. William

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C.Floz says:
Nov-30-2012 11:59 am

It is particularly difficult to improve something versus renovating it. There is a big difference of the two. A bar has been set already and improving is trying to outdo the bar set. That is the difficult part. - Arthur van der Vant

C.Floz says:
Nov-30-2012 11:59 am

It is particularly difficult to improve something versus renovating it. There is a big difference of the two. A bar has been set already and improving is trying to outdo the bar set. That is the difficult part. - Arthur van der Vant

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Limited Edition Retail

BY Connie Robbins Gentry

There is no escaping the pop-up or temporary store phenomena — and with retail vacancy still high in some markets, it’s not likely to go away anytime soon. What’s more, consumers seem to love them. 


While a few critics are grumbling that the proliferation of pop-ups has taken away from their impact, they are in the minority. Most experts agree that, as a retail platform, the temporary format has real staying power. 


“I don’t believe that pop-up stores have run their course — on the contrary, I think they’re in their infancy. Pop-ups offer great opportunity for innovation and will continue to progress and become a regular part of a brand’s format options,” said Scott Jeffrey, chief creative officer, Interbrand Design Forum, Dayton, Ohio.


There is a great deal of variation within the temporary-store space. Some pop-ups exist mostly to generate brand buzz (Target has mastered this strategy) and connect with customers, others to test new markets or new products. Pop-ups with extremely limited life spans are typically birthed and executed by the retailer’s marketing department. 


“Pop-up stores [of this type] tend to respond to a marketing need or product launch; the primary objective is to create market awareness and build the brand. In many ways, pop-ups are 3-D marketing,” said Ken Nisch, chairman, JGA, Southfield, Mich. 


Conversely, pop-ups of the seasonal variety, such as a Halloween store, are more about the merchandise and the moment. Such stores are created primarily to sell product and maximize holiday sales. They also allow retailers to test new formats or locations. 


The lines blur, however, when seasonal retail embraces the speed and marketing panache of the more dramatic, event-oriented pop-up concept. In fact, many retailers define their stores as both seasonal and pop-up. 


Burlington Coat Factory, Burlington, N.J., fits into this category, with the 20 “seasonal pop-up coat stores” that it opened in 12 states last year. The stores, branded Burlington Coat Factory Select, ranged from 5,000 sq. ft. to 10,000 sq. ft. with assortment limited to coats and outerwear, opened in early to mid-November and closed at the end of the winter season. The company plans to repeat the pop-ups this season, but has not announced specific locations. 


Toys “R” Us also has a recurring seasonal pop-up concept. The chain opened approximately 90 Toys “R” Us Express stores for the 2009 holiday season and 600 Express stores in 2010 in malls, outlet centers, street locations, strip centers and outdoor lifestyle centers nationwide. Toys “R” Us uses the seasonal platform to test different real estate formats.


“We were particularly pleased with the foot traffic at our Express stores in outlet centers [during the 2010 holiday season] and determined they presented a viable year-round business opportunity for the company,” said Katie Reczek, spokeswoman, Toys “R” Us, Wayne, N.J. “We have opened 12 [permanent] Toys “R” Us Outlet stores nationwide, with additional locations scheduled to open later this year.” 


Weighing in sales performance, space availability and other factors, the Express stores also give the company a good indication of whether a more permanent location is warranted. Of the 600 holiday stores Toys “R” Us opened in 2010, 68 have remained open. 


Real estate rules: Location always matters, but the real estate strategy for a pop-up store is quite different than for a seasonal store — the latter concept is typically governed by opportunistic real estate decisions dictated by availability and lowest cost. Pop-ups, on the other hand, tend to go for high-profile settings. 


“You won’t see pop-ups in second-tier real estate, only in prime locations that generate maximum traffic,” Nisch said. 


Christina Norsig, CEO of PopUpInsider, an online exchange that connects retailers with landlords seeking to lease space on a short-term basis, is both a pop-up consultant and retailer. Each year, as the founder and CEO of eTableTop, an online seller of decorative accessories, Norsig searches out vacant spaces in Manhattan to turn into holiday pop-up showcases for her brand. For Norsig, the right real estate positioning has enabled eTableTop to better connect with its customers. (Norsig is the author of the recently published “PopUp Retail: How You Can Master this Global Marketing Phenomenon.”) 


The list of those who want to open a pop-up store run the gamut from exclusive European manufacturers to mom-and-pop entrepreneurs. But Norsig added a cautionary note.


“The best candidates to open a successful pop-up store are experienced retailers who know how to run a business,” she said. “Just because it’s temporary, doesn’t mean it can be less professional.”


Success with pop-ups hinges on selecting the optimum site and making the most of the space. 


“The most successful pop-up stores leverage existing architecture — start with an interesting skeleton space and build on the bones to showcase your brand,” said Interbrand’s Jeffrey. “It helps to choose a space that will serve the brand and has inherent interest in and of itself.” 


Most pop-up stores rely heavily on graphics and signage, according to Jeffrey.


“You actually don’t want the space to look permanent because you want to communicate a sense of urgency,” he added. 


In terms of execution and design, a pop-up has to be able to open and close even more quickly than a seasonal store. Toys “R” Us typically spends a week opening each of its holiday Express stores and another week to close each location. 


By contrast, brand- or event-oriented pop-ups can sometimes open and close in a matter of hours, as was the case with a Smart Car pop-up. Created by Interbrand Design Firm, the entire store, which included three Smart Car coupes, traveled in a single trailer that quickly converted into a pop-up at road shows around the country. 


When it comes to investments, budgets for pop-ups are typically less restrained than for seasonal stores, which tend to focus on modularity and logistical simplicity, JGA’s Nisch said.


“Fixtures are often stored and reused the following year for seasonal stores, but pop-ups may rent theatrical lighting or media equipment because the store won’t be repeated in the same location,” he added. 


Similar to marketing or public relations campaigns, Nisch said, “pop-ups are measured in terms of cost per impression versus seasonal stores that measure costs as a percentage of sales.”


Indeed, it’s not uncommon for a pop-up to drop > $10,000 to $15,000 to finesse a tiny space for a 10-day run. 


“Everyone wants the perfect little 1,500-sq.-ft. clean vanilla box with [immaculate] walls, lighting and HVAC, but those are few and far between,” Norsig said. “Realistically, you have to consider difficult spaces in prime locations — and then think creatively.” 


Future: Looking ahead, Norsig believes pop-ups will come and go even faster than they do today — think Flash Mob translated into Flash Marketing via pop-ups that exist for mere hours.


Interbrand Design Forum’s Jeffrey envisions “great opportunities for the Amazons of the world” to open seasonal pop-up showrooms in vacant shops. Similar to Norsig’s strategy with eTableTop, online retailers might utilize pop-ups as an opportunity to connect with customers while maintaining their fundamental business model of displaying product to be ordered and shipped rather than running inventory through the store. 


JGA’s Nisch suggested that the next opportunity to leverage real estate value might be for premium malls to dedicate two or three vanilla spaces as permanent pop-up venues, leasing them for brief periods to a diverse mix of tenants that would create buzz and excitement in an ever-changing rotation of retail. 


Pop-up stores are also moving online. Flash sales site Fab.com is launching online pop-up stores with a series of themed retail “shops” inside its site. Fab is working with Fast Company on its first pop-up shop, called U.S. Design, which will showcase the work of some 76 American designers featured in Fast Company’s iPad app. 


The shop, curated by Fast Company and hosted by Fab will stay open a month and will feature about 150 items. But that’s just the beginning. Fab hopes to launch about five online pop-up stores by year-end.


Connie Robbins Gentry is a contributing editor for Chain Store Age.

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