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Rocky Mountain Retail

BY Katherine Boccaccio

Few places on earth are as scenic as Boulder, Colo. But, over the last several years, the city’s retail attractions seem to be matching its tourist draw stride for stride.

The development that has perhaps attracted the most amount of attention is the newly opened Twenty Ninth Street project in downtown Boulder. Developed by The Macerich Co., Santa Monica, Calif., the 805,000-sq.-ft. outdoor lifestyle center sprawls over 62 acres of shopping-and-entertainment-district vitality and open-space tranquility.

Twenty Ninth Street is anchored by a Macy’s department store, Wild Oats Market (which is based in Boulder) and The Home Depot. The development sits on the site of the former Crossroads Mall.

What is most significant about the design and plan of Twenty Ninth Street is how well the new development blends with an already distinctive downtown area. Twenty Ninth Street was designed by Macerich to complement, rather than compete with, popular Pearl Street. “We purposely created Twenty Ninth Street to appeal to the Boulder customers,” said Lain Adams, property manager. “It’s very important to us that we complement Pearl Street, so we have merchants that are different—so that, together, we can raise the retail profile of Boulder as a community.”

Tenants of Twenty Ninth Street include Eddie Bauer, Anthropologie, Ann Taylor Loft, Apple, Borders, Staples, a soon-to-open 16-screen Cinemark Theater, and restaurants such as Santa Fe, N.M.-based Railyard Restaurant and Saloon and a Denver restaurant called Ai Sushi and Steak.

Thanks to some diligent upfront efforts by Macerich, the local community has clearly thrown its support behind the new development. According to Adams, Macerich representatives worked daily with city officials, as well as residents, throughout the planning and building stages. “We started the process with a three-day facilitated workshop for 1,200 residents designed to uncover what they wanted to see in this development,” explained Adams. “We followed that with more than 100 community presentations, 50-plus hard-hat tours and the launch of an advisory group we called ‘Twenty Nine for Twenty Ninth Street.’ Through these 29 people from all walks of life, we got a good idea of what the community would respond to.”

Just as innovative was a marketing idea Macerich coined “29 Random Acts of Kindness,” in which the Twenty Ninth Street staff took to the streets of Boulder, performing random selfless acts. “We gave away water on a hot day, and we went to a school shortly before Halloween and handed out glow sticks and glow bags” for use during trick or treating, said Adams.

Twenty Ninth Street

Location: 1710 29th St., Boulder, Colo.Size: 805,000 sq. ft. on 62 acresDeveloper: The Macerich Co.Major tenants: Macy’s, Wild Oats Natural Marketplace, The Home DepotStatus: Opened to the public on Oct. 13, 2006; center is 85% leased with numerous new stores and restaurants opening throughout 2007.Project highlights: Green building practices were used during the construction of Twenty Ninth Street, as 82% of the razed Crossroads Mall building was used toward the new development. A quarter of the development is open space, it’s landscaped with indigenous plants, designed with local materials and operated with a “Boulder-centric” view. An amenity program called The Wonder of Science provides a walking outdoor exhibit that focuses on space and earth sciences.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT

BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions.

“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.

THE FIX: Differentiation would better help Sam’s

Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.

Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.

That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%

WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers.

Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.

Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.

THE FIX: Improved shopper experience ups comps

Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.

Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.

Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.

Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”

He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.

“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”

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