California Apparel News

L.A.–based fast-fashion retailer debuts concept store Heritage 1981

Forever 21 Inc. is forever growing.

In an effort to keep revenues churning at a fast clip, the Los Angeles retailer is rolling out a new store concept geared for the urban customer who wants slightly edgy clothes with a touch of vintage that are different from the offerings found in the more than 400 stores that make up the Forever 21 empire.

The new stores, called Heritage 1981, will have a constantly changing selection of affordable clothing that is trendy as well as edgy and cool. This will appeal to the hipper Forever 21 customer between the ages of 20 and 30. Forever 21’s customer ranges in age from 15 to 50.

“We just feel it is appealing to people with different tastes,” said Larry Meyer, a senior vice president with Forever 21. “And we want to grow our business into different groups.”

The new store formula has been in the works for some time now, but it got a boost when Forever 21 purchased 44 Rampage stores last summer for $14 million from Charlotte Russe Inc. in San Diego. While the company converted 25 of those stores to Forever 21 nameplates, it is transforming the other 19 into Heritage 1981 stores in malls where there are already Forever 21 shops.

The new retail model was created to help the fast-paced company keep on track with its traditionally healthy sales growth. In 2005, Forever 21’s revenues were about $925 million, Meyer said. This year, revenues are expected to hit $1.1 billion.

At Heritage, one-half the store’s merchandise is targeted toward men. The other half is for women. Prices are similar to those at Forever 21, with plaid wool shorts at Heritage 1981 going for $27, brown plaid knee-length tweed skirts selling for $35, a green cardigan for $30 and blue jeans for $29 to $49.

The Mission Viejo, Calif., store has hardwood floors, subdued lighting and a wall with small snapshot-like photos that give the place a homey vibe. The stores are still in transition. Not all the merchandise is under the Heritage label yet.

“There is some Heritage clothing, we’re ordering goods and there are some Forever 21 goods,” Meyer said, noting the stores range in size from 5,000 to 6,000 square feet.

Within the last few weeks, two stores opened in California. One is at the Westfield Valley Fair in San Jose. Another is at the Shops at Mission Viejo, and a third is slated to open soon at the Beverly Center in Los Angeles. Others stores will be opening in locations such as the Mall of America in Bloomington, Minn., the King of Prussia Mall outside of Philadelphia, the Woodfield Mall outside of Chicago and the Woodbridge Center in Woodbridge, N.J.

More stores will be unveiled next year, but Meyer didn’t want to reveal how many Heritage stores would be added in 2007. He also didn’t want to speculate about how much revenue the new stores would bring in.

Broadening horizons

Forever 21 is just one of the latest national retail chains to unveil a new store concept geared for a different customer.

Last year, American Eagle Outfitters Inc. of Warrendale, Pa., created a new emporium called Osa + Martin, targeted to 25 to 40 year olds. That’s a departure from the company’s tried-and-true customer of 15-to 25-year-olds.

The new brand—which focuses on classic, denim and active-outdoor sportswear for men and women—takes its name from two 20th century adventurers, Martin and Osa Johnson.

The stores vary from 5,000 to 7,000 square feet and carry apparel, footwear and accessories.

American Eagle Outfitters believes it can open 300 Osa + Martin stores in the next 10 years, adding as much as $1 billion to its bottom line. In fiscal 2006, American Eagle’s revenues grew 23 percent to $2.3 billion.

Also last year, San Francisco–based Gap Inc. launched its first new store concept in more than a decade with Forth & Towne. The target customer here is a middle-aged woman who needs a more forgiving fit in her blue jeans and more modest style. It is quite different from Gap’s three other brands—Gap, Old Navy and Banana Republic.

The first Forth & Towne store opened in West Nyack, N.Y. Soon after, four stores opened in the Chicago area. Most recently, Gap announced it would open Forth & Towne stores in Chula Vista, Calif., and Santa Barbara, Calif., in time for the upcoming holidays. By 2007, Gap expects to have about 30 of these stores.

Other new concepts around include Rugby by Polo Ralph Lauren and Ruehl by Abercrombie & Fitch.

Rugby stores are small shops located near college campuses, and carry clothing that is more affordable and edgier than Polo Ralph Lauren usually carries. Ruehl targets the 22-to 30-year-old customer who fantasizes about going to New York and making it big. The typical A&F customer is slightly younger, aged 18 to 22.

New store concepts are all about creating a sense of newness and excitement to expand business beyond fancy merchandising.

“Many established chains are reaching saturation where they have to start new concepts, which takes years to develop, to do something a little different for a slightly different demographic,” said Jeffrey Van Sinderen, a retail analyst with B. Riley & Co. in Los Angeles.

Kurt Barnard, president of Barnard’s Retail Consulting Group in Nutley, N.J., agreed. “Customers and shoppers are tired of seeing the same thing over and over again. They literally can be considered boycotting all the sameness,” he noted. “So if you are a retailer with apparel stores, you have to be very, very certain to continuously show something new. And sometimes just new merchandise is not enough. You may actually have to start a new concept.”