Town Center confident in its anchors
Charleston, W.Va. -- Emily White spent Thursday afternoon back-to-school shopping with her kids at the Charleston Town Center. When she finds herself at the mall, JC Penney is always the first stop.
"I have seen a big difference since I first started shopping [at JC Penney]," White said. "I used to be able to go into the juniors' section and could probably pick and pick -- now it's just like I can't find anything."
JC Penney, along with other department stores, continue to remodel stores, market new programs and products, all in an effort to stay relevant while competing with a host of other stores, many carrying the same products.
Charleston Town Center general manager Thomas Bird said the department store business has seen big changes over the 30 years that the mall has been in existence, but he isn't worried about the anchor stores -- Macy's, Sears and JC Penney -- leaving the Town Center.
Originally, Charleston's mall opened in 1983 with Kauffman's, Sears, JC Penney and Montgomery Ward as anchor stores, but since then, tenants shuffled and business changed.
"There were all these different small three- or four-chain stores in these small towns and there were some regional [stores], and it's all just combined now," Bird said. "So, it's a lot different than it used to be for the department store business."
After Montgomery Ward closed following bankruptcy in 2000, the anchor spot at the corner of Quarrier and Court street stood vacant for seven years. The space was later renovated as offices for BrickStreet Insurance and as a studio for local news station WOWK-TV.
"Actually, getting BrickStreet into replace Montgomery Ward was probably the best thing that happened because we picked up 500 shoppers that increased my food business by 6 percent in the first year," Bird said.
Of the Town Center's remaining anchor stores, only Macy's reported positive first quarter earnings of 55 cents per share, a 28 percent increase compared with 48 cents per share in the same period last year.
Sears reported a net loss of $279 million, or $2.63 per share, compared to a net income of $189 million, or $1.78 earnings per share, in the prior year. However, the company's online business grew by 20 percent. JC Penney reported a $348 million net loss or $1.58 per share. Total sales were $2.635 billion, a 16.4 percent decrease from $3.152 billion in the same period last year.
In 2005, Sears and fellow American retailer Kmart merged in an $11 billion deal combining the companies into Sears Holding Corp. Since then, Sears chairman Eddie Lampert divided the company into more than 30 separate units, leaving departments of the same company competing for money, marketing spots and customers. The goal to foster growth through inner-company-competition hasn't panned out as expected.
The company announced the closure of 100 to 200 Sears and Kmart stores across the country in order to save money in 2011. Neighboring Pennsylvania, Ohio, Virginia and Kentucky all had Sears and Kmart stores close.
Macy's and JCPenney recently remolded their stores in the Town Center, "committing to this market," while Sears hasn't remolded inside recently, Bird said.
"This is a good store for Sears, they do well," he said.
Bird thinks people in the area have accepted the Town Center as "the mall" explaining it's been consistent over the years and it's convenient.
"This mall is one of the best in our portfolio -- sales-per-square-foot -- in how well it performs," Bird said.
Forest City Enterprises of Cleveland owns the Town Center. They have properties in 27 states and three countries.
"I think our department stores do pretty well against their peers, so I'm not that concerned about them going anywhere," Bird said.
However, in the same time period, both Wal-Mart and Target recorded positive gains. Wal-Mart grew by 1.1 percent and recorded a profit of $3.78 billion, or $1.14 per share. Target reported a net earning of $489 million, or 77 cents per share.
On Wednesday, JCPenney stock plunged 10 percent after the New York Post and Reuters reported the company had credit problems. The company has since responded, reassuring investors they don't have credit problems and that all key vendors are continuing to make shipments.
"With all the changes and all the things they're doing, I think JCPenney is going to survive and I think they'll actually end up doing pretty well because they are trying to change with the times," Bird said.
In January, the Department of Labor and Statistics will discontinue its publication of its department store inventory indexes because of lack of demand. The data tracks all goods and services purchased, breaking them into 23 different categories.
Jesse Tron, manager of communications and media relations for the International Council of Shopping Centers, said the traditional dynamic as department stores as anchors for enclosed malls has changed.
"It use to be nothing else but department stores as anchors," Tron said. "Now, you're starting to see others.
"There will certainly be some department stores that do well and others that don't. It is possible that some will close, yes, but some will also expand," Tron said.
When landlords are left with empty anchor stores, Tron said, they've noticed new options when malls have to get creative to fill anchor spots. Target stores are now acting as anchors, where in the past they are generally a stand-alone store or in a strip mall. Because the anchor spaces are larger, landlords are now dividing the space once occupied by large department stores among multiple smaller retail tenants. Some malls demolish the anchor store space and build outdoor lifestyle spaces.
According to data reports from the International Council of Shopping Centers, department stores had a year-over-year growth of negative 1.8 percent.
"It's not going to be as clear-cut or cookie-cutter where it was always the department store as the anchor," Tron said. "I think we will see some variations of that as we move forward."
When asked if the mall had a plan if one of the anchor stores closed, Bird said he doesn't have a written plan of action to find a replacement.
"JCPenney is well known, so I'll probably always go back whether I have a good experience or not," White said. Reach Caitlin Cook at firstname.lastname@example.org or 304-348-5113.