California Apparel News

As the economy gains strength, two California boutique retailers have announced major plans to expand.

Los Angeles–based Kitson recently announced plans to expand its celebrity-culture retail concept to the rest of the United States and the world by building up to 200 boutiques around the globe. Apricot Lane, a 4-year-old retailer headquartered in the Northern California town of Vacaville, announced it would open more than 50 of its moderately priced fashion franchises throughout America in 2012. The move will more than double the number of its current fleet of more than 53 stores.

The announcements were made as retailers have been receiving conflicting messages on expansion. Major specialty retailers such as Pacific Sunwear and Gap Inc. have been cutting back their American fleets. However, real estate firm Colliers International announced in a forecast, released May 26, that the next 12 months would see increased retail expansion, especially for luxury retail, restaurants, and value and discount retailers. National retail vacancy rates stand at 11 percent, according to the company, which is flat in a year-over-year comparison with 2010, when the economic recovery was more tepid. The market is expected to benefit luxury and discount retailers, said Ross Moore, Colliers’ chief U.S. economist.

“The national retail market is poised for a return to sound fundamentals and good credit retailers,” Moore said. “Overall, mid-range retailers have yet to see the impact of an improving economy, but there is more strength in the retail market than is being reported.”

The market conditions still seem to be giving retailers a yellow light rather than a green light, said Ken Wengrod, president of FTC Commercial Corp. “Right now, I would not go into an expansion program until you get a really great deal,” he said.

Expansion plans for Kitson and Apricot Lane were founded in very different strategies. But in a coincidence, the retailers rented the same space in the Downtown Disney retail district in Anaheim, Calif. Kitson closed its Kitson Kids shop at Downtown Disney in May. Apricot Lane opened in the Kitson Kids space

May 20 and will produce an official opening event for the store on June 15.

Kitson currently maintains seven stores in Los Angeles County, eight stores in Japan and one shop-in-shop in Taipei. The retailer rose to prominence by debuting brands and creating a buzz, with celebrities such as Paris Hilton photographed as they shopped there. Images of the celebrities shopping at Kitson were often published in magazines such as Us Weekly. Fraser Ross founded Kitson in 2000, and he forecast then that he would find a fork in the road after a decade of business. He could then scale back his stores. “[Or] step up to the plate. If you’re going to grow—grow!”

Christopher Lee was hired as Kitson’s first chief executive on May 1. Lee had helped guide retail giant Forever 21’s rollout and served as a retail consultant afterwards. When researching Kitson, Lee said, he found that the retailer almost doubled the industry sales-per-square-foot average ($343 per square foot, according to the International Council of Shopping Centers)—making it a good candidate for growth. “The brand Kitson is very unique,” Lee said. “I don’t see any other company in the world that can take the best of Hollywood and the best of fashion and infuse them into one place.”

Lee is dreaming big for Kitson. Square footage for each new flagship is forecast to be 12,000 to 15,000 square feet. The emporiums will include separate shops for men’s, women’s, children’s and accessories. The brand will build fewer than 40 Kitson stores in the United States. The rest will be spread across major cities around the world. The stores will seek to duplicate Kitson’s Los Angeles success story. Stores will be encouraged to introduce brands while producing events where celebrities will visit stores and be photographed wearing Kitson merchandise. Global Kitson stores will serve as a network providing forecasts of fashion trends in different parts of the world. Lee also forecast that e-commerce will serve as one of the most important parts of the new company. It will relaunch its website at www.shopkitson.com in September.Franchise models and fast growth

Apricot Lane started in 2007 as the second career for two retired firemen, Tom Brady and Ken Petersen of Vacaville. They were later joined by another partner, Scott Jacobs, a marketer. The Apricot Lane concept was conceived as a franchise business. Apricot Lane corporate provides franchisees with store interiors as well as fashion merchandise such as jeans exclusively made for the retailer by the leading fashion label Miss Me. Apricot Lane by Miss Me will debut in the fall. Retail price points for merchandise are moderate. Tops range from $29 to $125. Denim starts at $100 and ranges up to premium prices of $150 to $250.

The retailer was fortunate to start business in a recession, according to Petersen. Many retailers were scaling back, which opened good real estate locations across the country. Talented businesspeople and executives had been laid off during the recession and were looking for second careers. Many had sizable savings and did not need to look for loans to open new businesses. Franchisees must pay $29,500 to start an Apricot Lane business and then give a 5.5 percent sales royalty fee to the company. They also must pay a 1 percent advertising fee annually.

Many franchisees choose to open Apricot Lane stores in suburban second-tier markets such as Billings, Mont., and Kennewick, Wash. “These places are fashion starved. There is not much competition out there,” Petersen said.

Swedish retailer Hennes & Mauritz also will continue opening stores in California and across the world, according to H&M representative Nicole Christie. Store growth will increase 10 percent to 15 percent around the world, Christie said. California will lead expansion in the American West. “We have not saturated the market yet,” Christie said. “Our goal is to make the brand more accessible. The company opened a store in San Jose, Calif., last month. In June, H&M will open locations in the California towns of Santa Barbara, West Covina and Carlsbad. “It’s only the beginning,” Christie said.