NEXT STOP: BEVERLY CENTER
Kitson Unveils New Format, Expansion Plans
Get ready for the new Kitson.
The prominent Los Angeles–headquartered boutique chain is scheduled to roll out a new store format in August. LA’s Beverly Center mall will be the first location for the new concept, said Christopher Lee, Kitson’s chief executive officer, and the mall is located a two-minute drive away from Kitson’s flagship store on Robertson Boulevard.
The new format will be an 8,000-square-foot space that encompasses all of Kitson’s store categories—ranging from men’s and women’s to kids’ and gifts—in a mini department store, said Lee, who joined the boutique retailer in 2011 to help guide its expansion.
Beverly Center had no comment on the new store, and Lee declined to disclose where it will be located in the mall, which is home to tenants such as Louis Vuitton, Prada, XXI Forever and Bloomingdale’s. However, Lee forecast that the upcoming store will not cannibalize sales from its 13-year-old flagship.
Beverly Center attracts a different consumer than fashion street Robertson, Lee said. If retail traffic flags on Robertson after 6 p.m. during winter and fall months, evening shopping perennially surges at malls such as the Beverly Center, where the evening rush runs from 6 to 9 p.m. Also, rules for retail real estate are different in the well-off urban areas of Los Angeles and Southern California.
“There is so much density in Southern California. You can open multiple stores,” he said.
Lee forecast that Kitson, in two years, will more than double its fleet of stores to 30 locations. Kitson currently runs 11 stores in Los Angeles County; one store in Santa Barbara, Calif.; one store in Orange County’s Fashion Island mall; and an outlet store in Camarillo, Calif. Candidates for future Kitson locations will be San Diego, Las Vegas, Miami, Northern California, New England and the Mid-Atlantic region. The company also will be developing partnerships for overseas Kitson stores. There are currently five Kitson stores in Tokyo, five in Korea and one in Taiwan.
New Kitson stores will range from 5,000 square feet to 8,000 square feet and look similar to the Kitson stores at Beverly Center and at Fashion Island, where Kitson is scheduled to move to a larger, 5,500-square-foot space on Sept. 1. “Kitson is a Los Angeles lifestyle brand. It must be translated throughout the world,” Lee said.
The current expansion is being funded through a $15 million secured-lending facility from Salus Capital Partners, a Boston-area commercial finance and asset-management company. The secured-credit facility was announced in May. Kitson also currently is discussing private-equity deals with equity funds that Lee declined to name. The company also would consider an initial public offering in the future. “We’re trying to grow this company as prudently and as quickly as possible. We have great opportunities in this country and around the world,” Lee said.
An increased presence of physical Kitson stores will boost its sales at its e-commerce shop (www.shopkitson.com), said Fraser Ross, Kitson’s founder. “It’s a growth pattern we have to do to be competitive,” Ross said. “The more people aware of the brand, the more people visit your Internet.” Ross did not confirm how much the company’s e-commerce sales surged after store openings.
Ross started Kitson in 2000 with a single location at 115 S. Robertson Blvd. The shop quickly gained a reputation as a place where paparazzi would photograph celebrities with a young, fashion-obsessed following.
Paparazzi took pictures of Paris Hilton, Lindsay Lohan, Britney Spears and Kim Kardashian shopping for expensive clothes from brands such as True Religion. As the economy changed, Kitson shifted merchandising strategies.
With the Great Recession, Kitson lowered some price points, increased its gifts and novelty category, and actively campaigned for a tourist dollar because travelers reportedly spend more than average consumers. While celebrity will always be important at Kitson, the retailer lowered its focus on celebrity culture. “We changed our pattern,” Ross said. “We don’t want our brand to be based on celebrity culture. It must be based on our merchandise.”
The public is not as obsessed with celebrities as it was pre-recession, according to the Kitson founder. Also, there’s not a gold-rush stampede of famous and semi-famous people looking to sell product as there was pre-recession. “It’s gone down to a more focused group of people,” Ross said of the celebrities who are considered to guarantee a sales boost for a brand.
Kitson will continue its long-held merchandising strategy of offering high-priced luxury items along with low-priced clothing and gift items.
Kitson will undertake its expansion in an economy that is gathering strength but some say is still weak. Expansion can overwhelm a company, but the most savvy entrepreneurs can make money in any economy, said Ken Wengrod, co-founder and president of Los Angeles–headquartered FTC Commercial Corp., a factor and lender to apparel- and commercial-related products. “There’s always business out there,” Wengrod said. “But you have to look at it on a calculated-risk basis.”
Entrepreneurs must consider if store leases are too expensive, whether their merchandise offers a point of difference from competitors, and, if the venture doesn’t work out, how will a company will close down the business, Wengrod added.
Lee has faith that he made the right business decision because Ross proved himself to be able to move his way to the top of a competitive boutique market and then survive.
“You can do a billion-plus dollars around a great merchant,” Lee said. “Fraser is one of those great merchants of retail.” Currently, the flagship store does sales of $1,000 per square foot. Average sales per square foot is $464 in the U.S., according to data released in May from the International Council of Shopping Centers.