Boscov's Rolling out Expansion

Pa. cahin grows in Baltimore market at a tough time for department stores

October 15, 2006|By Andrea K. Walker | Andrea K. Walker,Sun Reporter

As Boscov's department store chief Kenneth S. Lakin stood last week among the buzz of workers preparing to open three new stores in the Baltimore area, he was reminded of advice an uncle once offered while building the 95-year-old family retail chain.

"You can always get married again," Al Boscov once said. "But you can only open a store once."

Boscov's executives, in the midst of the company's largest expansion in its history, are bringing new stores to the Baltimore area Oct. 28 in Marley Station Mall, Owings Mills Mall and White Marsh Mall with $12 million in renovations. The Reading, Pa.-based department store chain has a store in Westminster but the opening-day weekend around Baltimore will help Boscov's further introduce itself to a market where it's still relatively unknown.

"They have one shot to really connect with area shoppers," said Amanda Nicholson, an assistant professor of retail management at Syracuse University. "It's just so competitive nowadays that people will walk in and have a look, and if they're not happy they won't come back. We're very critical because we have so much choice."

Boscov's expands in the Baltimore market during a difficult time for department stores, which have lost market share to high-end retailers on one end and discounters like Wal-Mart and Target at the other. Boscov's old-time charm in selling everything from appliances to apparel is a throwback to a business model that eventually suffered at several chains, including Hecht's and Marshall Field's. And launching the Baltimore expansion in the holiday season is a challenge because it forces Boscov's to stock up on inventory in a market where it doesn't know its customers' shopping habits as well as it does in other markets.

But the privately held company looks at its Baltimore effort as an opportunity to expand in a market it has long coveted. Described by some retail analysts as a step above J.C. Penney with merchandise and below Macy's in terms of prices, company executives believe they can fill a niche that is underserved in Baltimore.

Although some may call it old-fashioned, Boscov's executives believe their strength is the company's one-stop-shopping philosophy. The design of the stores is no more unique than its competitors. But Boscov's has a quarter more departments than a Macy's or a J.C. Penney.

A toy department is built next to children's clothing. A shopper can buy homemade fudge upstairs and Anne Klein jeans downstairs. There's a service department for appliances. Boscov's also carries mattresses and curtains, items many department stores no longer sell. Lakin said its prices are better than its high-end competitors' and its merchandise is of better quality than at discounters.

Being different

"You almost always look over your shoulder to see what your competition is doing," said Lakin, a grandson of the company's founder who is now Boscov's chairman and chief executive officer. "You have to make yourself different so the customer doesn't want to go somewhere else in the mall or down the road."

It's a concept that hasn't worked for many other retailers. Today's consumers will go wherever the price and location works best, retail analysts said.

"They do have some obstacles," said Nicholson, the Syracuse professor. "I wouldn't pretend for one minute that it's going to be an easy job. There is a very competitive landscape in retail in general and even more so in the department store area. The department store has been squashed between the growth in the specialty area and the growth in the discount area, both of whom are vying for its customers."

Boscov's recipe dates back nearly a century to Solomon Boscov, a Russian immigrant who opened his first store in the coal town of Reading, Pa. The chain, which at the end of the year will have 50 stores in six states, has prospered mainly by sticking to mid-size cities that offer consumers fewer shopping choices and competition.

Adjusting to change

Its life changed this year when the department store chain closed a deal with Federated Department Stores Inc. to buy 10 stores that Federated was unloading as a part of its recent merger with May Department Stores Inc.

As a result of the deal, Federated also converted all the area Hecht's stores into Macy's. The 11-store expansion this year and next - besides the Federated spots Boscov's opened a new store in Altoona, Pa. - will increase locations by almost 30 percent.

In the aftermath of Federated's changes, Boscov's acquired properties in areas such as Pittsburgh and Baltimore that are larger retail markets than the company's typically smaller locales. While most department store companies have morphed into huge national companies, Boscov's had grown more slowly, opening a few stores a year from New York to southern Virginia.

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