European 'cheap chic' stores like H & M in fashion
March 01, 2004 12:00AM
Take a look at Fifth Avenue in the low 50s, and it's easy to see the growth and importance of European "cheap chic" or "fast fashion" in New York.

In 2000, H & M - the Ikea of fashion - opened a massive, 35,000 square foot flagship store on Fifth Avenue at 51st Street, announcing its presence in Manhattan in a big way.

Only recently did fellow European competitors follow the Swedish retailer to Fifth Avenue.

In the fall, Mexx, the Dutch company bought by Liz Clairborne two years ago, made its U.S. debut by opening in a glassy flagship store on 52nd Street. Zara, the Spanish fashion store, is scheduled to open at 54th Street.

H & M has become the hot destination for the Gen X, Y and Z set by providing up-to-the-minute trends at K-Mart prices. It's been facing off against its competitors in the Flatiron District to Union Square to Soho to Herald Square and the area around Bloomingdale's.

"It's promotional disposable fashion," said Stephen J. Stephanou, executive vice president at Madison HGCD. "You might see a customer standing in line with 10 of the latest trendy tube tops for $150, and if it doesn't dissolve on the disco floor, that's great."

"It's a niche that hadn't existed before," he said. "It's going to be a phenomenon that will continue to expand in the city."

H & M, which has six stores in Manhattan, has been the most aggressive in its expansion efforts, while Zara, which is higher-quality merchandise, has take a more cautious approach even though it has been here since 1987, and now has five stores.

Mexx, the Liz Claiborne unit, is "the new kid on the block," said Stephanou. It started with the flagship on Fifth and another store in Union Square this past year. "The jury is still out on how they'll do," said Stephanou.

Other smaller players in Manhattan aiming at the same general market include Miss Sixty, Esprit, Sisley and Forever 21.

In its quest to capture fashion-conscious shoppers, H & M hasn't shied away from going right to prime locations or opening up stores practically next to one another, brokers said.

H & M made a splash in the city when it opened the flagship store on Fifth Avenue, said Susan Kurland of Cushman & Wakefield, which represents H & M in Manhattan.

"In their mind, if they were going to make a mark, they wanted to do it in one of most important shopping streets in world," said Kurland.

Faith Hope Consolo, vice chairman at Garrick-Aug Worldwide, who has represented H & M outside Manhattan, said if the chain didn't open up there, "nobody would have known who they were. It's like buying a full-page advertisement."

Rent didn't come cheap - about $500 a square foot on the ground floor.

"They are really willing to pay the freight," said Consolo. "They go to main and main."

Elsewhere, H & M has opened up multiple locations in high-traffic areas, including a store on either side of Macy's on 34th Street. This past year, H&M added a second store in Soho at 515 Broadway, only a block away from a smaller store at 558 Broadway, and across the street from where the new Bloomingdale's will open.

"They'll aggressively line themselves up with big stores," said Stephanou. "They all want high-traffic and high-visibility neighborhoods."

Kurland said H & M had altered its approach somewhat after opening its flagship store. "At one time the stores had to be 30,000 square feet, but maybe they would go as small as 10,000 square feet now," she said. "It's more location driven - if they find a great spot, like in Soho, they'll take it."

The company also opened up a store in Harlem in 2002, taking 23,000 square feet to become the first retailer at the new Harlem Center. The company's director of real estate in the U.S. said the company based its decision to open there not on stacks of research, but on the number of shopping bags spotted in the area. Kurland said the H & M Harlem store "was doing very well." Consolo said she thought the area a better fit for H & M than for Mexx and Zara, but said the location might require patience, because "to immerse oneself in the neighborhood takes a longer lead time."

Going forward, Consolo said it might make sense for H & M to expand to areas including 86th Street between Lexington and Third Avenues, as well as to Lower Manhattan. "The H & M customer is basically the Duane Reade customer, so it would work in Lower Manhattan," she said. She also said the company could go to the Meatpacking District, but Kurland said there was too little foot traffic in that area.

H & M's competitor, Zara, has moved slower. Zara came to New York City in the 1980s, taking a spot at 750 Lexington Ave. next to Bloomingdale's. "They only wanted to be on that corner," said Consolo, who did the deal. The chain tried to expand to malls in Mexico and the southwest, a move that didn't work out well. More recently the company opened stores in Soho, the Flatiron District, 34th Street and on Fifth Avenue at 54th Street. The store carries merchandise that "looks like knock-off designer clothes," said Consolo. "Something from Donna Karan that would be $1,000 would be $100 at Zara."

As far as Mexx, which is new to the U.S., Stephanou said the company's new store on Fifth Avenue showed "they are clearly trying to position themselves next to H & M." In Union Square, Mexx (which falls somewhere between Zara and H & M in its prices), opened up across the street from the Diesel store there,

Other stores that have opened up or signed new leases recently include Sisley and Esprit. Stephanou helped Esprit find 10,000 square feet of space at 110 Fifth Ave. in the Flatiron District as part of a U.S. relaunch of the venerable '80s brand. Sisley, which is a Benetton Group clothing store, looks to be undergoing a major drive to expand, recently signing leases at 133 Fifth Ave., 753 Broadway and at the Time Warner Center for a 2,200 square foot space. Maybe the '80s are coming back.

Still, H & M seems like the store to beat right now. Says Kurland: "They move better with the trends than anyone I've ever seen. They bring in a new inventory every couple of days." The store also does very well on the distribution end, she said. "If they had a monster day, you wouldn't find the merchandise gone. Their stores are always stocked fresh. In another store, you might find the merchandise depleted for a week until a new shipment arrives."

The real deal(2004) Available at : http://therealdeal.com/newyork/articles/european-cheap-chic-stores-like-h-m-in-fashion (Accessed: 10 October 2011)