The Orlando Sentinel from Orlando, Florida • H2

Orlando Sentinel: PRODUCT: SUBIZ DESK: SUBIZ DATE: 08-04-2002 EDITION: FLA ZONE: FLA PAGE: H2.0 DEADLINE: 18.31 OP: dswiderski COMPOSETIME: 22.32 CMYK H2 Orlando Sentinel SUNDAY, AUGUST 4, 2002 Chains still expand despite dire predictions STORES FROM HI NEW TO THE NEIGHBORHOOD Road. The mall's third anchor will be Dallas-based Neiman Marcus. A Lord Taylor, owned by May Department Stores Co. of St. Louis, and a Seattle-based Nordstrom are to open stores Sept.

6 and Oct. 11, respectively, at Florida Mall, at Sand Lake Road and South Orange Blossom Trail. They will join the mall's five existing anchors: luxury retailer Saks Fifth Avenue and mainstream retailers Burdines, Dillard's, J.C. Penney, and Sears. Five department-store chains make their Central Florida debut this fall.

The five are divided between two south Orlando malls, both of which are convenient to the area's tourist corridor, from which they expect to draw a good portion of the business: A Bloomingdale's and a Macy's, both owned by New York-based Federated Department Stores will anchor the new Mall at Millenia, scheduled to open Oct. 18 at Interstate 4 and Conroy flurry of excitement from tourists and locals, and the retailers will pump out the money to capture attention in the first 90 days or so. "The key question is, can they sustain that excitement once that period passes?" Richard Burnett can be reached at 407-420-5256 or rburnettorlandosentinel.com. may be so positive that it seems to dispel any doubts about the future of conventional department stores, some experts say. "It's going to be a big challenge when five new retailers of that caliber open in the same area within 30 days of each other," said Eli Portnoy, president of The Portnoy Group, a retail consulting firm based in Orlando.

"Obviously, there will be a HILDA M. PEREZORLANDO SENTINEL Opening this fall. A worker operates a bulldozer outside the Nordstrom department store at Florida Mall. cerns. Once the new stores open in Orlando, the initial reception settle Average? themselves to current reality," he said.

"The adapting is going to be a painful process, but ultimately they will have no choice." Those department-store operators willing to talk about the situation shrug off warnings of impending extinction; they have heard such dire predictions before. They do acknowledge, however, that they have a fresh set of challenges before them. Department stores' market share has fallen sharply during the past decade, thanks mostly to the rise of large, successful discount chains such as Wal-Mart and Target. This year, the conventional chains are on pace to capture barely 51 percent of all U.S. general-merchandise sales, compared with 71 percent as recently as 1992.

"It is certainly not a growing industry," said David Rachman, a retail consultant, author and professor of marketing at Ba-ruch College's Zicklin Graduate School of Business in New York City. "I mean, people have so many other choices now. The specialty stores have dug into their business enormously. Appliances, electronics and cameras these are booming businesses, but most department stores don't sell them anymore. They have such tremendous overheads they can't compete.

They are dinosaurs, basically, they really are." Higher-price chains have been hurt the most, experts say, especially during the recent recession and still-sluggish recovery. Same-store sales have been persistently lower this year for retailers such as Federated Department Stores Neiman Marcus, Nordstrom, and May Department Stores Inc. (Same-store figures, considered a key indicator of retail health, track sales growth only for those stores in a chain that have been open for at least a year.) These days, a lot of new shopping malls are cutting back on the number of department stores included in their projects as "anchors." With so many companies ailing, mall developers are hedging their bets, concerned that a new wave of consolidation could wipe out some chains, leaving malls with big, empty boxes to fill. "What you're going to see is one or two department stores, not four or five," Robert Michaels, president of Chicago-based General Growth Properties, recently told Shopping Center Today. When General Growth, the nation's No.

2 mall owner and operator, renovated a mall recently in Milwaukee, it I 8 QR Preventative 19 wthis maiiutjiiaiiut; ad Service includes new fluids see store for details 2.75! 2.00 OFF Clutch APY Allstate Bank National Average included only one department store among its anchors, choosing restaurants, a bookstore and a movie theater instead. Orlando's shopping malls mostly escaped those kinds of problems during past consolidation. In the late 1990s, for example, Dillard's Inc. purchased Mercantile Stores, owner of Gayfers department stores. But Dillard's eliminated the overlap by selling Gayfers sites at Ovie-do Marketplace, Florida Mall, and West Oaks Mall to the Parisian department store chain owned by Saks Inc.

Later, when Saks closed two of the three Parisians, Burdines acquired the one in Oviedo and Lord Taylor chose the Florida Mall site for its local debut next month, when it will open about a month before a brand-new Nordstrom. Still, such "musical chairs" retailing can be unnerving for mall developers. The Mall at Millenia, for example, could have accommodated more anchors, but mall officials say they are comfortable with the three they chose -Bloomingdale's, Macy's and Neiman Marcus. "I've seen department stores do a lot of things and go through a lot of changes and cycles," said David Haysmer, director of operations for Forbes which co-owns the Millenia mall with Taubman Centers Inc. "Talking to our merchants at Millenia, I'm confident things are heading upwards and we're going to be very stable." The five new department store chains heading for Orlando this fall say they are bringing their A-game to town and will use this market as a showcase to prove critics wrong about the future of department stores.

"I remember hearing the same opinion 30 years ago, about the supposed demise," said Jack Hruska, vice president of store development for Bloomingdale's. "But department stores are still here, aren't they? Yes, a lot of them have problems, but the department store remains a viable incubation center for fresh new ideas in fashion. "Sure, the department store industry has been losing market share," he added. "Despite that, Bloomingdale's has been experiencing the greatest growth rate in our history in terms of new store openings and expansion. We look very favorably at the Orlando market, and we are looking at other opportunities in Florida because we see great potential for growth there." The Bloomingdale's and Macy's stores opening at the Millenia mall will reflect the latest store designs and merchandising strategies of Federated, their New York-based parent, company spokeswoman Carol Sanger said.

Federated's remodeling program, which extends to its Miami-based Burdines chain, includes a clearer store organization, a greater variety of unusual products, easier checkout systems, and new sections such as a children's department. "This is part of what we call our reinvention-of-the-depart-ment-store strategy," Sanger said. "It is all centered around giving the stores a more customer-friendly environment, simplifying the pricing, and making the amenities that go with shopping more accessible to the customer." Officials for Nordstrom, Neiman Marcus, and Lord Taylor would not comment about their plans, citing competitive con- ad Service see store for details APOPKA 436 I We Honor Corner of Thompson 436 Extended New and I I 880-9300 Used Car Warranties I ALTAM0NTECAS5ELBERRY EASTUCF I 1203 E.Hwy.436 10938 E. Colonial 260-6888 MV12095 281-0042 MV31150I SOUTH ORLANDO 0RLD0WNT0WN 1 9803 S. Orange Blossom Tr.

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Member FDK5 RETAILERS' UPS AND DOWNS Same-store sales (a key gauge of a retailer's health) have languished so far this year for the nation's department stores. Same-store sales at discount chains, in contrast, have flourished amid a sluggish economy and market upheaval. The following table shows how department-store and discount chains familiar to Cen tral Florida have fared, (percentage changes) Name Jan. Feb. March April May June DEPARTMENT STORES Dillard's 4.0 5.0 2.0 Federated Dept.

Stores Neiman Marcus 2.5 1.7 Nordstrom 1.1 3.2 May Dept. Stores 3.9 J.C. Penney 5.9 12.5 6.8 5.5 Saks Inc. 1.7 2.4 0.9 1.2 Sears DISCOUNT STORES Kohl's 11.5 14.4 9.1 5.3 8.7 14.8 Wal-Mart 8.6 11.0 10.7 3.2 6.8 8.7 Target 5.8 10.0 9.4 0.4 4.6 6.1 Mortgage rates are the lowest they've been in years! Whether you're purchasing a new home or refinancing your existing one, contact the nation's leading retail mortgage lender Includes Bloomingdale's, Macy's and Miami-based Burdines. Includes Lord Taylor, Hecht's and other chains.

Includes Saks and Parisian, among others. Considered a value-price department store. SOURCE: Sentinel research Call today Kissimmee 407-935-9100 Dr. Phillips 407-351-5826 Orange City 386-775-21 57 Melbourne 321-722-9833 Orlando 407-660-9119 Maitland 407-767-1650 Lake Mary 407-688-1133 MtDora 352-735-6776 Sports 7 Winter Park 407-622-2770 Based on statistics by Inside Mortgage Finance ending 12-31-01. Put on your game face Sports takes you inside the game, with news, game wrap-ups, columnists Jerry Greene and Mike Bianchi and more.

Sports. Every day in the Orlando Sentinel. This Saturday 24vwnfoflKJroj- tLllLUlMil Whin better; Ionian orShaq? Coach Jackson picks Jordan! Orlando Sentinel OrlandoSentinel.com 2002 Wells Fargo Home Mortgage, Inc. All rights reserved. COLORSTRIP:.