DALLAS-The Hudson, OH-based Jo-Ann Stores Inc. has put the Southwest US at the top of its list in a nationwide push to get more 35,000-sf superstores into the portfolio, either as new locations or relocations in established submarkets.

The nationwide expansion and conversion represent the largest push in years for the 61-year-old company, Jeff Fink, vice president of real estate for Jo-Ann Stores Inc., tells GSR. By the end of its fiscal year 2005, which closes at the end of January, the chain will have opened 29 superstores this year. Next year, the plan calls for 40 superstores, of which seven sites already are locked down in the southwestern states of Arizona, Colorado, New Mexico, Nevada, Texas and Utah with “several more under active negotiation,” Fink says. “Additionally we have two locations approved for 2006 (Southwest) with many more under negotiation or consideration….I’ve prioritized the Southwest over three of the largest marketplaces in America.” The five-year plan calls for 60 superstore openings nationwide in 2006 and 75 in 2007.

“We are closing 1.3 small stores for every large store that we open,” Fink explains of a strategy to replace its smaller stores, which have a 40,000-item inventory, with superstores offering 70,000 items for shoppers. “If it’s older and it’s 10,000 to 14,000 square feet, it’s slated one day to go away,” he says. “It’s very rare for a retailer to expand from 14,000 sf to 35,000 sf and also increase performance.” Jo-Ann’s now has 863 stores of all sizes in 47 states, of which 115 are in Southwest.

In the Southwest, the team is scouting superstore sites in Dallas/Fort Worth, Phoenix, Denver, Las Vegas and Salt Lake City. And the one-time mall retailer is again looking at those kind of locations, leaning toward leased space in out-parcel buildings, explains Steven A. Lieberman, CEO of Dallas-based Retail Connection, who’s steering the initiative in Texas and surrounding states.

The Jo-Ann’s team started experimenting with a large store format in 1996, opening a 45,000-sf location in the headquarters city and following through with other openings through 2000. Then, Jo-Ann’s went into a turnaround period to limit openings and tweak the superstore model, ending up with 35,000-sf prototype that’s believed to offer just the right mix of space and inventory to fatten the bottom line. Right now, there are 114 superstores–old and new–as the plan picks up momentum due to the younger format’s strong financial showing. According to Jo-Ann’s, a traditional store brings in $1.5 million in annual revenue while a superstore is racking up $6.2 million.

The per sf sales number was the convincing factor for the 35,000-sf model. According to a presentation supplied by Fink, a traditional store brought in $107 per sf in sales, the 45,000-sf stores reined in $139 and the 35,000-sf prototype picked up $150 in its first year and the projection is $178 by the fourth year. Records show a customer is spending $22 per superstore visit versus $16 at a traditional store.

Ten of the chain’s 14 35,000-sf prototypes recently marked their first anniversary. The locations “are exceeding their planned results,” Alan Rosskamm, Jo-Ann’s chairman and CEO, says in a Q3 earnings press release. Its Top Five superstore cities are Chicago, Dallas/Fort Worth, Detroit, Los Angeles and Seattle.

Lieberman says Jo-Ann’s refined superstore format has been well received by shopping center owners. “It’s almost like a ground-floor opportunity with the depth of an old concept,” he says. “The landlords have been teased with it and now it’s here. It’s a very aggressive rollout with double-digit store growth for our markets.”

The Jo-Ann prototype has been fine-tuned to the degree that the layout is flexible enough to be customized to the submarket, i.e. allowing more space at a location if a “counter trend” warrants it, according to Fink. That will be a critical element when Baby Boomers start to flood the retirement market, he explains. That retirement surge will make Texas “a very exciting market for us,” he says, citing weather and tax benefits as top draws for retailers and Boomers alike.

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