Gurnee, IL, June 29--A shopper-friendly crop of big-box stores is sprouting up in U.S. suburbs, featuring wider aisles and colorful signs, in contrast to the "stack-'em-high, sell-'em-cheap" model perfected by Wal-Mart.
Retailers -- faced with declining traffic at traditional shopping malls and unrelenting competition from Wal-Mart Stores Inc. -- are in a race to open their own version of the kinder and gentler new big-box store as they strive to win back customers who defected to lower-priced chains.
"The big boxes were located in suburbia for convenience and car access," said Thom McKay, a retail consultant with architecture firm RTKL in Baltimore, Maryland. "Everyone has realized what an impoverished shopping experience they all are."
Sears, Roebuck and Co. calls the 18-foot-wide center aisle of its new Sears Grand superstore in this far-north Chicago suburb of Gurnee a "boulevard," and credits an improved shopping experience for better-than-expected sales.
About 90 miles north, in Fond du Lac, Wisconsin, Toys R Us Inc.'s prototype Geoffrey store has an activity center where employees help youngsters with new art projects every day, giving frazzled parents a break.
Still, analysts aren't completely sold on these concepts, which tend to have higher operating costs than the no-frills megastores that continue to flourish in suburbia. The new stores are getting rave reviews for looks, but the question is whether they can generate equally handsome profits.
"It's simply too early to tell" whether the stores will make much money, said Craig Johnson, president of consulting firm Customer Growth Partners in New Canaan, Connecticut.
Johnson said retailers want to keep quiet about that for now because it can take several years before stores reach their full profit potential. But if companies are expanding, that's a good clue that management is happy with profits, he said.
Two Sears Grand locations will open in the next few weeks, with plans for a handful more by next year. The retailer declined to comment on profits, however, but it is counting on the new format to expand its store base for the first time in two decades.
J.C. Penney Co. said in April it would add seven new off-mall stores this year, and could open as many as 100 over the next few years.
Going off-mall often means moving next door to Wal-Mart, which has flooded the rural and suburban markets with more than 3,000 discount stores.
Wal-Mart can afford to scrimp on cosmetic upgrades like pretty signage because customers shop there for low prices rather than aesthetics, analysts say, but other retailers are hard-pressed to compete.
"You have to find ways ... to position yourself differently from Wal-Mart," said Madison Riley, retail strategist with consulting firm Kurt Salmon Associates. "It's very difficult for anybody to beat those guys on price."
A Kurt Salmon survey found some 58 percent of consumers prefer to shop in big stores to save time, yet 45 percent feel that stores today are simply too big and difficult to navigate. Four in 10 said it's hard to find what they want in megastores because of the vast merchandise selection.
The Sears Grand store in Gurnee is as big as a Wal-Mart supercenter and sells everything from milk to plasma televisions in a 200,000-square-foot, one-story format. But Sears has tried to make it look more inviting than the typical warehouse superstore.
When they walk through the door, customers can see all the way to the back of the store, and large, colorful signs point shoppers toward home appliances, electronics, clothing or food.
Unlike the typical "impoverished" megastore -- where cardboard boxes are stacked to the ceiling -- Sears Grand has cases tucked away in corners or on low shelves.
The stores target suburban moms, age 25 to 45, with income "only slightly higher" than the traditional Sears stores, said Teresa Byrd, Sears Grand general merchandise manager.
That meshes with another trend in Kurt Salmon's survey. Riley said many retailers were trying to stock better quality merchandise in hopes of getting into higher price points -- which also moves them out of the Wal-Mart bull's-eye.
Sears says initial sales at Sears Grand are 30 percent better than expected. There has been industry talk of plans for adding hundreds of Sears Grand stores, but the company has not confirmed any plans for expansion on that scale.
Still, looks aren't everything -- analysts are quick to point out that Sears also has a handful of Great Indoors home decorating stores that look nice but are costly to operate and are yet to generate a profit.
Sears announced last August that it would close three Great Indoors stores and tighten its supply channels and inventory in hopes of making the chain profitable.
