Tuesday Morning debuts 12 units, plans for 500 by decade's end - Company Profile

Discount Store News, June 7, 1993

DALLAS - Tuesday Morning, the upscale deep discounter, is on the expansion trail again, headed for 500 units by the end of the decade, executive vice president Jerry Smith said. The chain debuted 12 stores at the end of April, bringing its store count to 217. Further openings this year will bring the final 1993 store count to 235.

The Tampa, Fla., opening is the chain's 14th Florida store, and its first in the Tampa Bay market (another also opened in nearby Clearwater). The round of openings also included the new markets of Haddonfield and Deptford, N.J.; Winston-Salem and Greensboro, N.C.; Salt Lake City (2); and Santa Barbara, Calif. Additionally, units were added to existing markets Indianapolis and Minneapolis/St. Paul (2). The New Jersey and Utah units both mark initial entry into those states, bringing to 31 the number of states served.

According to Smith, the recession has been relatively kind to Tuesday Morning, perhaps because of its 50% to 80% discounts or, even more likely, because of its upscale product mix that appeals to upper middle class shoppers (meridian family income of Tuesday Morning shoppers: $55,000) who were less affected by the recession than were middle and lower class shoppers.

Tuesday Morning has stuck to a formula that works, Smith said. "We know our shoppers," he said. "Most are what we call knowledgeable shoppers; they know the key labels and brands, and appreciate the high quality that we sell."

In contrast to most closeout stores, the retailer sells upscale products for upscale consumers. For instance, this month the company will feature fine hand-blown crystal stemware at $259 each.

In recent months, the company has featured brand names like Bill Blass, Laura Ashley, Mikasa, Samsonsite, Spode, Anne Klein and Ralph Lauren. Anne Klein watches were added in early May at $30.

Certainly, at the Tampa opening, the customer profile hardly fit the typical off-price demographic. As the clock ticked down to 8 a.m., the parking lot filled with an assortment of Mercedes, Jaguars, and Cadillacs, and most of the women who emerged from them (there were only about one or two male shoppers) looked like they were on their way to a country club, not a semi-abandoned strip mall.

The store opened with little publicity, apart from a couple of items in the local business sections and announcements in neighborhood shoppers." One customer said that she had shopped Tuesday Morning in other states while traveling, others said that out-of-town friends had told them about the chain, and one said that she was a regular shopper through the company's soon-to-be-discontinued catalog. But nearly all were at the opening due to the chain's rampant word-of-mouth publicity. The opening day circular didn't drop until the morning of the opening.

Shirley Caverly, Tuesday Morning regional manager for central Florida, noted that the chain does advertise from time to time, but mainly just prior to each opening. Mainly, it relies on customers talking to their friends and direct mail to preferred customers to build traffic.

The company is in a unique position in the marketplace: selling department store goods out of stores, generally located in low-rent strip malls and warehouse zones, open only four times a year with a design scheme that won't ever win any design awards. Fixtures are limited to warehouse racks and fold-out tables, the floors are cement, and an entire store can be opened from lease to grand opening for under $40,000.

Because the chain opens only four times a year, for about six weeks each time, to take advantage of the best sales periods of the year (Holiday, Back-to-School, Mother's Day/Memorial Day, and Presidents' Day), it saves on labor, heating and electricity costs during what would be slow periods.

The result is significant savings for the consumer, an incredibly low cost of doing business (only the store manager is a full-time employee and many of the part-timers spend their checks before they even leave the store), and nearly 100% sell-through of its goods because the selection is keyed to each selling season, with little or no continuity merchandise. For instance, the chain might bring in a few Christmas items in August just to tease customers, Caverly said, but on the whole, won't start selling holiday goods until late October Lawn and garden doesn't hit the shelf until May.

Last year, the company sold $160 million worth of goods out of 190 stores at year-end, for an average of a little under $1 million per mature store, each of which is only about 10,000 sq. ft. The stores which are open only about half the year total, averaged a 9% same store increase over 1991.

One of the keys to the chain's success, Smith said, is a staff of specialized buyers who comb the world for deals. At the Heimtextil America show last spring, for instance, two buyers were visiting every booth, particularly those from outside the United States, not necessarily to buy, but to establish relationships for future business.

The chain stockpiles goods until it has enough to supply all of its stores, then masses them out during the appropriate season. For instance, Smith said, the third quarter will see a special selection of Italian accent furniture that the chain has acquired bit by bit over the past 18 months.