Kmart pulls into Manhattan's Penn Station - discount chain opening first two stores in Manhattan, New York, N.Y

Discount Store News, Oct 21, 1996 by Laura Liebeck

NEW YORK -- Kmart is looking to make its fortune in New York: not on Wall Street, but on Broadway and various other streets across town.

The site of the chain's first New York City store, at the famed Penn Station, should produce sales of "well north of $50 million" for Kmart, said chairman and ceo Floyd Hall. The same is true for Kmart's second Manhattan store, scheduled to open in November in former Wanamaker's space.

"We're very dependent on doing big volume here", said Hall, adding confidently, "We know how to run a $50 million to $75 million to $80 million store."

These two new stores bring to eight the number of Kmarts in the boroughs of New York, but constitute Kmart's first crack at the heart of New York City.

So far, no other Manhattan stores are planned for the near future, said Hall, because Kmart wants to fully evaluate the new units, which have been fashioned for this urban market. He said the chain probably will take 12 to 18 months to evaluate the stores before seeding the area with additional units.

Kmart is not the first discounter to open in New York City. Bradlees has been operating a store here for nearly two years. The mention of Bradlees brought out the competitor in Hall during the opening festivities. He said that Kmart's prices "will be better than at Bradlees and well under most people in town." Warren Flick, president of U.S. Kmart Stores, further stated that "Kmart will be the true price leader in Manhattan [and will make] very strong price impressions."

Hall noted that unlike the suburban stores. "This store won't rely on promotional efforts that a suburban store will." But Kmart was the focus of a Conway ad circular that encouraged shoppers to loot at Kmart but buy at Conway, the New York City discount store chain.

Kmart has positioned the Penn Station store to take full advantage of its commuter location--in one of the city's two commuter train terminals--to appeal to suburbanites on the go and the busy, time-pressed urban dweller.

At the train level of the store, also called the concourse, Kmart offers such departments as health & beauty care, pharmacy, cosmetics, and Pantry products, including food, plus one-hour photo and souvenirs.

At the street level, natural light pours in from the many windows--another first for Kmart--to highlight the retailer's apparel program, which should account for 40% of the store's sales, said Hall, about average for the chain. This area features the newly expanded Kathy Ireland program, which is aimed at younger women, and Jacklyn Smith, which has more "snap" in its appeal to mature women, according to Hall. In addition, Kmart is giving prime space to Regatta, Kmart's private label, which has as its spokeswoman model/actress Lauren Hutton.

Also on this level is the chain's second licensed fragrance department, called Paula's Designer Fragrances, and the jewelry department, which has been expanded and infused with more fashion merchandise.

On the second level of the store, Kmart presents home fashions and rugs, men's and children's shoes (the first time that Kmart has presented a split shoe presentation), hosiery, housewares and RTA furniture, which was expanded in this store and fashioned to meet the needs of the urban consumer. RTA is displayed on carpet, the only carpeted area of the store. The department also featured platform displays, a new technique that will be rolled out to 800 stores by Nov. 10, giving Kmart a "headquarters" look, said Jim Alvord, divisional vp, home furnishings. Alvord noted that Kmart will show a good/better/best program in RTA in its effort to expand the selection.

The first Manhattan store, at One Penn Plaza, offers approximately 141,000 gross sq. ft., 96,000 sq. ft. of its selling space over four floors. The second unit, at 770 Broadway, will be on two floors, with historic elements of the site preserved, and will feature Kmart's new high-frequency format complete with a full Pantry department.

The Penn Station store, while unique in a number of aspects, does not reflect Kmart's current prototype. The four flours have lots of twists and turns and nooks and crannies, plus escalators, low ceilings on the lower floors and windows to the street, on the top floor. The store also offers home delivery, a first for Kmart, and well-developed security program that includes security personnel, cameras, and security tags.

The high-frequency format will be in 187 stores by the end of this year and 450 stores by the end of 1997, said Hall.

Among the new features of the Penn Station store:

* Cashier stations throughout the store;

* Ethnic foods section (mainly Hispanic);

* Platform display for exercise equipment;

* Larger-size TVs in consumer electronics including 31-in. and 35-in. sets.

* Size and height charts in infants and toddlers.