BrandsMart caps the year with opening of monster flagship - Miami, Florida

Discount Store News, Dec 9, 1996

MIAMI - BrandsMart USA replaced its 20-year-old flagship store with its largest store ever late last month. The 185,000-sq.-ft. facility, with an 88,000-sq.-ft. showroom, includes a massive storeroom, all of the company's telephone operations and executive and training offices.

President Michael Perlman told DSN that the company plans to open two more stores over the next three years in southern Florida, one in Kendall, south of Miami, and one in Palm Beach, about 60 miles to the north. While both may debut in 1997, the company is still negotiating real estate deals. "We'd like to start right away, but we won't be able to do anything until we have the right sites," Perlman said. He added that when the two new units are added, bringing the chain's store count to five, he expects to do $500 million in sales annually "easily." The company now generates about $320 million in sales per year.

The newest store is easily the chain's largest (its Sawgrass Mills outlet, at 55,000 sq. ft. of showroom space, runs second) and according to Perlman, "We'll never build one this big again."

BrandsMart will return to its standard prototype of about 50,000 sq. ft., he said.

There are several key changes in BrandsMart's newest look. Many of them come under the purview of Elizabeth Justin, buyer for accessories, sell-through video and office supplies. She has added a sell-through videotape program that includes a video wall near checkout and four pre-viewed road-blocks, marketing hundreds of used videos at $4.88 each. The company has also expanded its housewares selection, moved into tertiary areas like desk lighting, and for the first time has added on-site food in the form of a Miami Subs express station.

Additionally, BrandsMart has expanded its presence in photo, added just this year, by building film, album and frame roadblocks near the photo department. This store will not include one-hour photo, unlike the Sawgrass Mills store, but will incorporate next-day processing, ferrying orders each day to its sister store.

BrandsMart takes a one-price approach to frames, with any size on sale for $8.88 (excluding the smallest frames, which sell for According to Justin, the margins are so strong on larger sizes that even at half what competitors charge, they still return 30% margins.

Justin is charged with building BrandsMart's margins with accessories and other high-margin goods. "We added one little item like luggage tags," she said, "and saw immediate impact on margins. It's not a high-dollar business, but it's very profitable."

Short of room to merchandise accessories and consumables (which BrandsMart lumps under accessories), the old Miami unit received just 1% of sales from the profitable category. "We do about 4% in other stores; if we can do that here, we'll see a 3% bump in sales at 50% margin," Justin said.

Other high-margin strategies include expansion of personal care products, small appliances and cookware, including new Betty Crocker products.

According to Perlman, the new unit should eclipse the original, a severely out-of-date and undersized facility a few blocks away on the Palmetto Expressway. For years, that unit sold about $130 million to $150 million a year from its 28,000-sq.-ft. showroom, and before its retirement accounted for more than $1.5 billion in retail sales.

"We expect to do at least $165 million from the new location," Perlman said. Despite severe computer problems during the opening weekend, the store is well on its way to that goal; 54,000 customers purchased $3.4 million worth of goods during the store's first four days. "If we could keep that up, we'd be selling $300 million out of this store," Perlman joked.

Traffic was so overwhelming that the company is redesigning its entrance, removing a greeter's desk and an office that Perlman said were obstructing traffic entering and leaving the store. "We're going to make it a lot simpler to get in and out," he said.

The chain became perhaps the first to offer a DSS system for a penny (with a one-year subscription to DirecTV, prepaid), delivering a Uniden product at that price. A new merchandising unit for DSS, located just across from the entrance, offers 20 different models of DSS products from Sony, Uniden, RCA, Hitachi and Toshiba.

People don't shop to be entertained; they shop for price," Perlman said, and BrandsMart made a deep price impression with doorbuster specials like "Independence Day" for $11.95, reconditioned Emerson microwaves for $38, 13-in., cable-ready Zenith color TVs for $98 and a Pioneer ProLogic surround sound rack system with a 25-disc CD changer, a total of 260 watts of power and five speakers for $498.

The company also added Mitsubishi, which had pulled out of BrandsMart stores because of discounting, giving it "every major brand of televisions," according to chairman Bob Perlman.

The new store allowed BrandsMart to build seven glassed-in demonstration rooms: one for car audio, one for high-end home audio and five for home theater. One room featured the new 80-in. rear projection televisions from Mitsubishi, selling in the $9,000 range.