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Trendy retailers targeting city malls: H&M picks Circle Centre; Williams-Sonoma Home eyes Fashion Mall

May 2, 2005

Two retailers in the early stages of national expansion efforts are eyeing Simon Property Group Inc.'s Circle Centre and Fashion Mall for new stores.

Clothing retailer Hennes & Mauritz plans to open an 18,000-square-foot store in Circle Centre this fall, and local retail experts say Williams-Sonoma Inc. is considering the Fashion Mall for one of its first Williams-Sonoma Home stores.

Better known as H&M, Hennes & Mauritz is to clothing what IKEA is to furniture: hip, Swedish and budget-friendly.

Since opening its first U.S. store in New York in 2000, H&M has consistently drawn crowds for its selection of clothing for men, women, teenagers and children. In addition to fashion basics and updated classics, H&M also focuses on turning the latest runway-fashion trends into affordable clothing.

"Our target market is anybody interested in fashion," said Lisa Sandberg, director of communications for H&M's U.S. operations.

Stockholm-based H&M is the largest clothing retailer in Europe and has 1,100 stores in 21 countries. It has 76 stores in the United States, most of them on the East Coast. The company is venturing into the Midwest after staking out territory in Chicago, said Lisa Sandberg, director of communications for H&M's U.S. operations. A store in Fort Wayne's Glenbrook Square mall opened April 22.

The company is targeting U.S. growth of 10 percent to 15 percent each year, Sandberg said. Typically, H&M opens a flagship store in a new market, such as the Circle Centre location, then adds stores, Sandberg said. Additional stores may carry several H&M lines or may focus on one segment, such as children's or teen fashions, she said.

"There's been a lot of fanfare about them," said Bill French, principal and vice president at locally based Colliers Turley Martin Tucker. "It's absolutely a good catch from the standpoint that it's truly an international retailer."

The Circle Centre store is a typical size for H&M, which usually looks for stores in the 17,000- to 23,000-square-foot range. Sandberg said the Circle Centre store will be one level, but couldn't offer details on its location within the mall.

A spokeswoman from Simon, which manages Circle Centre, didn't return calls seeking details about the store, including its location.

Circle Centre offers few vacancies of that size on its first three levels, and a major retailer on the vacancy-plagued fourth floor would be a surprise, retail experts said. Abercrombie & Fitch closed its second-floor location for renovation in late April, but the store's manager said it will reopen in the same location in mid-July. Several small shops on the first level of the south end of the mall near Nordstrom are vacant, but aren't contiguous.

Under the Sun, a retailer of Mexican furnishings based on Rockville Road, recently vacated its third-floor space near the center of the mall, but that left only 4,500 square feet open. Store co-owner Ed McMichael said mall manager Simon terminated the store's temporary lease, saying it had another tenant for the space.

Circle Centre's overall occupancy rate was 85 percent at the end of 2004, according to company filings.

On the north side, Simon is shuffling tenants around Fashion Mall to accommodate a new store, rumored to be Williams-Sonoma Home. The retail brand is the latest venture from Californiabased Williams-Sonoma Inc., which also operates Williams-Sonoma, Pottery Barn and Pottery Barn Kids at Fashion Mall.

Simon is clearing out space formerly occupied by Houlihan's restaurant, which recently closed, and retailers Bebe and the Walking Co., which are relocating elsewhere inside the mall. Assuming those spaces are combined, that would free up about 15,000 square feet for a new tenant.

Fashion Mall's occupancy was nearly 97 percent at the end of the year.

Neither Simon nor Williams-Sonoma returned calls seeking comment on a possible store at the Fashion Mall.

The California-based kitchenware retailer launched Williams-Sonoma Home as an upscale home-furnishings catalog in 2004. The company plans to open three to five bricks-and-mortar home stores this fall, according to its Web site. Store sites will include Los Angeles and Palo Alto, Calif.; Portland, Ore.; and Cincinnati. Indianapolis isn't mentioned, but several retail sources said they've heard a deal is in the works.

If Williams-Sonoma does pick Fashion Mall for one of its first home-store locations, it would cement the mall's growing reputation for upscale home furnishings. Crate and Barrel, slated to open at the mall this fall, the two Pottery Barn stores and Restoration Hardware all compete with Williams-Sonoma and Williams-Sonoma Home to some degree. Fashion Mall is the only Indianapolis location for those stores.

Of the two newest entries, Williams-Sonoma Home would aim for the higher end of the market, while Crate and Barrel goes after more of a middle-market crowd. For instance, a handspun jute rug sells for $225 at Crate and Barrel; a handbraided version from Williams-Sonoma Home fetches $475.

If Williams-Sonoma does pick Fashion Mall for one of its first home-store locations, it would be a vote of confidence in the strength of the local retail market, French said. Additionally, it would only add to Fashion Mall's reputation, which has escalated in recent years with tenants such as The Cheesecake Factory and Crate and Barrel.

"We've seen some dramatic improvements to the quality of retailers [at Fashion Mall], which means better selection for consumers in central Indiana," French said. "Every year, it seems, Fashion Mall has gotten better."
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