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ATTITUDE CHECK

Anchor Blue sells the West Coast look at prices less-affluent teens can afford

By Elyse Umlauf-Garneau

Not every teen can afford Abercrombie & Fitch, but that doesn’t mean they can’t have access to trendy apparel. Anchor Blue is making sure they can.

Shopping for clothes can be an angst-filled adventure for some students. Tight budgets and the “too cool for you” atmosphere in some stores can generate feelings of inadequacy. Anchor Blue aims to improve the shopping experience for middle income, multiethnic teen-agers by providing “cool” at a price they can afford.

“Lots of chains bring an attitude that you have to be cool to shop here, we’re only for surfers, you have to be one of the beautiful people or a skater, and so forth,” said Michael Bush, president and CEO of the Anchor Blue retail group, Ontario, Calif. “We try to be very welcoming and inclusive and without that attitude.”

Anchor Blue targets the 16-to-19 age group at 165 stores in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah and Washington state. The chain got its start in the 1960s as Miller’s Surplus and then Miller’s Outpost. In 1981 the company developed its own brand of clothing and became Anchor Blue. Two decades later owner David Miller sold the chain to American Retail Group, a European-owned retail holding company, which in turn sold it in 2003 to Sun Capital Partners, a Boca Raton, Fla.-based investor group specializing in turning around distressed retailers. And Anchor Blue was somewhat distressed, says Bush.

“The company had fallen out of love with its core customers,” Bush said. “Rather than looking for new ones, we decided to embrace and serve our core customers.”

The strategy is based on four core values: welcome all; deliver fashion at reasonable prices; maintain ambience; and focus on West Coast styles without imitating the likes of Tommy Hilfiger or Ralph Lauren. “We try to combine fun, humor and sexiness in the store,” Bush said.

Anchor Blue has concentrated on improving small elements, such as fashion details, in-store music and Anchor Blue logos on the price tags. The strategy has helped the retailer boost comparable-store sales, which rose about 6 percent last year. In 2004, the first year of the chain’s turnaround, comp sales were up nearly 5 percent year on year. Not bad, considering that in 2003 and 2002, they were down 12 percent and 10 percent, respectively.

“It’s pretty evident that they’re making a nice comeback,” said Gregory M. Cochran, CLS, vice president of leasing at The Macerich Co.’s Westcor division in Phoenix. Twenty-four Anchor Blue stores operate in Macerich malls in Arizona, California, Colorado and Utah. Cochran says a number of the stores are performing well; he points to comp sales at several centers that have exceeded the retailer’s overall results. In 2004 comps were up at two Arizona stores — 15.5 percent at Chandler (Ariz.) Fashion Center and 25 percent at Desert Sky Mall, in Phoenix.

Edgy, funny and cheap
Youngsters need not break the bank — or mom and dad’s bank, as the case may be — to build a wardrobe. Bush says the chain’s prices run about 20 to 30 percent lower than those of Abercrombie & Fitch and the like. Yet it represents exactly what the age group is after. “The fashion is casual and has a bit more of that West Coast vibe, rather than an East Coast preppy mentality,” Bush said.

For guys, Anchor Blue’s line includes jeans, shorts, cargo pants, printed T-shirts, hooded sweatshirts and polo shirts. On the accessories side there are belts, backpacks, cologne and watches. The young women find skirts, shorts, knit and woven tops, and scarves, as well as sunglasses, boots, jewelry and loungewear for juniors. Inexpensive though the line may be, the clothes do not necessarily lack edge or humor. “Kiss my axe” and “Shake your Buddha,” for instance, are among the messages on Anchor Blue’s T-shirts for girls.

A great deal of American youth apparel reflects the Los Angeles lifestyle, inspired by a casual, active philosophy and by such beach and board sports as surfing, skateboarding and snowboarding. But though Anchor Blue’s merchandise is part of that milieu, it is more urban than beach. A retailer like Pacific Sunwear might cruise down the Pacific Coast Highway and shoot ads at Laguna Beach. Anchor Blue is more likely to choose a rooftop in downtown Los Angeles with a party scene for its shoots. “We’re less beach- and surf-driven, yet we still have that West Coast sensibility,” Bush said.

The stores themselves, which typically measure about 5,000 square feet, aim for a fun, hip vibe. Music (hip-hop and pop) and graphics (including some of those L.A. party scenes) contribute to the ambience. Concrete floors, exposed ceilings, a wall perimeter shelving system and a combination of tables and four-way display racks mix with a color scheme of royal blue and lime green. “It’s hip but not outrageous,” Bush said.

Bush acknowledges that competition for teen dollars is keen, but even so, there is room for lots of players, he says, and Anchor Blue differentiates itself through its aforementioned core values. Cochran says he thinks moderately priced youth retailers serve an important role. “There’s always peer pressure and teens wanting to wear Abercrombie,” Cochran said. “But if it’s fashionable, it doesn’t necessarily have to be a brand name for teens to buy it. There’s definitely a niche for those kinds of tenants.”

Stay true, stay real
Bush says a retailer must stick to its values if it wants to build and maintain its relations with teens, who are notoriously fickle and can sniff out the phonies. “Brands that aren’t genuine to themselves and don’t have a distinct personality that they express to their audience run the risk of being labeled phony,” said Bush. “That’s when you run the risk of falling off a teen’s radar screen or having a falling out with the teen audience.”

This does not mean that a store cannot evolve, of course. As teens’ tastes change, Anchor Blue tweaks its merchandise and surroundings to stay relevant, by modifying the language on shirts, say, or by changing music, models, ad venues or products. “If boys start wearing woven shirts, then we’ll provide cool woven shirts,” said Bush. “We move with the audience, but do it in the parameters of what we’re about as a brand.”

Such adaptability is critical, according to George Whalin, president and CEO of Retail Management Consultants, of San Marcos, Calif. “If it gets boring, that customer is gone,” Whalin said. “You need to keep tweaking the fashion and the environment.”

Anchor Blue has a Web site but does not plan to begin selling over the Internet for another year or more, executives say. The site displays the merchandise and much more besides to inform and entertain its audience, including a horoscope, quizzes, an advice column, downloadable music, video games and movie trailers. The elements change frequently, so there is always something fresh.

Anchor Blue intends to increase the number of stores in its current markets west of Denver and to move into other parts of the country too. Last year it opened four stores in the Dallas area and is looking to expand further in the state. This year’s plan includes 21 new stores, some of which will probably open in Florida. The retailer seeks out areas with strong net gains of young families.

“Our goal is to stick to markets where we’ll know the fashion sensibility best,” said Bush. “For instance, Florida is more like Southern California than Bangor, Maine, is. We look for a fashion sensibility that is in keeping with what the brand is about.”

Anchor Blue best performs in malls with movie theaters and where other teen-oriented retailers are doing well. Bush says the type of major anchors, whether they’re Dillard’s or Macy’s, is less important to Anchor Blue than having other teen-oriented retailers, such as Abercrombie & Fitch, in the center and near its stores.

Whalin says the strategy is smart. “Teen shoppers aren’t fiercely loyal to any store,” he said. “I’d want to be as close to Abercrombie as possible. If a store is visually appealing and a cool place, these shoppers will walk right out of Abercrombie and into Anchor Blue. This audience goes where they get the best deals and merchandise that grabs their attention.”