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Represents Savvy Retailing
by Beverly Dykes
Those familiar with formerly popular confections will recognize Charlotte Russe as a dessert invented by a noted French chef in the late 1700s, who named it in honor of his Russian employer, Czar Alexander I. It consists of a rather elegant presentation of a mold lined with ladyfingers, that is then filled with flavored Bavarian cream. In America, a regional variation that hails from Brooklyn is comprised of sponge cake, sweetened whipped cream and chocolate sprinkles.
In the retail realm, Charlotte Russe is the name of a womenís apparel and accessories retailer that aptly epitomizes the monikerís subtle reference to the ever evolving nature of consumersí tastes and preferences. The name, of course, is derived from the eponymous French dessert. The chain, however, shows no indications of becoming passe.
The first Charlotte Russe store was opened in 1975 in Carlsbad, CA. Its offerings consisted of apparel geared toward young women ranging in age from the teens to mid-twenties. Strong performance figures led to growth, such that by the 1990s the chain numbered 35 stores, (mostly in California) generating $70 million in annual sales. In 1996, the company became an acquisition target of private equity investment firm Sanders, Karp and Megrue (SKM), which enacted it own plan of expansion for the concept. The store roster thus continued to expand via the opening of new locations positioned in malls nationwide. As of fourth quarter 2008, the store count numbered approximately 490 units operating throughout 45 states and Puerto Rico. In 2009, Charlotte Russe, Inc. was purchased by investment funds managed by private equity firm Advent International. Based in Boston, MA, Advent International has been investing in the retail sector for over 20 years. The entity has funded numerous investments worldwide, with an emphasis on high growth sub-sectors that outperform the general market conditions. Today, the Charlotte Russe store roster is comprised of more than 550 locations operating nationwide, supported by corporate headquarters in San Diego and creative offices in San Francisco.
One may wonder what gives this retailer an advantage over the competition, and how it manages to outperform the growing number of concepts that debut each year serving essentially the same merchandise category (among the competition are Forever 21, Rue21 and Hot Topic). The answer is that Charlotte Russe has continued to evolve along with its customers, while still offering access to major fashion trends at value-oriented prices.
In late 2008, the company undertook a marketing strategy that involved partnering with a renowned stylist and promoting the endorsement of the companyís first celebrity spokesperson, who would serve as a brand ambassador. The campaign would provide Charlotte Russe with renewed insight into the latest trends and styles, advice on creative direction, and assistance with product design and merchandise development going forward. The affiliations demonstrated the continued ability of Charlotte Russe to tap into the pulse of todayĎs fashion trends, thus elevating the visibility and credibility of the brand. The retailerís emphasis is on promoting looks that young women everywhere seek to emulate -- with apparel and accessories that extol the confidence, style focus and aspirations of its target customer. The chain has continued to sharpen its identification with fashion-conscious young women, in its efforts at becoming an even more significant aspect of their lives.
The specialty retailer primarily attracts women ranging in age from 14 to 35 seeking fresh selections of apparel, footwear and accessories that reflect their individuality, yet allow them to update their wardrobe with stylish pieces that are affordably priced. The merchandise encompasses ready-to-wear lines of tops (starting at $10), dresses (most under $30), skirts, denim, outerwear, intimates, as well as offerings of shoes, jewelry, belts, scarves and handbags that are spot-on in terms of appealing to discerning shoppers. In recent years the concept has successfully attracted a wider customer age range, to adequately meet the desires of growing numbers of women who find its combination of selection and pricing irresistible. Through fashion content, merchandise mix, and enticing store design and presentation, Charlotte Russe projects the current attitudes and trends that match a broad spectrum of customerís lifestyle needs.
A comprehensive review of the companyís operations is routinely undertaken in order to ensure that Charlotte Russe retains its position in the marketplace as a top-tier specialty retailer. The company continues to demonstrate improvements in operational performance and an adeptness at brand positioning, merchandising, inventory management, real estate strategy and capital utilization that have positioned the chain well to endure periods of macroeconomic instability. Charlotte Russe Holding, Inc. is poised to demonstrate its strength and staying power in the marketplace.
The company has maintained a strategy of reinvesting cash flow generated by existing stores back into the business, enabling Charlotte Russe to continue extending its reach into more and more markets. Economic benefits achieved by existing operations continues to encourage national growth of the chain. The company projected adding approximately fifteen new stores to its roster this year, having targeted new market regions in CA, IL, TX, OR, MI and CO. Among the newest locations to debut, celebrating their grand openings in November, are stores in Tippecanoe Mall in Lafayette, IN; Paragon Outlets in Livermore, CA; and Westgate Outlet in Glendale, AZ.
The optimum store size for Charlotte Russe ranges from 5,000 to 6,500 sq. ft. with a minimum of 50 feet of frontage. Although its locations have previously averaged 7,000 sq. ft., the company is shifting over to a boutique-based layout featuring distinct areas within, each of which showcases specific, evolving trends. Preference is to occupy space in enclosed super regional malls, outlet centers and downtown/central business districts featuring fashion-oriented tenants. The typical lease term commitment is 10 years. The demographic target is primarily teen to adult age women earning a mid level of income, who will be most likely to frequent regional shopping destinations on a routine basis.
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