What appeared to be a rumor or a hoax about Herberger's rebirth several weeks ago turned out to be real news. The department store, along with other brands under the Bon-Ton umbrella such as Younkers and Carson's, have resurfaced online under their original website addresses.
CSC Generation Holdings, an Indiana company, purchased Bon-Ton's intellectual property and trademarks shortly after the stores closed last month. Then the company shocked the retail world by saying it is talking with landlords about reopening stores in Colorado, Illinois, Wisconsin, Pennsylvania and Minnesota.
Recently, CSC's CEO Justin Yoshimura discussed what his company has in store for Minnesota and why it's interested in a retail concept in decline: the department store.
Q: Which, if any, of the 16 Herberger's stores in Minnesota are you considering reopening?
A: The Herberger's brand is a core brand that we want to build sales around. We're evaluating a few locations in Minnesota. We've had preliminary discussions with landlords but it's still a little early to say. It will be locations outside of the metro area. [Herberger's had stores outside the metro in Albert Lea, Alexandria, Baxter, Mankato, New Ulm, Rochester, St. Cloud and Willmar.]
Q: Can you be more specific?
A: Our first Minnesota store will probably be in Rochester, but we haven't signed a lease yet. We hope to open 100-plus stores [nationwide] in the next few years and see many possibilities in Minnesota. But we haven't completed our first store reopening yet. It depends on how our first few perform.
Q: Will new stores simply take over the old spaces?
A: Our new store concept is between 10,000 and 100,000 square feet. Bon-Ton stores were 40,000 to 250,000 square feet. We want to be open to different formats.
Q: Are you still interested in malls?
A: Two-thirds of the stores will be in former locations. One-third will be nearby.
Q: Is a big part of your road to profitability dependent on negotiating more favorable lease agreements, similar to what Marcus Lemonis did with Gander Mountain, now Gander Outdoors?
A: That's exactly what we're doing.
Q: You've got a lot of items for sale on Bon-Ton websites such as Herbergers.com. Since you didn't purchase any of the liquidated merchandise, where are you getting the goods you're selling?
A: We placed orders with some of Bon-Ton's former vendors including orders that Bon-Ton backed out of when they filed [for bankruptcy].
Q: Herberger's did not sell many electronics items and no major appliances, but you've got them on the website. Why?
A: Sears is in retreat. We actually viewed our opportunity as rebuilding Bon-Ton partly by acquiring former Sears customers. It differentiates us from Macy's or Kohl's. We're shifting our merchandise mix away from so much apparel and more categories where you want to experience it in person. Bon-Ton used to carry mattresses. We extending that because a large percentage of the population wants to try it out in person.
Q: How else will the stores be different?
A: We're a very experimental company. We're open to trying new things if a sales rep suggests that. That's what made us successful in our other endeavors [DirectBuy and LeaseCo]. One of our DirectBuy customers who had a one-year apartment lease said I wish there was an easy way to lease a TV for a year. Can I lease it? That's when we launched LeaseCo after we collected ZIP codes of people interested in leasing.
Q: Why do you describe your company on your site [CSCgeneration.com] as a "decentralized multibrand technology platform that is saving companies from Amazon?" What's your beef with them?
A: Personally, I buy a lot of things from Amazon and I think Amazon is a cool company, but Amazon exhibits monopolistic tendencies. Their retail business is a loss leader to collect consumer data for what they sell. A duopoly of Walmart and Amazon would be sad.
Q: It almost sounds as if you're taking department stores back to one-stop shopping.
A: We're taking it back to its roots when a department store was a customer's number one retailer.
Q: You mentioned that you're considering testing everything in your stores from art to liquor, personal stylists to interior designers. What does that look like in a department store?
A: We don't want to look like every other department store. We want to differentiate ourselves around service and flexibility of payment. The average Bon-Ton customer spent $700 a year on items to look good. What if we could help you live a healthier lifestyle instead of just selling you more?
Q: What changed that made you say Bon-Ton became a "real" opportunity?
A: We didn't want to buy that many stores.