RETAIL—Dillard’s Attempts To Expand in L.A. Being Thwarted

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With more than 300 stores throughout the United States but only one in the Los Angeles area, Dillard’s Inc. is making a serious bid to open new stores here, industry observers said.

But the mid-range department store chain is having trouble making inroads because of opposition from potential competitors.

Dillard’s has been looking to expand its L.A. presence ever since opening its Palmdale store last November, but observers say the chain has recently stepped up its efforts.

“They are more serious now than I have heard them,” said retail real estate broker Mark Tarczynski of CB Richard Ellis.

Little Rock, Ark.-based Dillard’s, whose officials did not return phone calls last week, focuses on fashion apparel and home furnishings targeted to middle-income customers. Among the centers that Dillard’s has expressed interest in, according to brokers, are Westfield Shopping Town in Topanga and the Del Amo Fashion Center in Torrance.

Making it tough for Dillard’s to gain a foothold here is the chain’s preference for locations inside large shopping malls. Yet most big malls in L.A. already have major department stores as anchors, and in many cases, the lease agreements of these stores give them veto power over new tenants moving into the mall.

Chains like Macy’s and Robinsons-May, which sell many of the same lines carried by Dillard’s, aren’t anxious for another competitor particularly because business is down for big department stores, according to retail analysts.

A case in point is a proposed mall in Simi Valley. A site has been selected and an environmental impact report has been completed on the project, which still awaits city approval.

“We have had discussions with (Dillard’s),” said Assistant City Manager Brian Gabler. “There are difficulties in bringing them into a proposed mall because of the other tenants.”

Rina Neiman, a spokeswoman for Macy’s, said she couldn’t see any reason the company would seek to block Dillard’s. “We’re in malls where there are Dillard’s in Texas,” she said.

Yet Tarczynski said it is common for mall anchors to block competing stores. Even if they don’t directly veto these stores, they can use their leverage as anchors to insist on lower rents or other concessions. “Even if (the new store doesn’t) sell the same things, the anchors will give the landlords a hard time to extract every pound of flesh out of them,” he said.

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