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Kmart closings result in added market share

The prevailing cycle of retail consolidation has provided a boon to Santa Ana, CA-based Anna's Linens — especially in California, where it has picked up market share as other retailers retired from the retail rat race.

And Kmart's announcement earlier this month that it will close 284 stores represents the latest opportunity for the home textiles retailer, which grounds itself in working class and ethnic neighborhoods.

"Kmart is our No. 1 competitor," said president Alan Gladstone. "In fact, every [Anna's] store has a Kmart within one to two miles."

Kmart's roster of store closings will eliminate direct competition for 40 percent of Anna's 70 stores this year. Anna's has targeted a significant number of markets where it believes it can pick up share after the closings, emulating a formula implemented when Irvine, CA-based House2Home abruptly shuttered its 42-store chain last November, and when Chicago-based Montgomery Ward closed its doors in early 2001.

"Without question, after the going-out-of-business sales, we made a concentrated effort to go after shoppers," Gladstone said. "Stores that were in House2Home areas had immediate increases. And Wards was a significant competitor; they were very good at window coverings, [a core Anna's business]."

To tap those shoppers, the retailer made more frequent use of its direct mail circulars, bumping their number from 32 to 36. It also broadened its distribution into new zip codes. In the densely packed Los Angeles market, it now markets to a three-mile radius around its stores. In Texas, it boosted the radius to five miles, and in New Orleans to between eight and 10 miles.

Consolidation provided a secondary benefit to Anna's as well, as a torrent of merchandise already in the pipeline suddenly had no place to go. Opportunistic buys account for slightly less than one-third of Anna's mix but are important to driving promotions. The availability of such buys has not yet slackened, Gladstone said.

"So much merchandise is on the market. We cannot buy everything that we could sell," he said. "We don't have room for everything being offered to us."

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