New Coldwater Creek stores to be elegant, not opulent

When Coldwater Creek opened its Seattle store in 1999, it transformed a two-story section of the old Nordstrom building at Fifth and Pine into a tranquil, earthy shopping environment, installing waterfalls and a stream that runs through the floor.

But the Idaho-based women's-wear and jewelry retailer is betting its growth on a more understated format. As the company gears up for an accelerated rollout of stores across the country, it is focusing on smaller locations with fewer special effects.

"We're still building beautiful stores; we're just building them a little bit smaller and a little bit smarter," said Daniel Griesemer, Coldwater Creek's new senior vice president of retail.

Griesemer, a former Gap executive, was hired in October to help Coldwater Creek — best known for its catalogs — expand its retail presence. The company has since decided to shrink the size of its new stores to around 5,000 square feet and to target upscale shopping centers in suburban areas.

The previous store model of roughly 8,000 square feet required $1.2 million in startup costs; the price tag for the more utilitarian format is about $875,000 per store. Griesemer said Coldwater Creek, which now has 34 stores, hopes the leaner model will help the company grow to at least 150 stores over the next five years.

"They are finding ways to make the box more productive without sacrificing customer service or the experience," said Lauri Brunner, retail analyst for RBC Capital Markets in Minneapolis.

After struggling through a disappointing 2001, Coldwater Creek is looking to parlay the more efficient store model into a larger share of a swelling market for upscale women's clothes. Coldwater is vying with a field of competitors that includes Chico's, J. Jill and Talbots, all specialty stores that cater to 35- to 55-year-old women, America's fastest-growing age group.

"As baby-boomer women move into the post-child life stage, they are going to have more time and energy and disposable income," said Marti Barletta, president of the TrendSight Group, a Chicago marketing consulting firm.

Barletta said the casual clothes sold by specialty women's retailers such as Coldwater Creek fit in with the active lifestyles many baby boomers lead.

"There's never been a generation of women like this before, who have these outside interests not related to kids," she said.

To capture more of that market, Coldwater Creek is adopting an aggressive multichannel approach, building more stores to complement its established catalog business.

The company, which had $5 million in cash on hand as of March 2, says it will open 14 stores this year and 22 to 28 next year.

Most new stores will open in what the industry calls "lifestyle" shopping centers — suburban retail centers that feature upscale apparel and home-furnishings retailers. That's a sharp contrast to the 13,000-square-foot store in downtown Seattle, which Griesemer calls a showcase location.

"We don't regret the experience we've created in that store at all — we're very proud of it," Griesemer said.

But perks such as streams and waterfalls are expensive, so future stores will be based on a smaller, less elaborate format.

The push to open new stores is part of an effort to rebound from a sluggish 2001, during which profit fell by $11 million. The aftermath of Sept. 11 and problems with the company's fall clothing line forced it to mark down heavily.

In January, the company closed its distribution center in Sandpoint, Idaho, and cut additional jobs at corporate headquarters and stores. Its chief financial officer, Donald Robson, resigned. This week, Coldwater Creek announced the hiring of Melvin Dick, a former senior partner at Arthur Andersen, as its new chief financial officer and executive vice president.

Despite the challenges of the past year, Griesemer said he believes Coldwater Creek is poised to build on the success of its catalog business and emerge as a dominant specialty retailer.

"What will be fascinating to be a part of will be to see this company grow from a northern Idaho direct-marketing company to a national, multichannel product brand," he said.

Analysts say baby-boomer women are a potent demographic group, but Coldwater Creek's success will depend on how well the company connects with its customers.

"First and foremost, they have to execute," retail analyst Brunner said. "They will be helped by the fact that the demographic is good, because the department stores are struggling right now. They have that wind at their backs.

"But if they're going to open all these stores, they have to pick the right merchandise and provide good customer service."

Jake Batsell can be reached at 206-464-2718 or jbatsell@seattletimes.com.