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If The Niche Is Right, Retailers Can Still Grow

Retailers are closing in record numbers, but up-and-coming retailers, some from overseas, still see opportunity in the United States. The catch: the niche has to be right.

Suitsupply's New York store

For instance, Dutch men's clothier Suitsupply is planning further expansion in the U.S. after growing in Europe, Latin America, the Middle East and East Asia. The company is expanding while other men's clothing specialists are struggling to grow. 

Tailored Brands Inc., owner of Men's Wearhouse and Jos. A Bank, experienced a 1.5% year-over-year drop in sales in FY 2017, though comparable-store sales eked out a 0.1% gain. It also closed a handful of Jos. A Bank stores last year.

Suitsupply has 33 stores in the U.S., including one that opened in the Williamsburg neighborhood of Brooklyn last week, and one on the tony Newbury Street in Boston that will open later this month. The brand opened its first store on these shores in 2011 in Manhattan, and expects to open at least five this year. 

Suitsupply sells off-the-rack suits that are more expensive than the mass-market brands — as high as $1,100 — but not as pricey as a suit in an upscale made-to-measure haberdashery.

Suitsupply CEO Fokke de Jong told Bloomberg he has been hearing about the death of men's formal clothing for a long time, and doesn't believe it. He is betting big: Late last year, Suitsupply raised $360M in expansion capital, and this month it hired Andrea Suarez, formerly a Rag & Bone exec, as its president of North America.

Some retailers are planning expansion despite contraction in their niche. The Wall Street Journal reports that Magnolia Bakery, a New York City brand that originally gained fame by appearing on "Sex and the City," is planning as many as 200 domestic franchises over the next five years.

The company will not depend on the strength of its cupcakes alone, since the bloom is off the rose in that specialty (Crumbs Bake Shop failed in 2014). Magnolia CEO Steve Abrams told the WSJ that cupcakes only account for a third of the company's sales.

Other retailers in growth mode in the U.S. include Pilates Club studios, juice shops and other fitness- and health-focused businesses, which are filling spaces left by Sears, JCPenney, Toys R Us and others, CNBC reports.

Club Pilates expects that in the next year, 5% to 10% of its clubs will be in spaces that once housed retailers. The movement into former retailers by the exercise chain is already happening, such as a Club Pilates that opened last fall in a former Panera Bread in Darien, Connecticut.