Rosedale's new anchor tenant, Von Maur, expands as others shrink

Jim von Maur, president of Von Maur department stores, keeps slowly, methodically opening new stores while much of the retail world retrenches.

The Davenport, Iowa-based retailer opened its second Twin Cities store last week in Rosedale Center, after opening in Eden Prairie Center in 2001. It will be the company's 33rd department store in 15 states, since it began in the late 1800s in Davenport.

The Rosedale store is the metro's first midmarket or luxury-market department store to open since 2015, when Nordstrom opened its second Twin Cities store in Ridgedale. In 2011, Herberger's took over the long-vacant Mervyn's space in Southdale.

Now department store closings, not openings, dominate retail news. The Twin Cities recently saw the closure of six Herberger's stores. Before that, it lost several Macy's stores, several Sears stores, Neiman Marcus, Saks Fifth Avenue and the J.C. Penney in Southdale.

In the past 10 years, more than 600 department stores closed nationwide while nearly 3,500 discount department stores, such as T.J. Maxx, Kohl's, Walmart and Target, have opened. Spending in U.S. department stores has fallen nearly in half since 2000, according to Nielsen.

Such trends worry others, but not von Maur. "It can be scary to see a department store go out of business, but we do things totally different than Herberger's," von Maur said. "They were low-cost discounters, and we're about quality goods."

It's a business model that gets customers in the door with customer service and quality instead of sales and coupons. The company's desire to keep new merchandise on the shelves means permanent markdowns of 33, 50 or 75 percent, instead of sales in which prices go down and then return to regular prices.

The women's shoe department has a designated spot for clearance year-round. Earlier this week, nearly every major department in the store had a few clearance racks. "We always have product on sale," said Amy Rotert, vice president of stores. "It's a first-in, first-out policy."

Focus on service

For years Von Maur has distinguished itself with perks such as free gift wrapping, free shipping for online or phone orders, free return shipping and an interest-free credit card. Add in the liberal return policy and comparisons to Nordstrom become inevitable.

But von Maur isn't fond of his family's company being called "the Nordstrom of the Midwest."

"I think we're better," he said. "There was a time when we were similar, but their standards have changed quite a bit."

While many of Nordstrom's sales staff have gone casual, professional dress is still required of Von Maur's salespeople. Men wear a suit or sport coat and tie; women cannot wear denim or open-toed shoes. Only subtle piercings and tattoos are acceptable.

The look of the new Rosedale anchor also follows a traditional curve with white walls and beige tile accented with dark mahogany antique furniture throughout.

"I like it," said Wendy Kloek of Stillwater as she shopped the store for the first time on Tuesday. "It's well-lit and the music is pleasant without being offensive. It's more upscale, but you're getting a better product."

The new store features several updates compared to the Eden Prairie store. Much of the cosmetics department is "open sell" outside of glass enclosed cosmetics cases, a concept that Nordstrom brought to its Ridgedale store. The women's activewear department has been expanded.

One large dressing room near the dress department includes seating and a 55-inch TV to allow FaceTime viewing for bridesmaids, friends or family members. The tailor station has been brought to the sales floor for more timely access.

Von Maur will be competing with Macy's and Penney's at Rosedale Center but not Herberger's, which closed in August along with all the Bon-Ton owned stores.

"I don't think the loss of Herberger's hurts Von Maur," said Dick Grones, of Cambridge Commercial Realty in Edina. "They had a lot of duplicative lines. One would have lost sales to the other."

Further expansion

Von Maur isn't saying if he's interested in taking over any of the six vacant Herberger's in the Twin Cities. "We certainly think the Twin Cities is a multi-store market, more than two," he said. He mentioned the southern part of the Twin Cities and Maple Grove as options. Von Maur was originally listed as a potential anchor in the Shoppes at Arbor Lakes in Maple Grove more than 15 years ago, but developer Opus later rejected the idea of an enclosed mall with anchors in favor of an open-air lifestyle center.

For years Von Maur was interested in getting into Rosedale and Ridgedale but lost out to Herberger's and Nordstrom. Both malls have among the highest sales per square foot of any Twin Cities mall except for Mall of America and the Galleria. Rosedale's sales exceed $600 per square foot, which is quite a bit better than Ridgedale's, Grones said.

Higher-end retailers such as Von Maur choose to be in strong, viable shopping centers in higher-income markets. Rosedale came to the bargaining table with an investment of nearly $80 million in remodeling the center inside and out and adding a new parking deck to replace spaces taken by the new Von Maur store. According to Reis, a real estate research firm, malls in better neighborhoods that draw more affluent shoppers are performing best.

Family ownership

One significant thing that makes Von Maur different from most department stores, including Nordstrom, is private ownership. The Nordstrom family has tried unsuccessfully for years to take the publicly traded company private.

"It's [private ownership] a huge advantage," said Sanford Stein, a Twin Cities-based retail trend forecaster and author. "They can have a commitment to the customer beyond quarterly reporting because they probably don't have the debt that the rest of the department store world has."

Family-owned Von Maur doesn't typically release earnings or sales numbers, although the company outperforms department stores seeing flat or negative results, von Maur said. "We're beating last year with growth higher than 3 to 4 percent."

Part of Von Maur's success has been its slow-growth model. "We open one to two Von Maur stores and 10 or more Dry Goods stores [its women's specialty shops] a year," said von Maur. "We're growing when most other department stores are closing or staying the same."

John Ewoldt • 612-673-7633