Meet the Crazy Dreamer Who's Giving America Another Linens Chain
Is there opportunity still in the linens-and-housewares retail niche? Fred Mershad thinks so.
The former CEO of regional department-store flop Elder-Beerman Stores has announced he'll open the first half-dozen of 50 planned units of his new Linens & More for Less chain this year. The chain, Mershad says, is intended as a "category killer" in the housewares arena.
Really? Is he wearing bell-bottoms? Because the age of new category-killer chains was about 20-30 years ago. The linens-and-stuff category has already been killed. When's the last time you strolled through a mall or your local downtown and saw a little store that sold bedsheets?
In case Mershad missed it, the category was killed stone dead by Bed, Bath & Beyond (BBBY), which has more than 1,100 cavernous housewares stores and made nearly $2 billion in its most recent quarter. It not only killed most of the mom-and-pops of the category, but also its prime superstore competitor, Linens 'N Things, which went bankrupt, liquidated, and now lives only on the Internet.
Apparently the irony is lost on Mershad that he's starting with a first unit in a 30,000-square-foot former L'NT store in Warren, Ohio this month. Um, there's a reason that store is empty. There wasn't room in the marketplace for a second housewares superstore chain. Nothing about the current economy suggests there's more room now than when L-'N-T went bust in '08.
There's a bottom line that paying rent on a 30,000-square-foot housewares store entails selling a massive amount of towels and tissue-box holders. BB&B has already got this formula nailed. It'll be hard to beat their economies of scale and ramp a startup superstore doing essentially the same thing.
There'd be more hope for this idea if there seemed to be some new innovation to the concept -- maybe a smaller store size perhaps, or a unique approach to the category. But judging from the fact that the company name sounds uncomfortably similar to Linens 'N Things, that seems unlikely.
Another problem: Mershad has no startup experience. His claim to fame is cleaning up Elder-Beerman, getting it out of bankruptcy, and getting into a shape where it could find a buyer.
On the other hand, his background may come in handy, since the chain will likely be in trouble right away. Selling wanna-have housewares in this economy with a brand-new store name no one's heard of isn't going to be easy.
Photo via Flickr user GenBug Related: