Clothier to Occupy D.C. Woodies Store
H&M Also Opening in Six Malls
by Debbi Wilgoren and Dina ElBoghdady

The vacant Woodward & Lothrop department store downtown, for seven years a barren reminder of the District's grand retail past and struggling present, has been partially leased by the trendy Swedish clothier Hennes & Mauritz.

The H&M chain plans to launch six stores in local malls by spring and open in the Woodies building in the fall. It will introduce the Washington area to the high-fashion, low-priced clothes that have been a smash in Europe and are drawing long lines at some of its nearly four dozen stores in other east coast cities.

D.C. Mayor Anthony A. Williams (D) plans to announce the move Monday, when he presides over the unveiling of Christmas window displays at the vacant Woodies building, at 11th and F Streets NW. The window displays are a four-year-old city custom that promotes the idea of downtown retail yet is a bittersweet reminder of the days when Woodies' windows were an anticipated feature of the season and the space behind the windows was filled with merchandise and shoppers.

H&M officials said they see great potential in the Washington region because of its fast-growing population and heavy concentration of students and young professionals. In addition to the downtown Woodies site, stores are planned for Arundel Mills mall in Maryland, Georgetown Park in the District, and at Tysons Corner Center, Dulles Town Center, Manassas Mall and Potomac Mills in Virginia.

The Woodies location will be nearly twice as big as the others, with 27,000 square feet of retail space - almost as large as H&M's U.S. flagship store on Fifth Avenue in Manhattan.

D.C. leaders can barely contain their excitement over the arrival of a major new retailer - and the jobs and tax revenue it will create - on what was once the city's main shopping thoroughfare. "We have the real opportunity to re-create what F Street once was," Williams said from Salt Lake City, where he is attending a meeting of the National League of Cities. "It's really turning the corner in creating that positive energy."

Developer Douglas Jemal, who owns the building, said he is talking to other retailers including Crate & Barrel, Virgin Records and Bed Bath & Beyond about leasing the remaining 150,000 square feet of retail space in the building, which he bought in 1999 for $28.2 million after plans to turn it into an opera house fell through. He is converting the top floors into office space.

"It's been dark way too long," said Terrance Lynch, executive director of the Downtown Cluster of Congregations and a leading advocate for building a lively city center. "There's a desperate shortage of real retail options downtown. I think this is going to be the first of many."

The District's East End is rebounding from decades of steep decline, during which residents fled to the suburbs and businesses withered or relocated to new office canyons in midtown and the West End. During that time, homeless people were the most common foot traffic after dark, and even at midday it was hard to find a cup of coffee or a place for lunch on many blocks.

A resurgent office market and the successful opening of MCI Center in 1997 spawned a slew of popular restaurants, clubs and boutiques in the neighborhood, and a city-promoted tax break this year has prompted a frenzy of high-end apartment construction.

But basic shopping - a prerequisite for lively streets and for generations a staple of downtown commerce - has been slower to reappear.

Large retailers traditionally wait for restaurants, entertainment venues and residential development to blaze the path in a struggling neighborhood. Efforts to lure Macy's to the Woodward & Lothrop building two years ago faltered, and the Gallery Place mixed-use project under construction a few blocks away has been slow to attract retail tenants.

Some experts on Washington's retail situation, speaking on condition of anonymity for fear of offending city officials, questioned the decision to have two H&M stores within city limits, saying the Georgetown store could cut into the downtown store's market share.

But H&M officials said the company intentionally floods new markets to attract as many customers as possible. Its basic business model is to sell clothes that look more expensive than they are, at stores that do not resemble discount operations, to those who-might shop at Gucci as well as at Target.

"We're a daring company, and we try out new things all the time," said Joakim Gip, marketing director for U.S. operations. "We see such a huge potential in the redevelopment of downtown D.C."

Price is key. H&M prides itself on ultra-inexpensive fashions, the same styles that inspire such luxury brands as Prada.

To keep its prices low, it relies on moving lots of merchandise through its stores - quickly. The 55-year-old retailer also buys material in bulk and uses its own in-house designers to keep costs down.

Shoppers get the look, though not the quality, of the upscale brands, analysts said.

"But when you see a dress for $11.99 that looks terrific, so what if you wear it three or four times before it starts shredding," said Harry Bernard, a fashion industry consultant at Colton Bernard Inc. in San Francisco. "It still good value for the money."

The formula transformed H&M from its roots as a dowdy women's dress shop in Sweden to an international powerhouse of trendy throwaway fashions. It worked in Sweden and then across Europe, where H&M now has nearly 850 stores and counts itself as the continent's largest apparel retailer.

But because of Europe's size, it offers little growth opportunity for a company as ambitious as H&M, said Lois Huff, a vice president at Retail Forward, a consulting firm.

That's why the company came to the United States, starting in March 2000 with its Fifth Avenue store in New York City, where checkout lines often snake around the racks. Since then, it has opened 44 more stores in New York, New Hampshire, Massachusetts, New Jersey, Pennsylvania, Delaware and Connecticut.

"They go into a market, open up a few stores and see what works," Huff said. "It's what you might call learning on the fly."

Eric W. Price, the District's deputy mayor for economic development, said the city is negotiating a financial package that will allow H&M to use a percentage of future sales tax revenue to pay for reconfiguring the Woodies space to fit its needs.

In return, he said, the company has promised to target D.C. residents for the 100 jobs its stores in the city will create. Officials from the city's Department of Employment Services are consulting with H&M about setting up training programs to prepare unemployed residents for those jobs.