Kohl's to Open in Mervyn's Locations..Local Reps Better Move to Get the $$

When Mervyns called it quits last year, many in the recession-battered retailing world were surprised when Kohl's Corp. rushed to take over dozens of the failed chain's locations.Both department stores sold a similar mix of mid-priced apparel, accessories and home furnishings. There was a significant overlap in the customers who shopped at Mervyns and Kohl's. The retailers' stores were even alike in size and layout.On Sept. 30, Kohl's bold move will be put to the test when it opens 35 stores in former Mervyns locations, 30 of them in California.If the chain succeeds, its gamble could pay off not only for the roughly 5,000 workers it has hired but for communities around the state."Any time you create jobs, there is a multiplier impact," said Chapman University economist Esmael Adibi. "The person who gets that income spends it in restaurants, clothing, cars, appliances and other places. The income has to be spent somehow, so that generates by itself further economic activity."Still, Kohl's faces many of the challenges that led to the collapse of Mervyns and other retailers. With California's unemployment rate at 12.2%, people are cutting back on spending for clothing and accessories."The moderate-income consumer is feeling the pinch," said retail analyst Richard Jaffe of Stifel, Nicolaus & Co. "If you're a two-income household earning $50,000 a year and now it's a one-income household earning $25,000 a year, you're not shopping. The money isn't there."One thing is certain: Kohl's is making a big bet on California. The retailer spent about $250 million to convert the Mervyns stores, and the acquisition will bring its statewide total to 121 stores -- almost as many as Mervyns had here before its demise.That will increase the company's California footprint by one-third in a single day, adding locations in places including Redondo Beach, Sun Valley and Whittier.Kohl's has been eyeing California for years, waiting for the right real estate to become available. The fact that it made its move while others were retrenching was no accident."We see this as a great opportunity to actually go the other way," Chief Executive Kevin Mansell said in an interview. "Let's take advantage of other people's weakness; in fact, let's get aggressive."The Menomonee Falls, Wis.-based retailer, with more than 1,000 stores nationwide, will face heavy competition in California from department stores JCPenney and Macy's, discounters Target and Wal-Mart and off-price retailers Ross and T.J. Maxx.