Retailing experts noted that Philadelphia might become the only city in the nation to have a mall anchored by a leading department-store chain and its discounter.
"It's a location that is perfect for Clover - a dense, highly populated area that has both residents and workers," said Francis R. Strawbridge III, the retailer's chairman. "It's too good an opportunity to pass up."
He said Strawbridge officials had been searching for years for a Center City site on which to open a new Clover store.
"In the Center City area, there is no self-service mass-merchandiser," Strawbridge said. But "where do you come up with 85,000-square feet of retail space in Center City?"
The news that a Clover store would open in the Gallery next spring was applauded by business and civic leaders. Market Street East, the stretch of boulevard east of City Hall, has enjoyed a renaissance in recent years with improvements to the streets and an influx of new businesses. Business leaders credit G. Stockton Strawbridge, Strawbridge's retired president and chairman, for the changes.
"It's a sign of real confidence by the Strawbridges, who have never made a mistake as to the location of their stores," said Charles Pizzi, president of the Greater Philadelphia Chamber of Commerce. "We know from the history of their stores, whatever they do, they do right."
In January, the Stern's department-store chain, which is based in Paramus, N.J., said it would pull its last two stores out of the Philadelphia area
because of declining sales.
Aside from its Center City store, Stern's also had a store at Echelon Mall in Voorhees, Camden County. Stern's had been a fixture at the Gallery since 1986, when it replaced Gimbel's.
Strawbridge officials said yesterday they had reached an agreement "in principle" to lease 104,100 square feet of the 496,435 building on a long- term basis. They declined to discuss details of the lease.
R. Harwood Beville, executive vice president of operations for the Rouse Co., which manages the Gallery, said Strawbridge didn't get any special deals
from the city or from the Jacobs Group, the Cleveland-based company that owns the building, for assuming a lease.
He said at least four companies had competed for the space. Rouse Co., which also sought the space, was hoping to divide it up to lease out to smaller retailers.
"It was a market transaction with no special incentives offered," Beville said. "It was not at all discounted or off-priced."
City and business officials applauded the move and praised the Strawbridge chain for its commitment to Philadelphia.
"Obviously, the mayor is extremely pleased with this development," said David Cohen, Mayor Rendell's chief of staff. "It shows a tremendous commitment by Strawbridge and Clothier to Philadelphia, and it's a big boost to the area."
Paul R. Levy, executive director of the Center City District, said: ''That's encouraging news. Anytime you have a vacancy on such a major retail strip, it's very important to fill it."
Although local retail experts said economic conditions were not conducive to opening a new store, they said it was a smart move to go forward, especially since the Pennsyvlania Convention Center is scheduled to open next June.
"Nothing's turning around this year," Mercia Grassi, a Drexel University marketing professor, said, referring to the economy. "We're lucky if it turns around next year."
Still, she added, "I think it's one of the best things for Center City."
Grassi, who has long maintained that Center City needs a large discounter, called Clover "a perfect match" for the area. She also noted that this might be the first time that a major retailer would have a full-scale department store and a large, mass-market discounter anchoring the same mall.
Strawbridge's flagship store has been at 8th and Market streets since 1868.
Strawbridge officials said they foresaw no problems with the pairing, even though the department store calls its sales "Clover Days." They said two of its Clover stores - in Springfield, Delaware County, and in Exton, Chester County, are about a quarter-mile from a Strawbridge's.
"They really complement each other," Francis Strawbridge said. "In both locations, the department stores and the Clover stores do very well."
Clover, he noted, sells many items that Strawbridge's does not, including automobile accessories, toys, books and sporting goods.
Michael Smith, a Temple University marketing professor, said Clover would be a boon to Center City residents.
"If you put a Bloomingdale's in there or a Saks, that's not going to serve the neighborhood," he said. "Clover is good for the neighborhood. It might not be good for the people who live in Montgomery County, but it's good for the neighborhood."
The new Clover, which will employ about 200, will be the eighth store in the Philadelphia area. The Delaware Valley has a total of 25 Clover stores.
Strawbridge officials said they expected to begin hiring new employees in January.