As pure-play retailers take to the streets, what are the site considerations?
If you’ve been reading this column over the last four years, let me first say, “thank you!” It’s gratifying to think that my musings about retail and retail real estate have kept your attention and interest. In this, my 100th and final (except for an occasional contribution) Retail Rap, I wanted to tackle the big […]
All good things must come to end — including, after nearly four years, my contributions to this column. “Retail Rap” will soon be forging on without me. This is the first of two final columns I’ll be contributing, and I’ll beg your indulgence if I wax nostalgic at times in this, column number 99, and […]
When Whole Foods Market announced in May that it planned to open a new chain of stores offering a lower price point and specifically targeting millennials, it’s safe to say that the reaction from industry analysts and observers was underwhelming. Responses have ranged from confusion to outright skepticism, and there is a general sense of uncertainty surrounding the whole enterprise. My own reaction falls somewhere on the spectrum between “dubious” and “confused.” I have many questions, not least of which is why, if the new chain will continue to remain focused on offering healthy and all natural foods, Whole Foods would go to such lengths to create a brand that has the potential to cannibalize their own business. For this weeks Retail Rap, I’d like to talk about some of the questions that I have about this new concept.
While the announcement promises a “new” and “different” concept, I’m not clear about how “It will be unlike any of the other stores you’re seeing out there.” The stores will reportedly be “technology-oriented,” with a streamlined design and a “curated” product selection. All of which is fine, I suppose, although (again) it doesn’t tell us much in the way of specifics.
There has been lots of discussion about the wisdom of expressly targeting millennials, but the big question to me is why you would go all-in on such a strategy when it seems like Whole Foods is already getting a strong share of millennial business. It depends on which Whole Foods location you go to, of course, but in my experiences millennials seem to be a well-represented demographic.
I don’t know about you, but I’m extremely curious to hear more and to try and get a better sense of just how Whole Foods plans to make this new concept successful. After reading my thoughts in this week’s Retail Rap, I’d love to hear if you could see this type of brand flourishing in the current marketplace? Are there more pieces to the millennial puzzle that we’ve yet to put together?
I just got back from the International Council of Shopping Centers’ (ICSC) 2015 RECon Convention in Las Vegas, and I came away feeling as good as I have about the state of the industry in some time (and it wasn’t just the weather, which was delightfully on the cool side). Judging by the buzz on the floor at the convention center, the action was definitely heating up. My sense from talking to colleagues and clients is that developers left the conference with a decidedly positive outlook. I heard from more than a few folks that they were having great meetings—meaning that the retailers were serious about getting deals done, and that more than the usual number of handshake deals were completed—so for this week’s Retail Rap, I wanted to discuss my thoughts on this years ICSC.
While it’s not the first time I’ve used these words, it was clearer than ever before that the hot topic of the conference this year was mixed use. Large numbers of major retail developers are considering either being part of a larger mixed-use development or have taken substantive steps toward adding additional uses such as office, residential, hotel or medical to their own projects. I’m not entirely certain why we seem to have reached a tipping point where mixed-use has moved from the category of “daunting” to “appealing”, but I suspect that there are many causes. Another oddity I noticed at this year’s conference was that while Monday’s traffic at the event was outstanding, Tuesday’s was surprisingly light. While activity always tends to wane somewhat as the conference goes on, the drop-off seemed significantly more noticeable to me than in past years. I was also encouraged to see the beginnings of an infusion of youth into the business—and some small but encouraging signs of racial and ethnic diversity. The difference is small, but noticeable in an industry that has been so comprehensively dominated by an older generation of mostly white men for such a long time. It’s a welcome step in the right direction.
Overall, I left ICSC knowing that this was one of the more positive and productive events in quite some time. After reading my thoughts on ICSC in this week’s Retail Rap, I’d love to hear the thoughts and impressions from my fellow attendees. Were you in Vegas this year? If so, did you have some takeaways?
It’s fascinating to me that, as of April 1, Sears went from being run like a REIT to being run as a REIT — at least partly. The Hoffman Estates, Illinois-based company formed a new REIT, Seritage Growth Properties, with the stated intention of raising a cool $2.5 billion by selling and leasing back 254 stores. Sears promptly began moving forward with those plans, and has since announced three separate deals to do just that with Macerich Co. (nine properties); General Growth Properties (12 properties) and Simon Property Group (10 properties). Deals like the ones that have been announced so far are certainly proving that Sears can make money by selling its assets, but the question is, why and to what end? In this week’s Retail Rap, I examine the strategic moves that Sears has already made and what this could mean for the future of the company.
On one hand, these deals have all been done quickly and announced almost simultaneously, which speaks to some level of strategic planning. On the other hand, we have yet to see any public sign that Sears understands and is attempting to address its liabilities as a retailer. What is the long range plan? It seems to me that the missing piece of the puzzle is any sort of statement of a new direction or big-picture strategy designed to turn around the retail portion of the business.
Now to be clear, Sears is still a very viable company in terms of its real estate holdings. That being said, I’d love to hear your thoughts on this installment of Retail Rap because it’s not entirely clear to me whether the decision to sell now isn’t part of a broader real estate strategy, or is at least in part due to the fact that Sears might feel like the time is right. I don’t know about you, but I’ll be watching with interest to see what Sears does next. Is this just the first step in a turnaround effort for this floundering retailer? How are they going to use the money? Is there a surprise in store? It will be interesting to watch and see what unfolds in the months and years ahead.