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Jeff Green Partners

A LEADER IN RETAIL REAL ESTATE FEASIBILITY

jgreen@jeffgreenpartners.com

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Office supply stores forced to think small

Joan Verdon / NorthJersey.com – Staples and Office Depot have a space problem. They have way too much of it — more than 12 million square feet of unneeded store space.

Staples plans to close 225 stores by the end of 2015 and wants to shrink the size of most of its remaining stores. Office Depot, which recently merged with Office Max, intends to close at least 400 stores by 2016. North Jersey, which became saturated with office supply stores, particularly Staples, in the 1990s and 2000s, now faces an oversupply of vacant office stores.

Shoppers hit stores on first day of tax-free weekend

Gary Dinges / Austin-American Statesman – Bargain hunters of all ages swarmed Central Texas stores Friday, the first day of the state’s tax-free weekend.

Through Sunday, retailers aren’t charging state and local sales taxes on most clothing and school supplies priced less than $100. In most cities, including Austin, that means shoppers will save 8.25 cents for each dollar they spend.

Over the course of the three-day weekend, the state comptroller’s office estimates Texans will save $82.7 million.

At the Tech Ridge JCPenney, located at 12351 N. Interstate 35 in North Austin, shoppers showed up as early as 9 a.m. The store was ready, manager Melanie Wergin said, with all merchandise in the stockroom moved to the sales floor, extra registers and additional employees, including some seasonal workers hired specifically for back-to-school season.

Middle-class shoppers more sensitive to back-to-school supply costs

Rick Romell and Kylie Gumbert / Miwaukee Journal-Sentinel – The giant pencil cutouts screaming “One Big Sale Here” throughout the Target store on Miller Park Way are a dead giveaway: This is the country’s second-biggest shopping season.

And for the great majority of Americans, the annual back-to-school extravaganza is unfolding across an increasingly price-sensitive landscape.

Cash-strapped, middle-class parents are being economically challenged by ever-growing lists that have expanded beyond protractors and No. 2 pencils to include graphing calculators, flash drives and Handi Wipes.

How did Lululemon fall so far?

Catey Hill / Wall Street Journal/Marketwatch – Product missteps and increased competition helped hobble the yoga-gear seller.

It wasn’t too long ago that ladies of a certain, er, social status wouldn’t be caught dead in their yoga class without cloaking their thighs in a pair of form-fitting Lululemons (with the coordinating Lululemon top, of course). But these days, many of those same women are shunning the pricey brand — and you can’t fully blame that on their fear of inadvertently revealing a bit too much while doing a downward dog.

Dollar store merger means more competition

Hadley Malcolm / USA Today – Competition among discount stores is about to ramp up with Dollar Tree’s acquisition, and revitalization, of Family Dollar’s more than 8,200 stores, analysts and industry experts say.

Family Dollar, which was founded in 1959 by CEO Howard Levine’s father Leon, has been suffering from a lack of direction and tired stores that haven’t changed in years, they say. It’s also wavered from the enticing price point its moniker alludes to. And an expansion plan was bagged earlier this year when the company said in April that it would actually close 370 stores and said foot traffic was declining.

Dollar Tree, Family Dollar Stores Merger to Create 103 MSF of Retail Spave Across U.S.

Barbra Murray, Contributing Editor / Commercial Property Executive – Dollar Tree Inc. and Family Dollar Stores Inc. have entered into a merger agreement, and the price tag on the deal is much more than a dollar; it’s $9.2 billion. Dollar Tree will acquire Family Dollar in a transaction involving stock and cold-hard cash.

The merger will result in a discount-store behemoth, melding Dollar Tree’s 5,080 stores spanning 48 states and five Canadian provinces with Family Dollar’s 8,200 locations across 46 states, for a total of approximately 103.5 million square feet of retail space across the country. Too much of the same thing?

“Even though they’re both discount retailers, they come at it from a little bit of a different point of view,” Jeff Green, president & CEO of retail real estate consultancy Jeff Green Partners, told Commercial Property Executive. “Family Dollar is really a neighborhood discount store, whereas Dollar Tree has no merchandise that’s more than a dollar. So they’re almost complementary. Dollar tree is typically suburban and Family Dollar is small-market and inner-urban. It’s a complementary strategy that way.”

That’s the plan. Dollar Tree points out that the merger will yield a broader range of customers and geographies across the fixed- and multi-price point. “This acquisition will extend our reach to lower-income customers and strengthen and diversify our store footprint,” Bob Sasser, CEO of Dollar Tree, said in a prepared statement. “Combined, our growth potential is enhanced with improved opportunities to increase the productivity of the stores and to open more stores across multiple banners.”

While an expansion of the Dollar Store/Family Dollar footprint is part of the merged company’s strategy, Green said he believes that an aggressive expansion campaign won’t kick off anytime soon. “Family Dollar is an older, staid kind of concept, and Dollar Tree is a strong new dynamic chain,” he said. “I think what they’re going to try to do is bring in those sort of changes to the operating, merchandising and promotions in an effort to increase same store sales. I’m not sure the initial thrust will be for more stores, just increased sales.

Nor does Green believe the merger will result in mass store closings. “If there will be any closings, it will be of just underperforming stores,” he added. “It’s not going to be because they’re located too close together.” And with that, Green refers back to the complementary nature of the two companies.

Family Dollar comes at a pretty penny. Dollar Tree will shell out $74.50 per share of Family Dollar stock, marking a 22.8 percent premium over the latter’s closing price the Friday before the merger announcement. Shareholders will pocket $56.90 in cash and receive $14.90 equivalent in Dollar Tree shares. Dollar Tree will rely on cash on hand to finance the transaction, as well as bank debt and bonds; JPMorgan Chase Bank, N.A. has already committed.

The merger of Family Dollar and Dollar Tree is on track to close by early 2015.