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 […]
Jeff Green
Retail Rap: All Good Things
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 […]
CVS, Target Make a Deal
Keith Loria / Commercial Property Executive – CVS Health Corp. has agreed to acquire the Target Corp.’s pharmacy and clinic businesses for approximately $1.9 billion, creating a seismic shift in the drugstore industry.
In the deal, CVS Health will acquire Target’s more than 1,660 pharmacies across 47 states and operate them through a store-within-a-store format, branded as CVS/pharmacy. Additionally, a CVS/pharmacy will be included in all new Target stores that offer pharmacy services and Target’s nearly 80 clinic locations will be rebranded as MinuteClinic.
It allows CVS Health to increase its retail presence in new markets, such as Seattle, Denver, Portland and Salt Lake City.
“It shows you that major drugstores are trying to expand, and expand beyond the traditional bricks-and-mortar new store model,” Jeff Green, president of Jeff Green Partners, told Commercial Property Executive. “For the most part major drugstore chains have fully saturated their market; meaning that building a new store will cannibalize sales at your existing store, something retailers are trying to avoid.”
However, the deal is expected to have a major effect on retail, as well, as the two corporations will seek out joint development opportunities in select locations best-suited for new small format Target stores with a CVS/pharmacy inside.
Brian Cornell, Target’s chairman & CEO, announced that over a two-year period following the close of the deal, Target and CVS Health plan to fully assess and select from sites in CVS Health’s current consideration set to jointly build five to 10 TargetExpress stores with a CVS/pharmacy inside.
“The co-development of stores adds a new retail channel for CVS Health as well as expanding convenience for more patients,” Michael Lagazo, senior advisor, retail, with commercial real estate advisor Sperry Van Ness, told CPE. “CVS Health adds chain drugstore expertise and has a strong store development strategy in markets well suited for smaller formats. Target will now be able to compete directly with category killers with a larger pharmacy business such as Wal-Mart.”
Target is outsourcing the drugstore business because they have outgrown their expertise in a highly regulated industry with unique product flow issues not similar to apparel, daily needs, and soft goods. The move allows Target to continue offering wellness products and services while redirecting more operating capital and energy towards electronics, household goods, and groceries.
“Target will benefit from the knowledge and experience brought by the second largest drug store operator in the country,” Green added. “Further, CVS has the most experience in delivering healthcare at the store level through their ‘Minute-Clinics’ a business that Target would like to be in also. Both can increase market share in their respective businesses, and differentiate themselves from their competitors.”
Yonkers Hyatt Place part of emerging hospitality trend
Ernie Garcia / The Journal News – The Hyatt Place hotel that celebrated its opening Tuesday at the Cross County Shopping Center represents an emerging hospitality trend in the Lower Hudson Valley.
The 155-room hotel lies in the middle of the Yonkers mall, which since 2009, has repositioned itself as a lifestyle center offering a fitness club, higher-end stores and more restaurants. The idea behind the makeover is to have diverse uses for the mall beyond shopping.
Hyatt Place is the first of three local projects to embody the concept of having a hotel in the middle of a shopping center, which isn’t so unusual in other parts of the country. The nation’s most iconic shopping center, the Mall of America in Minnesota, has more than 50 hotels within a 10-minute drive and one of the newest properties there, the Radisson Blu, opened in 2013 with an entrance attached to the mall.
“Hotels specifically understand that one thing that will give them a competitive advantage is to have the amenities of restaurants and retail nearby,” said Jeff Green, a Phoenix-based national shopping center development consultant with Jeff Green Partners. “I think it’s the wave of the future. The younger people want a more communal experience. They don’t want to be stuck in their rooms, which points us to having retail as part of the project.”
While Hyatt Place’s grand opening was Tuesday, the hotel’s soft opening was April 29. Rooms there typically range from $150 to $200 a night. The Wichita, Kan.-based developer LodgeWorks chose the Cross County Shopping Center because many of their customers don’t want to spend their evenings in office park hotels.
“We began exploring, along with other hotel companies, the opportunity to position hotels as close as we could to the activities people would like to enjoy at night or after their day ended at the office,” said LodgeWorks president Mike Daood.
Ridge Hill in Yonkers is trying to do something similar. The shopping center has hotel plans, and has asked Yonkers officials for permission to build it in the middle of the shopping facility, rather than on the center’s fringe.
On June 10, the city’s Planning Board gave a favorable recommendation to the proposed location change for the 175-room hotel. In paperwork submitted to Yonkers by Ridge Hill developer ForestCity, attorney Janet Giris said the proposed relocation is based on feedback from potential hotel executives.
“Operators have expressed a current interest in developing a hotel in the center of Ridge Hill, among the retail and restaurant uses,” wrote Giris, whose filings didn’t say what hotel brand would open at Ridge Hill.
ForestCity already has mixed-use developments combining retail and hospitality. The company developed Station Square in Pittsburgh with a Sheraton hotel, and Tower City Center in Cleveland which has a Ritz-Carlton and a Renaissance Hotel.
Yonkers Mayor Mike Spano said he expects City Council to approve Ridge Hill’s request. He also said two hotels in the city’s biggest shopping corridor isn’t overkill.
“Both hotels are being built on the 87 corridor, which I think is a very important distinction because most everything thing built on this corridor scores,” he said. “There are no failures when it comes to anything that’s built on the New York State Thruway in Yonkers, whether that’s the casino or Ridge Hill.”
Nancy Rodriguez visited the Cross County Shopping Center around lunchtime Tuesday, and said having the Hyatt Place hotel there is a good idea.
“It’s practical, especially for women because we like to shop,” she said. “And we’re between the Bronx and Yonkers, so it’s a good location. It’s perfect for tourists.”
Meanwhile, in Dobbs Ferry, the Rivertowns Square combines shopping and entertainment with luxury apartments and a hotel.
Last month, the Armonk-based Saber Real Estate Advisors announced construction began on the $150 million Rivertowns Square, a luxury center scheduled to open next year along the Saw Mill River Parkway. The project includes a hotel, although the company contracted to bring the hotel there pulled out and Saber is looking for another hospitality partner.
Rivertowns Square is 80 percent pre-leased and tenants include Mrs. Green’s Natural Market, Chipotle and a movie theater.
The Palisades Center in West Nyack has also discussed mixed uses, but no plans are in place, according to Clarkstown officials. The indoor mall’s fourth floor is empty and past proposals have included a conference center and exhibition rooms in the 243,000-square-foot space.
Hudson’s Bay Shops Big in Deutschland
Scott Baltic / Commercial Property Executive – In a landmark inter-hemispheric deal worth $2.72 billion (€2.420 billion), Hudson’s Bay Co. has agreed to acquire Galeria Holding, the parent company of Kaufhof, Germany’s number-one department store, Hudson’s Bay announced Monday. The acquisition is expected to close by the end of the third fiscal quarter of this […]
Retail Rap: Half Foods?
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?