Keith Loria/Commercial Property Executive – Sears Holdings Corp. has entered into a joint venture with The Macerich Co. as part of Sears Holdings’ continued efforts to enhance its financial flexibility and generate value from its real estate portfolio. This is the third joint venture Sears has made this month; after partnerships with General Growth and Simon Property Group, generating […]
Jeff Green
Retail Rap: Silver Lining for Some Store Closings
In an article that appeared in National Real Estate Investor (NREI) Online on April 10, author Elaine Misonzhnik describes the recent store closure announcements from Walgreens and Pier 1 as part of a larger pattern of retailers “pursuing portfolio optimization and an omnichannel approach.” While I generally agree with that statement — and with the notion that increasing pressure from online sales growth is contributing to a more competitive brick-and-mortar environment — I was reminded once again of just how different the dynamics behind store closings can be. I think there’s a tendency to lump all store closings together, when the reality is much more nuanced and complex. Not all store closings are created equal, so for this week’s Retail Rap I wanted to break the recent announcements down into several different categories.
Take Walgreens and Pier 1, for example. These both fall into the portfolio optimization category of store closures. Even here, however, there are noteworthy differences. Walgreens has decided to close 200 stores, which may sound like a large number, but it’s only a drop in the bucket for a chain that operates more than 8,200 stores nationwide. As the NREI article mentions, Walgreens is also planning to open around 200 stores in the next year. To me this isn’t so much a series of closures as part of the healthy portfolio balancing process. Additionally, we haven’t seen many Walgreen’s stores close in a very long time — so in a sense Walgreens is “overdue”. Most likely, the stores that will close are burdened by a mediocre location, aren’t the right size, don’t have the prototype layout, or are lacking a drive thru pharmacy.
Another thing I wonder about (especially in light of the Sprint-RadioShack partnership, as discussed in this Retail Rap) is when two brands merge, until the official name change – do consumers know? Do they care? I think it will be fascinating to watch and see how this particular scenario plays out in the weeks and months ahead, how about you?
‘Fast-fashion’ takes toll on retailers for women
Justine Griffin / Herald-Tribune – Is it just a strange coincidence we are seeing so many women’s retail brands going under one after another in 2015?
It started with Wet Seal, a discount apparel brand I remember well from my high school days, which filed for bankruptcy in January.
It shuttered its Sarasota Square Mall store on Jan 5. Next came Delia’s, a fashion apparel chain for girls and teens, which liquidated its Sarasota Square store (and all others) in January when the brand filed for Chapter 11 bankruptcy protection.
Fresh Produce, a Colorado-based apparel chain with a store on St. Armands Circle, filed for Chapter 11 bankruptcy protection this month. The Sarasota store is still open, though its future is uncertain.
The retailer, which sells tropical and vibrant every-day wear and sportswear for women, listed several outstanding debts, including a $3.9 million loan with Wells Fargo and an “unknown” debt for commercial rent to a Sarasota-based company, Great Lakes Developments.
Fresh Produce celebrated its 30th anniversary last year.
The most recent casualty was Cache, known for its evening gowns popular at high school proms, which is closing all of its more than 200 stores nationwide, including its store in the Mall at University Town Center, which opened in October. The company filed for Chapter 11 bankruptcy protection this month.
The growing line of failing women’s apparel chains paints a dreary picture for the brick-and-mortar retail industry. More people are shopping online, where the competition for consumers’ loyalty is fierce.
But who is responsible for the shrinking number of moderately priced women’s clothing companies? “Fast-fashion” brands, industry jargon for up-and-comers such as H&M, Charlotte Russe and Forever 21.
“H&M is cheap and hip. It’s taking a chunk of business from these brands that have been around a while longer,” said Jeff Green, retail analyst. “They have this cutting edge about them.”
H&M, a Swedish international apparel brand known for its discount prices on trendy clothing for young men and women, is easily one of the most popular stores to open at the Mall at University Town Center. It’s expansive display of men’s and women’s styles is constantly changing — and the prices are some of the cheapest in the mall.
Charlotte Russe and Forever 21, which have been staples in malls nationwide for teens and young women, are constantly reinventing themselves to stay relevant.
H&M and the others are known for having a strong online presence, both on social media and in their shopping websites, too.
More moderate brands, like Cache — whose overall look and feel has been the same for more than a decade — can’t compete with that.
“People will shop upscale or they’ll shop fast fashion,” Green said. “It’s that middle market that’s suffering.”
Apple Watch debut falls flat in Sarasota
Justine Griffin / Herald-Tribune – The hype around the pre-order date for Apple’s newest gizmo — a smartwatch — seemed to fall a little flat compared to the technology company’s many other celebrated releases.
During my stint as a retail reporter, I’ve covered quite a few Apple product releases. I’ve gotten up before the sun to talk to people (sometimes more than 100 of them) in line at malls across the state, waiting to be one of the first inside an Apple Store to take home the newest version of the iPhone or the iPad.
I’ve clapped and cheered alongside sleep-deprived Apple Store employees — dressed in the traditional blue T-shirt with the white Apple logo, jeans and Chuck Taylor shoes — while they counted down the seconds before the store opened.
People really, really love their iPhones and iPads.
The familiar queue line snaked around outside the Apple Store in the Mall at University Town Center on Friday, but it was empty by the time I arrived. A lonely Starbucks employee, manning a cart with free coffee, bottles of water, fruit and trail mix, stood at the front of it.
“Want a free coffee?” he asked before I entered the half-filled store.
I was told that only 20 people had showed up to wait in line before the store opened. I’m not sure if I should be surprised.
This was the first product release for the Apple Store in Southwest Florida. But Apple fans couldn’t take home a watch on Friday. They could only hold it, play with it, and pre-order it. The watch will be available for purchase on April 24.
“I think this one is going to take a while for people to get behind,” retail analyst Jeff Green said. “It’s unique, even for Apple. So it will take people some time to adopt than most other Apple products.”
Inside the store, which honestly didn’t look any busier than it does on a Saturday afternoon, about a dozen people hovered around the table with samples of the coveted Apple Watch.
Employees opened hidden drawers with nearly a dozen watches in each. Customers tried them on.
“It’s kind of small,” said one man, who held his wrist with the watch close to his face.
Others were curious about what you can do with it. Read text messages. Track work outs. Tell time. Who knew?
DRA to Seek Proposals for Main St. Tower
Liviu Oltean / Commercial Property Executive – The Downtown Redevelopment Authority (DRA) of Houston has issued a request for qualifications for the acquisition, clearing and development of a 35,579-square-foot site at 1111 Main St. The RFQ calls for the development of a multifamily project and/or a mid- or high-rise hotel tower with an extensive retail component.
Younan Properties Inc., owner of the neighboring 19-story office tower at 1010 Lamar St., entered into a memorandum of understanding with the DRA to lease two or three levels in the tower. Those levels will be converted to retail space and will connect to the retail component of the future tower. Younan will also provide 587 parking spaces.
DRA stipulated an extensive retail component for the project on the basis of a 2014 study by Jeff Green Partners, which showed that there is tremendous retail potential in the Downtown Houston market. Responses to the RFQ are due May 26th and execution of an agreement has been slated for February 15, 2016.
“Retail in the Downtown Houston area would serve a base of 33,492 employees within a quarter-mile radius, growing to 176,636 within one-half mile and 215,185 within a one-mile radius of the Downtown Shopping District,” the RFQ states. “Using the average expenditures per worker reported by the International Council of Shopping Centers (ICSC) in their March 2012 report Office Retail Spending in a Digital Age(,) total (current-year) retail sales potential generated by the daytime employment base is projected to be $957 million.”
DRA to Seek Proposals for Main St. Tower
Liviu Oltean / Commercial Property Executive – The Downtown Redevelopment Authority (DRA) of Houston has issued a request for qualifications for the acquisition, clearing and development of a 35,579-square-foot site at 1111 Main St. The RFQ calls for the development of a multifamily project and/or a mid- or high-rise hotel tower with an extensive retail component.
Younan Properties Inc., owner of the neighboring 19-story office tower at 1010 Lamar St., entered into a memorandum of understanding with the DRA to lease two or three levels in the tower. Those levels will be converted to retail space and will connect to the retail component of the future tower. Younan will also provide 587 parking spaces.
DRA stipulated an extensive retail component for the project on the basis of a 2014 study by Jeff Green Partners, which showed that there is tremendous retail potential in the Downtown Houston market. Responses to the RFQ are due May 26th and execution of an agreement has been slated for February 15, 2016.
“Retail in the Downtown Houston area would serve a base of 33,492 employees within a quarter-mile radius, growing to 176,636 within one-half mile and 215,185 within a one-mile radius of the Downtown Shopping District,” the RFQ states. “Using the average expenditures per worker reported by the International Council of Shopping Centers (ICSC) in their March 2012 report Office Retail Spending in a Digital Age(,) total (current-year) retail sales potential generated by the daytime employment base is projected to be $957 million.”
