Observations & Conversations
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Astute developers are reading monthly sales reports of their regional and local tenants, in addition to scouring 10-Q reports from their publicly traded tenants in anticipation of a fall-out after Christmas. Last month’s sales for publicly traded retailers ran the gamut from devastating to flat and more than a few saw their stocks take a dive. |
I don’t know of one large retail chain that isn’t reevaluating its projections for store openings in 2001, except for Kohl’s. The CEO of Kohl’s was quoted (I’m paraphrasing) that he expects a downturn in the economy, but their chain is such a powerhouse that they plan to continue growing aggressively. I don’t believe recent poor sales are due to the economy (how could it be, since it’s the best in decades). It’s the retailers cannabalizing themselves by overstoring to keep out competition. Buyers are running scared these days and it’s obvious... you can buy ladies’ apparel in any color of black, housewares are exactly the same from store to store and the only exciting impulse buying is being done by teenagers.
What I don’t understand is why retailers that expect poor Christmas sales don’t stock up to the gills with merchandise, buy tons of advertising and if it doesn’t work file bankruptcy in February, rather than expediting their failure by putting no merchandise on the floor during the holidays. It’s not the most ethical approach to running a retail chain, but when it’s time for survival of the fittest, ethics can quickly get compromised. As to overstoring, there’s no solution, except to close stores and take the write-down. I’ve always wondered why chains like Wal*Mart, Staples or CVS don’t just lease spaces in competing sites and immediately sublease them without going through the motions and expense of opening a store with the intent of keeping out competition. They should just go into the brokerage business and sublease all the space within the trade area to non-competing retailers.
One sector of retail that I do see growing at a rapid rate is the home-furnishings business. Furniture manufacturers are trying to push out product and a few are mulling the idea of opening stores without affecting their wholesale trade (kind of like the outlet store mentality of 10 to 15 years ago).
While I was reading the October sales figures from hundreds of retailers, my partner asked me to start a research project on e-retailers. The project entailed 1) finding web-based only retailers that are looking to enter the retail arena with bricks-and-mortar stores, 2) web-based only retailers that have closed their on-line stores and 3) retailers that began as catalog or web-based that have been operating bricks-and-mortar stores for at least a year. Next month, I’ll share the names of several of the e-retailers that plan to open stores in a shopping center near you. The most relevant point that surfaced from our research is that retailers realize the customers want both web-based and storefront access. In this month’s issue, an article on Disney reiterates the need to combine both internet and storefront sales. Disney is allowing customers to buy from them on-line while standing inside the store. I bet their research also showed that shoppers want to buy both on-line and on the premises.
Also in this month’s ESP, we’re running an article by a reliable, but anonymous (by request), source on the movie theater business in response to an editorial I wrote several months ago. Plus, you’ll find tons of leads on retailers looking for new locations in malls, downtowns, specialty and outlet centers. Be sure to check out the article on Hot Topic, especially if you’ve got a mall that needs more teen-oriented stores.
Another service we’re offering our readers and it’s FREE is a daily tenant tip by email... get a lead on a retailer that is actively looking for new locations. To sign up for tenants looking for strip, power and freestanding locations, send email to tenanttip-request@property.com and in the message write subscribe. For leads on mall, specialty, downtown, entertainment, outlet and tourist based tenants looking for new store locations, send email to espretailing-request@dealmakers.net and in the message write subscribe. Until next month,
Ann O’Neal,
Publisher