On behalf of fellow shoppers everywhere, I’d like to use this month’s column to post the following letter to each of our favorite retailers: “Please accept this written apology for having been remiss in my shopping duties. I know that I haven’t seen you in a while, but I’m afraid my gas bill has prevented me from being able to visit as often as I used to. I’m not sure when we’ll meet again, but please know that I’m thinking about you, and I miss you.”
Our absence is being felt. On the morning of May 1st—a banner news day in the retail real estate world—The Home Depot announced from its Atlanta headquarters that it would close 15 stores over the course of 30 days, and it was scrapping 50 store openings slated for the coming months. Kohl’s headlines followed a few minutes later, as the Menomonee Falls, Wis.-based retailer went public with news that it would open fewer stores than originally planned. Starbucks’ announcement less than an hour later came as no surprise given the morning’s tidings: CEO Howard Schultz said the company was slashing store openings through 2011.
The next morning delivered more bad news. Linens ’n Things filed for Chapter 11 bankruptcy and, in doing so, would close 120 stores in 31 states.
The May announcements came on the heels of earlier news that Foot Locker would close 140 stores over the next year, Zales would shutter 100, Ann Taylor 117.
With the retail meltdown has come the pain of loss, palpable throughout the chain of consumption. Customers are losing favorite retailers, whether by the closure of a local store or the reneging of plans to open a location nearby. Retailers are feeling the losses on every level, in every department. Suppliers are faced with unpaid invoices, some of them staggeringly large. And developers are dealing with unexpectedly empty buildings and bays, and with fewer leasing prospects for new projects.
And so we all peer into the dark tunnel, straining to see a ray of light, and wondering how best to lower our losses during the wait.
Developers have varying strategies for project-by-project survival. Some put plans on hold, awaiting an upturn. Others focus on “necessity retailers” as top leasing prospects, filling spaces with the tenants most likely to tread water when others are drowning. Many augment retail projects with additional uses.
And then there’s Laurence Siegel, real estate developer and a driving force behind the much-publicized, 2.4 million-sq.-ft. Meadowlands Xanadu. Siegel’s strategy is to remain optimistic in a sea of naysayers, asserting that the $2.3 billion entertainment project located in northern New Jersey’s Meadowlands Sports Complex can thrive despite the downturn. Some analysts have agreed, suggesting that the current climate could positively impact Xanadu by offering families a place to forget their financial woes amongst the center’s many entertainment offerings.
I can see where Siegel and supportive analysts are coming from. But I believe that while American consumers will indeed appreciate the distraction offered by entertainment destinations, they will be bolstered more by the continued survival of the retail chains they have patronized for decades.