ECOMMERCE

Coffee giant pulls the plug on online store

BY Deena M. Amato-McCoy

Starbucks Corp.’s online store has officially closed its virtual doors.

The e-commerce site, which sold Starbucks’ branded merchandise — from mugs and coffee brewers to coffee, tea, and flavored syrups — shut down on Sunday, Oct. 1. The coffee giant decided to close the online store to focus on integrating its physical and digital channels, and to establish stores as destinations, according to Business Insider.

Since announcing the site’s closure in August, the company has been selling merchandise online at 50% off. Since merchandise is no longer available online or via phone orders, the company is encouraging customers to purchase merchandise at their local Starbucks or grocery store. They can also order items through their app and pick them up at their local Starbucks location, the company said on its “FAQ” page.

In September, Starbucks also discontinued its subscription program, a monthly service that introduced members to a samples of Starbucks Reserve coffees.

While local stores are not accepting returns of online Starbucks Store purchase, the company will refund purchases made within 30 days, the company said online.

The decision to close the online store followed Starbucks’ announcement that it would also shutter its Teavana operation. With many of the company’s principally mall-based Teavana retail stores consistently underperforming, the coffee giant said it will close all 379 Teavana stores over the coming year. A majority will close by spring 2018.

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The modern case for mixed-use retail

BY Al Urbanski

We have a tendency to take things that have been with us forever, reinvent them, and give them new names. Mixed-use centers, for instance, are essentially the 21st century version of downtowns. But whereas America’s towns grew up organically alongside harbors, rivers, and transportation crossroads, mixed-use centers aren’t always able to be so logically placed.

“Mixed-use centers have caught fire over the past 15 years. They really went crazy in the pre-recession years, but a lot of those projects should never have been built,” said developer Ralph Conti, who got his first taste of live-work-play while at Sears’s Homart Development Company in the mid-1990s.

“Everybody wants mixed-use, but it’s not about what some politician wants,” said Conti, now a co-managing partner at Celebration Pointe, a mixed-use center going up in Gainesville, Fla. “A lot of deals got forced that way, and then they had problems. Mixed-use is going to work best in densely populated areas where there are barriers to entry. An urban footprint is usually where mixed-use works best.”

Conti believes he’s found that in Gainesville, whose population of 131,000 and median household income of $32,000 belie the opportunity existing there.

“It reads like a tertiary market, but the daytime population swells by 100,000. We have the University of Florida with about 54,000 students, Sante Fe College with 28,000. Then you have the UF Medical Center, which brings in millions of people a year. It can be hard to get a hotel room in Gainesville,” Conti said.

Celebration Pointe will add 140 rooms to the market with Hotel Indigo. It will offer up luxury apartments, office space, a Regal RPX Theatre, and The Promenade at Celebration Pointe, a gathering place that fills one of Conti’s other key requirements for a successful mixed-use center: walkability. One locale plenty of north-central Floridians have been beating a path to lately is the area’s first Bass Pro Shops, which opened at Celebration Pointe this year.

“The reason we’re doing this project in Gainesville is that there’s a big hole in this market,” Conti said. “It’s been painfully slow-going, but we’ve been listening to the end users to tell us what it’s going to be.”

Also rushing into the breach with a mixed-use development in Gainesville is the Butler family, whose general store built in the ’30s blossomed into the city’s central retail complex. Now known as The Neighborhoods at Butler, the mega-power-center is composed of three distinct shopping areas housing a Walmart, a Lowe’s, a Sam’s Club, a Target, two Publix supermarkets, a Dick’s Sporting Goods, and a Best Buy.

New to the Butler mix, now under construction, is Butler Town Center at Stengel Field, a mixed-use project that will feature upscale shops at ground level, 202 luxury residences above, and a walkable town environment. Highlight attractions include a Whole Foods, a Regal Cinema, and a food hall with an aeronautics theme pegged to the site’s history as an airfield.

Despite the 150-plus stores and 1.7 million sq. ft. that Butler Enterprises presents to the Gainesville market, the company’s leasing consultant agrees with Conti that the market cries out for more.

“Gainesville has a large consumer base that is under-retailed,” said Gerardo Aguinis, a principal of The Zall Company. “There are over a million people in Alachua County and they have to drive one or two hours to reach the nearest major markets of Jacksonville, Orlando, and Tampa. We have a captive audience here.”

Aguinis notes that people already flock to Butler, but that new additions were needed to cater to their developing tastes. Luxury retailers, as well as some important national and regional players, were missing from the already wide selection of retail being presented at Butler Plaza.

“New generations don’t want old concepts, and that’s nothing new in retail,” Aguinis said. “Our leasing philosophy hasn’t changed. You need to create a destination, and it needs to be an environment where people want to gather.”

Indeed, the Temple of Retail concept that worked so long and so well for mall developers (and still does in many cases) is something not likely to be continued in massive new projects.

“Retail alone isn’t enough to sustain a center anymore,” said Kathleen Brill, VP and director of leasing at Cullinan Properties. “Our research is pointing to the fact that consumers are enjoying mixed-use centers so much because they can do so many errands in one area.”

And sometimes a location needs retail and a whole lot more. Cullinan found that to be the case in St. Charles, Mo., where the company bought and razed a famed local motor inn and restaurant called Noah’s Ark and is lifting the site to even greater prominence. Now about 80% complete, Streets of St. Charles is writing a new chapter in the life of the historic city west of St. Louis. At build-out, the 27-acre site will feature an eight-screen AMC theatre, two hotels totaling 260 rooms, and 300-plus luxury apartments. Some 400,000 sq. ft. is devoted to retail, dining, and entertainment. Tenants include P.F. Chang’s, Bar Louie, Leopard Boutique, Rocky Mountain Chocolate Factory, and Orangetheory Fitness.

Brill said communities nationwide have contacted Cullinan in hopes it could recreate the Streets of St. Charles in their towns, but she is in sync with Ralph Conti on the subject: Mixed-used doesn’t work just anywhere.

“Some of the elements we found successful in St. Charles were location — easy accessibility to an interstate — and voids in key areas such as entertainment and upscale residential,” she said. “This was almost a brownfield site before Streets was created, but local incomes have risen substantially in recent years and the time was right.”

Though mixed-use developments tend to be expansive projects, circumstance can dictate that huge scale is not essential to the concept. Monticello, which combines 47,811-sq.-ft. of street retail under apartments in Santa Clara, is a project of the Irvine Company, master-planner of entire communities in Orange County such as Irvine and Newport Beach. When it comes to live-work-play, Irvine started writing the book decades ago.

“The mixed-use concept is especially effective in Northern California, where land is very precious and there’s a housing shortage,” said Fred Collings, SVP of Irvine Company Retail Properties. “In Monticello, where you can assemble 800 to 900 apartment units and retail and amenities like fitness classes, common public areas, and lounges for computer work, you can make your product a real poster child for the live-work-play concept.”

Retail at Monticello is necessity-based, with a focus on restaurants for the time-pressed, Silicon Valley careerists who live there. Tenants include California Pizza Kitchen, Pressed Juicery, Konjoe Burger Bar, and Starbucks. Nearby employers such as Apple, Intel, and Qualcomm make the center’s location especially valuable.

Food and service-based retail dominate at Irvine’s NoCal residential properties, but exceptions are made when the market warrants them. “We’ll introduce other retail when we can determine through analysis that there is a hole in that market for an apparel retailer, but generally, we don’t have the square footage to accommodate apparel,” Collings said.

The bottom line: Mixed-use will continue to flourish, but not in the cookie-cutter fashion that enclosed malls did. Some will be big, some small. Some will have hotels and entertainment some will focus on residential and needs-based retail. It all depends on the strength of a locale and its needs.

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Boston beckons

BY Al Urbanski

Marcus &amp Millichap’s Q2 Boston market report signals urgency to retailers like the famed lamps Paul Revere placed in the tower of the Old North Church. To wit:

  • Retail vacancy rates are below 2% in some areas, such as those along Route 128 and Interstate 495. Retail space under construction is up 30% this year.
  • Whole Foods, Wegmans, and CVS are among the players in a spate of new necessity-based centers.
  • Luxury high-rises are sprouting in old warehouse and dock areas, creating new neighborhoods with new retail demands. Retail space in central Boston is highly sought after, with prices starting at $800 per square foot.

Two-and-a-half linear miles of streetfront retail will line the streets of WS Development’s 20-block Boston Seaport project, the largest currently under construction in the city. Lanes where shipyards and warehouses once did business will house the likes of Bluemercury, Bonobos, L.L. Bean, Shake Shack, and Filson — a Seattle-based outfitter debuting its first New England-area store.

“Boston’s growing and needs new neighborhoods fast,” said Yanni Tsippis, WS Development’s SVP in charge of the Seaport project, which will add to downtown’s real estate inventory with 2,500 residential units, 2.8 million sq. ft. of office and research space, three to four hotels, a million sq. ft. of retail and entertainment, and up to three parks.

New England’s biggest town also badly needs more retail, Tsippis said.

“There’s just one retail area — the Back Bay. There’s no other area outside the Seaport that’s realistic to serve as a second retail zone,” he said.

The famously criticized Big Dig, the most expensive highway project in U.S. history, gave the Seaport ready access to Logan Airport and, at the same time, cleaned up the formerly nasty Boston Harbor. Transit lines also intersect there, near the Convention Center. “The Seaport District,” he said, “is now the most accessible area in the whole city.”

West of downtown, just outside Cambridge, lies Watertown, where Boston’s other big new retail project, Arsenal Yards, is taking shape. The mixed-use development, a co-project of The Wilder Companies and Boylston Properties, will feature 350,000 sq. ft. of retail and entertainment, some 500 residences, and 100,000 sq. ft. of office space.

“Four ecosystems drive the area: tech, health care, finance, and higher education,” said Tom Wilder, who’s leading the development of Arsenal Yards. “We always had great universities, but we didn’t always retain a lot of those graduates. Now the growing tech and biotech companies realize there’s a pool of talent available here.”

The project replaces an enclosed shopping mall that had overtaken an old U.S. Army ordnance depot and small arms factory in the 1980s. Historic portions of the manufacturing complex will be retained in the new Arsenal Yards, which makes a logical move into residential in an area with considerable housing shortages. When completed, it will offer up half a dozen chef-driven restaurants, a 30,000-sq.-ft. specialty grocery store, a multiplex cinema, and a combination of boutiques and national retailers. The first stores are set to open in fall 2018.

“The site is unique,” Wilder said. “It’s its own town, but it’s urban-edge. You’re in walking or biking distance of Cambridge and Boston, which millennials demand. We’re giving them everything they’re asking for — outdoor dining, beer gardens, bocci courts.”

Arsenal Yards’ timing might be right. According to the Marcus &amp Millichap report, a slowdown in project completions along with strong tenant demand dropped Boston’s vacancy rate by 50 basis points in Q2 2017 over the same period the previous year. In Cambridge, however, the rate plummeted 80 basis points to 2.6%.

The trend is likely to continue. Marcus &amp Millichap forecasts a 128,400-resident increase over the next five years in Boston, a town where average monthly household retail sales top $4,000, more than three times the national average.

Paul Revere would have needed a third lantern to signal this trend, for it would appear that retailers and residents are coming by both land and sea.

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