CVS, The Boulevard restaurant ink leases at Queens center
Queens, N.Y. — A CVS Pharmacy and The Boulevard, a new family restaurant, have leased space in the Francis Lewis Boulevard Shopping Center in the Whitestone section of Queens, N.Y.
The CVS transaction is a lease renewal for an existing 13,500-sq.-ft. pharmacy. The Boulevard has taken 4,000 sq. ft. and plans to open by the end of March.
The Francis Lewis Boulevard tenant lineup also includes McDonalds, First Savings Bank, Kumon and Aphrodite Sweets.
Muss Development LLC, the owner and operator of the shopping center, has plans to upgrade the center when a 4,000-sq.-ft. parcel adjacent to CVS becomes available in the second quarter.
Sears sets Lands’ End free
Lands’ End will be back on its own as a publicly traded company following a formal announcement by parent company Sears Holdings to spin off the well-known apparel brand.
The move follows years of speculation that Sears would divest the brand, which it acquired in May 2002 for $62 a share. At the time, Lands’ End was a publicly traded company with revenues of nearly $1.6 billion, profits of $67 million and earnings per share of $2.23. The $62 a share Sears paid 12 years ago represented a 21.5% premium over the closing pricing of $51.02 prior to the announcement of the deal.
Following the spin-off announced over the weekend, Lands’ End will be a publicly traded company independent from Sears Holdings and Sears Holdings will not retain any Lands’ End common stock.
To execute the transaction, Sears is performing what’s called a “pro-rata spin-off transaction.” Sears Holdings will distribute all of the outstanding shares of common stock of Lands’ End on a pro rata basis to holders of Sears Holdings common stock. Sears Holdings stockholders will receive roughly one third of a share of Lands’ End common stock for each share of Sears Holdings common stock.
The Lands’ End deal follows what was a difficult year for Sears Holdings. During the fourth quarter, the company reported a loss of $358 million compared to a prior year fourth quarter loss of $489 million. For the year, the company said it lost $1.4 billion compared to a loss of $930 million. The extent of the company’s losses last year, although sizeable, were less than the prior year and chairman and CEO Edward Lampert offered a positive outlook at the time.
"During 2013, we made progress in our continuing transformation into a member-centric retailer leveraging Shop Your Way and integrated retail, which we believe will position us for enhanced growth and profitability to create long-term shareholder value," Lampert said. “Our full year results are impacted during this transformation as we continue supporting traditional promotional programs and marketing expenditures while we invest in our Shop Your Way program and integrated retail strategy. We have been investing hundreds of millions of dollars annually in our transformation and will continue to invest in the future of the company."
So far, the company’s investments have been slow to yield sale growth. Fourth-quarter same store sales at Sears declined 7.8% while Kmart’s comps dropped 5.1%. For the year, Sears comps decline 4.1% and Kmart declined 3.6%.
Retail Showrooming is Dead
By David Coleman, CEO and founder, Brandoogle
According to a recent IBM report, retailers should no longer feel threatened by the practice of retail showrooming. Agreed, and also great news for traditional brick-and-mortar retailers.
Retail showrooming is a known margin killer.
While I agree with the IBM report that retail showrooming is dead, unfortunately, that’s not the story. The IBM report completely misses the elephant in the room … while retail showrooming is dead, virtual showrooming is exploding (virtual showrooming is the practice of comparison shopping and purchasing online without ever visiting a store).
Retail traffic was down an alarming 15% this past holiday season, retail sales were generally flat to down, and internet purchasing was up 40%.
What’s happening? The consumers who engaged in retail showrooming in 2012 discovered that comparison price shopping on a mobile device was extremely difficult. Mobile devices are great for texting, tweeting, and instagrams, but are terribly inefficient for comparison price shopping. Full-screen devices, laptops and desk top computers, are much better suited for this exercise.
So the reason for the lack of retail showrooming growth is not simply that is was last year’s fad. Quite the contrary, it’s a function of the consumers who have tried comparison shopping on mobile devices while in-store, have simply switched to a much more efficient medium: Full screen devices at home or work. This demographic, the price conscious tech-savvy consumer, probably made up a large percentage of the 15% decline in retail traffic.
Further evidence of this change in consumer behavior is validated by the recently published reports from Channeladvisors.com that noted that nearly 75% of online purchases were made using full-screen devices. So a lack of growth in retail showrooming is hardly a cause for celebration, but moreover is a rather ominous sign that things are only going to get more difficult for traditional brick-and-mortar retailers in the near term.
As technology, and the apps associated with it, continue to get better and faster, this change in consumer buying patterns can only be expected to increase.
Omni-channel retailing, in-store experience, internet price matching, and loyalty programs will only go so far. (Note the recent Best Buy earnings report). The key to combating virtual showrooming is to change the landscape of the battlefield.
Eliminate the opportunity for showrooming to occur. Showrooming can really only occur when what is available in the store is also available on-line. Therefore, preventing a showrooming opportunity, retail or virtual, starts with an assortment plan that recognizes showrooming risk before inventory is ever purchased.
A fact confirmed by John Lammers, DMM of Auto Zone who recently stated: “There’s absolutely no question. Understanding the on-line competition plays a key role in ensuring that our assortment planning, and merchandising strategy are aligned with our customers’ needs.”
Most of us wouldn’t extent credit to a customer without checking their credit risk first. So why would a forward thinking retailer buy into inventory without first checking out the vendor’s showrooming risk?
The retailers that will survive and prosper in this new environment will be those that are as savvy with technology enabled assortment planning as the consumers are with technology enabled comparison shopping. The real question the industry faces is “Do traditional brick-and-mortar retailers truly understand the dynamics of the showrooming problem, and if so, are they willing to adopt new thinking to tackle the age old challenge of comparison shopping?”
David Coleman is the CEO and Founder of Brandoogle and can be reached via e-mail at [email protected]. Brandoogle works with both retailers and brands to improve margins and combat showrooming using a proprietary suite of software and services.