Finding a New Normal
Bucksbaum Retail Properties opened for business in April 2012. The Chicago-based company has already opened one project and is working on four more.
The 53,000-sq.-ft. Kingsbury Center near North Chicago has opened with four tenants: Buy Buy Baby, PetSmart, Road Runner Sports and Jimmy Johns. It is a joint venture with Chicago-based Structured Development.
Set to open in the fall of next year, Mariano’s Fresh Market will occupy a 66,000-sq.-ft. space in Chicago’s South Loop. The market is a joint venture with Outlook Development of Milwaukee and Simon Konover Cos., based in Hartford, Conn.
Three developments will break ground soon: The Maxwell will provide 230,000 sq. ft. of retail, serving more than 15 Chicago neighborhoods around the South Loop. Chicago-based Bond Cos. is the joint-venture partner.
New City, a 500,000-sq.-ft. mixed-use retail and residential development, will rise in Chicago’s Clybourn Corridor. Structured Development is the joint-venture partner.
And, the mixed-use Liberty Center in North Cincinnati will encompass 835,000 sq. ft. of retail, 100,000 sq. ft. of office, 155 residential units and 135 hotel rooms. The project is a joint venture with Steiner + Associates of Columbus, Ohio.
Chain Store Age asked Bucksbaum Retail Properties’ CEO John Bucksbaum about the new realities driving retail shopping center development in the post-recession world.
Where are the development opportunities today?
I believe that more retail development opportunities exist in the urban core. These opportunities don’t look like the traditional, safe opportunities we’ve seen in the suburbs. City projects typically will be smaller. They may involve re-using facilities or building near mass transit stations, and cities will likely offer more mixed-use opportunities.
None of this rules out suburban development. Right now, for instance, we’re planning a major mixed-use project in suburban North Cincinnati.
How has retail development changed since the recession?
Development has changed dramatically. Suburban opportunities are more limited. Generally, existing retail properties already accommodate retail demand in the suburbs.
As I mentioned earlier, more opportunities exist in the urban core. Young workers enjoy the 24/7 lifestyle that cities offer, and they want to live in the city. In response, companies are moving downtown, in search of workers. Look at Google, Motorola and Kraft
ProFlowers extends online footprint
SAN DIEGO — Online fresh flowers retailer ProFlowers is launching a ProFlowers-branded store on eBay, extending its online reach.
The new ProFlowers eBay storefront features a broad assortment of fresh flowers, plants and product bundles including vases and chocolates, much like its existing online e-commerce site. Its eBay store also prominently features a “Deal of the Week” specially priced bouquet and vase.
“ProFlowers provides the freshest flowers, the capability to create a personal gifting experience, and the best customer service in the industry. We are excited to expand the ProFlowers ‘wow’ gifting experience to eBay customers,” said ProFlowers GM Bill Patterson.
ProFlowers’s market platform combines an online storefront, proprietary supply chain management technology and established grower relationships that bypass traditional floral supply chains of wholesalers, distributors and retailers. It will now leverage the global commerce platform’s access to millions of potential buyers to extend its online footprint and grow its e-commerce business.
“eBay’s success in attracting respected brands and retailers shows the strength of our platform to drive commerce, attract new customers and create engaging new shopping experiences,” said Michael Jones, eBay’s VP of merchant development. “We’re pleased to partner with ProFlowers, a respected leader with great selection, superior customer service and a generous seven-day freshness guarantee policy. And with Mother’s Day just a week away, I can’t think of a better time to bring special joy to moms everywhere courtesy of the ProFlowers store on eBay.”
OfficeMax has ‘challenging’ Q1
NAPERVILLE, Ill. — Declines in technology product category sales and decreased foot traffic at its stores affected OfficeMax’s results for its fiscal first quarter ended March 30, 2013.
The company posted total sales of $1.8 million, down 5.7% from $1.9 in the first quarter of the year prior. Adjusted sales, which exclude the impact of changes in foreign exchange rates and of stores closed and opened as well as the difference in the number of business days in the quarter compared to the same quarter last year, decreased 4.3%. Operating income for the quarter was $102 million compared to $18 million in the first quarter of the year prior.
"We experienced a challenging first quarter, with a sales decline that reflected weak macroeconomic conditions and continued industry declines in technology sales," said Ravi Saligram, president and CEO of OfficeMax. "We will continue to drive gross margin improvement and have put in place a significant cost reduction plan that should improve results in the second half of the year."
Retail segment sales in the first quarter of 2013 decreased 7% to $845 million compared to the first quarter of 2012, reflecting a same-store sales decrease on a local currency basis of 5% primarily due to decreased traffic and lower technology product category sales. The decrease reflected a U.S. Retail operations same-store sales decrease of 6%, and a Mexico retail operations same-store sales decrease of 2% on a local currency basis.
Retail segment gross profit margin increased to nearly 30% in the first quarter of 2013 from 29% in the first quarter of 2012 due to higher customer margins driven primarily by a sales mix shift from the relatively lower margin technology category as well as less promotional activity and lower product costs from profitability initiatives, partially offset by deleveraging of occupancy costs due to lower sales and an expiration of favorable purchase accounting for leases. Retail segment operating, selling and general and administrative expenses as a percentage of sales were 28% in the first quarter of 2013 and 27% in the first quarter of 2012, primarily due to deleveraging of expenses due to lower sales. Retail segment income was $16 million, or 2% of sales, in the first quarter of 2013 compared to $23 million, or 3% of sales, in the first quarter of 2012.
In other noteworthy first quarter developments, the company opened its first OfficeMax Business Solutions Center. The new store format is a first of it kind for OfficeMax in the United States, and will offer 5,000 sq. ft. of specially tailored business services, solutions and products to help local entrepreneurs grow their businesses.
OfficeMax ended the first quarter of 2013 with a total of 936 retail stores, consisting of 846 retail stores in the U.S. and 90 retail stores in Mexico. During the first three months of 2013, OfficeMax closed five stores in the U.S., and opened one store and closed one in Mexico.