REAL ESTATE

Juan Valdez launches Miami expansion; 60 stores planned

BY Dan Berthiaume

Bogota, Colombia – Colombian coffee retailer Juan Valdez has opened the first of 60 planned stores in Miami, with official grand opening scheduled for July 28. The downtown location is the first Juan Valdez store in Miami besides an existing store at Miami International Airport.

Another Miami store is scheduled to open Aug. 10, with two more new stores in 2015 and a total of 60 planned by the end of 2019. Juan Valdez has previously operated stores in other U.S. cities such as New York, but its Miami plans mark the retailer’s first major push into the U.S. Juan Valdez also plans major expansions into Texas and California. The retailer’s first new Miami store opened five days after U.S. coffee chain Starbucks opened its first Colombian store in Bogota.

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REAL ESTATE

Sears Outlet Stores expands Kansas City center

BY Dan Berthiaume

Hoffman Estates, Ill. – Sears Outlet Stores has leased a 354,000-sq.-ft. former Sears location in Kansas City, expanding outlet store operations and services and developing a new central distribution center for the South-Central region. This new repair and distribution center is expected to create nearly 160 new jobs to be filled by Kansas City locals.

In addition to the development of this new distribution center, Sears Outlet Stores has invested in updating and remodeling both its retail location and the building’s exterior. The retail space in this location has expanded more than 50%.

The retail store, which now has more than 27,000-sq.-ft. of retail selling space, has also expanded its assortment of merchandise, bringing in new categories like apparel and furniture. Sears expects to have the project complete by early this fall.

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REAL ESTATE

Confidence Game

BY Jeff Green

The economic trend for some time now has been a slow and meandering recovery. Despite improving consumer confidence numbers, a surprising first quarter GDP decline of 2.9% speaks to that uncertainty. Retail analysts and observers have a tendency to blame the weather whenever we have a bad economic quarter or when retail sales are unexpectedly sluggish, but I tend to be a little dubious of those explanations. Last winter was definitely rough enough to impact spending, but I don’t think it’s enough to explain the continued issues into the spring.

Now, with the recent release of the June retail sales numbers, the picture is only getting murkier. Retail sales rose just 0.2% in June. What is particularly interesting to me, however, is not necessarily the overall number, but numbers behind the number: specifically, how divergent the sales figures have become, not just from one company to the next, but within companies — from one brand to the next. For example, Banana Republic and Gap are down, while Old Navy is way up. Urban Outfitters is performing poorly, but Anthropologie and Free People are doing quite well.

From my perspective, this is new. We have seen some brands be a little up and a little down in the past, but the frequency and size of these swings feels like a new phenomenon. It is interesting to note that consumer confidence reflects a similar pattern. While consumer confidence bumped up in June, the larger pattern is relatively stagnant. I suspect the fragile nature of the collective consumer psyche might also go a long way to explaining why scandals like the Target credit card information theft can have such an outsized impact. Consumers are a skittish bunch these days.

The uninspiring economic numbers, uncertain recovery and tenuous consumer confidence might also explain some of the volatility and seemingly unusual patterns we are seeing in brand-specific performance. I think it’s telling that value retailers like Wal-Mart and Target haven’t seen the traction you’d expect in a predominantly value-driven shopping environment. At the other end of the spectrum however, Gap and Banana Republic are also doing poorly (both were down 7% in June). It is in the middle where the action is, as mid-level brands like Old Navy (which was up 7% in June) report stronger numbers.

We may be at a point in the post-recessionary era where we have recovered “enough” that consumers are moving away from strictly value, but that the lackluster nature of the recovery is preventing a true resurgence in some mid- to higher-end brands. Essentially, both ends are getting squeezed and some higher-end retailers and general/mass merchants might continue to face some structural challenges. You could make a similar argument in the restaurant sector, where price leaders like McDonalds have struggled of late, while fast-casual upstarts like Five Guys and Smashburger have thrived.

As for what this all means for brick-and-mortar, it’s a little more complicated. If there is a broad conclusion to be reached here, it might be this: in the current economic climate, big-picture trends are elusive and traditional assumptions are only so helpful. You really have to look at each individual retail brand in its own context as it relates to price, quality, service, product depth and variety, and whether the brand is effectively speaking to consumers.

It’s worth noting that despite the brand-to-brand sales variations at some companies, there are broader multi-brand retail success stories right now. All three major TJX Companies brands — Marshall’s, Home Goods and T.J. Maxx — are doing well, which is especially interesting as it runs counter to the struggles that so many other discount and value retailers have experienced. I’d love to get your thoughts on what that might mean. Are they doing something different? Is there something special about Marshall’s, Home Goods and T.J. Maxx? Is this the exception that proves the rule, or is it an indication that the retail marketplace might be even less predictable than I suggested? Leave a comment below or email me at [email protected] to keep the conversation going.


Click here for past columns by Jeff Green.

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