REAL ESTATE

Retail ‘Slowmentum’ Picking Up?

BY Jeff Green

At a time when sluggish-to-modest industry numbers have seemingly become the norm, and a protracted economic recovery inches forward, the recent spate of seemingly good retail and economic news has industry analysts and observers like myself raising a collective eyebrow. As Chain Store Age recently reported, “Consumer year-over-year spending growth of 4.1% gained momentum in April 2014 compared to the prior month’s growth of 3.1%.”

Along with the positive April job numbers and the news that Radio Shack now plans to shutter substantially fewer than the previously announced 1,100 locations, this would seem on the surface to indicate that things might be picking up across the board. On top of that, there seems to be some real optimism and excitement leading up to the 2014 ISCS RECon Convention in Las Vegas. I can personally attest that my RECon docket is full to bursting, and from what I’ve heard, I won’t be the only attendee with a lot on my plate.

What does all of this positive news add up to?

I think the short answer to that, unfortunately, is “not much.” Don’t get me wrong, I’m always pleased to see better numbers, good news, and optimism, but, once we unpack the data a little further, it’s easy to see that the numbers don’t really support a perspective that is much different from what we already know — or at least think we know — about the state of the industry: Growth is continuing, but doing so slowly and unevenly. Consider the fact that much of the improvement in consumer spending can probably be attributed to pent-up demand from this year’s once-in-a-lifetime winter, as well as to the fact that Easter, and all of its attendant economic activity, was bumped from March in 2013 to April this year.

As for Radio Shack scaling back its planned reorganization, it’s worth pointing out that the decision seems to be less about optimism and more about pragmatism. The planned reduction in closings is all about what the consumer electronic brand’s lenders will sign off on. Radio Shack’s credit agreement only allows the chain to close 200 stores a year, and the brand and its creditors have been unable to come to an agreement on a higher number. In the meantime, the realities of a $139 million dollar loss in 2012 and a $400 million dollar loss in 2013 are still tough to overlook.

As for the optimism within the industry, I think we can attribute a lot of that to the simple fact that retail real estate professionals are a pretty optimistic group overall. While I don’t necessarily think that the big story at RECon will be one of dramatic economic improvement, that tendency to look on the bright side will certainly contribute to a lot of lively discussion about important trends and the direction of the industry.

Key issues this year will revolve around the emergence and importance of experiential retail, questions about which new chain store concepts have legs, and whether or not there will be enough store expansion to fill some of the big box vacancies. Will Target suffer any more long-term damage to the brand as a result of their data breach issues? What is in store (literally and figuratively) for Sears and J.C. Penney, and, for better or for worse, what are the long-term implications of their ultimate fate for the rest of the industry? Sears, whose chairman and CEO Eddie Lampert who recently told shareholders that "sometimes you need to go backwards to go forwards”, has closed 305 stores in the last 3+ years, and has experienced 28 straight quarters of declining sales.

In addition to these questions, the industry’s best and brightest will no doubt discuss the growing need for retailers to optimize merchandising for the younger consumer. As many apparel retailers have realized, merchandise has got to be “trend forward” to be consistently competitive. As brands like Coldwater Creek have found out the hard way, when merchandise doesn’t change to keep up fashion and emerging trends, the results can be disastrous.

The bottom line is that, despite the fact that I don’t necessarily see a dramatic turnaround on tap, there will be plenty to talk about at this year’s RECon. The conference remains one of the industry’s most interesting and most enlightening national events, and every year there are surprises and unforeseen storylines that emerge. I’ll see you there!

What other topics do you see dominating the convention floor at this year’s RECon? Share your thoughts by leaving a comment below or email me at [email protected].


Click here for past columns by Jeff Green.

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REAL ESTATE

New Orleans opens the first downtown outlet center

BY Michael Fickes

For a couple years now, outlet centers have been moving from the outskirts of cities closer and closer to downtown. Howard Hughes Corp.’s Outlet Collection at Riverwalk is the first to make it all the way downtown — into the center of the newly rebuilt New Orleans.

Slated to open on Memorial Day weekend, the former 200,000-sq.-ft. Riverwalk Marketplace has expanded into a 250,000-sq.-ft. outlet center following a $70 million redevelopment.

The redeveloped center is located at the base of Canal Street and Poydras Street next to the convention center, the cruise terminal, Spanish Plaza and the Audubon Aquarium — just across the street from Harrah’s Casino and within walking distance of 20,000 hotel rooms, the Central Business District and the French Quarter. Is there a better shopping location for tourists, residents and the daytime business population anywhere?

“New Orleans is a very walk-able city,” said Mark Bulmash, senior VP, development with Howard Hughes Corp. “You can walk to shopping, to the Superdome and the French Quarter. It is very easy to get around. When we showed national retailers the rebuilt city and the walk-able dynamics, they liked it.”

In mid-May, two weeks before the grand opening, the center was 98% leased, largely by well-known national outlet retailers — many with their first Louisiana location.

Anchor tenants include Coach Factory Store, Coach Men’s Factory Store, Forever 21 and Last Call Studio by Neiman Marcus. The tenant roster includes Café du Monde, Chico’s Outlet, Clarks/Bostonian Outlet, Gap Outlet, Guess Factory Store, Hartstrings Childrenswear, It’Sugar, Kay Jewelers, Kenneth Cole Company Store, Loft Outlet, Lucky Brand, Puma, Raising Cane’s, Red Mango, Sunglass Hut Outlet, The Fudgery, Toby Keith’s I Love This Bar & Grill, Tommy Bahama, U.S. Polo Assn. and dozens of others.

More than 90% of the tenants are outlet stores.

The Outlet Collection at Riverwalk is not a case of over-storing. New Orleans has 30% fewer retail square feet of retail per capita than the national average — perhaps thanks to Katrina. Shoppers have been gathering at the neighboring convention center to take buses to the suburbs to shop. Now shoppers can bus into the city and gather at Riverwalk with city residents.

The site has housed retail shopping for nearly 30 years. It was the home of the 1984 World’s Fair. After the fair, the Rouse Company reconfigured the space into Riverwalk Marketplace. “It was doing pretty well until Katrina,” says Bulmash. “After Katrina, New Orleans fell off the radar of national retailers, and they began to leave. Local mom and pop shops moved in.”

General Growth Properties acquired the center in 2004 when it bought the Rouse Company. Later General Growth spun off Riverwalk Marketplace and other former Rouse properties into the Howard Hughes Corp.


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OPERATIONS

Kohl’s, Toshiba partner with Plug and Play in retail accelerator program

BY Marianne Wilson

New York — Kohl’s Department Stores and Toshiba Global Commerce Solutions have teamed up with Plug and Play to participate in Plug and Play Retail, an accelerator program that is focused on technologies and teams innovating in the retail industry. (Based in Sunnyvale, California, Plug and Play is a business accelerator that specializes in growing tech startups.)

“We are pleased to announce Plug and Play’s partnership with Kohl’s and Toshiba Global Commerce Solutions and plan to leverage their deep industry knowledge and expertise to advise our investment strategy in the retail space. With their guidance, we will look to invest $25K-$100K in up to 30 retail-focused startups from around the world,” said Saeed Amidi, founder and CEO, Plug and Play.

The Retail Accelerator is a 12-week program designed for early and growth stage startups. Qualified companies are developing solutions in areas like inventory management, forecasting, augmented reality and Beacon. Through tailored deal flow, themed workshops, and face-to-face interaction, Plug and Play Retail aims to enable corporations to engage with startups that may complement their respective suite of offerings or create new potential revenue streams.

Startups accepted into the program receive funding from Plug and Play Ventures, weekly mentor sessions with industry thought-leaders, and opportunities for potential pilot projects, all culminating at Plug and Play’s quarterly demo day.

"Through our commitment to innovation, Kohl’s is investing in the new technology, platforms and partnerships that will elevate customers’ connection with Kohl’s,” said Ratnakar Lavu, Kohl’s executive VP digital technology. “The way consumers shop and share is changing faster than ever, and we are staying several steps ahead to ensure their experiences with Kohl’s remain both easy and exciting."

Plug and Play Retail will be accepting applications until May 31 and the program begins June 30.

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