Sears Outlet Stores expands Kansas City center
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.
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.
Gap to enter Slovenia, Austria
San Francisco — Continuing its global growth, Gap Inc. on Monday announced that it will introduce the Gap brand to Slovenia and Austria through agreements with new and existing franchise partners. Magistrat International, a new partner, has been selected for the launch of Slovenia. Gottex, which currently manages the Gap franchise business in Israel and Hungary, will launch Austria.
Gap has signed a new agreement with Magistrat International to open three stores in the capital city of Slovenia, Ljubljana. City Park, Slovenia’s largest shopping center, will be the location for the first two free-standing stores; one for adult and one for kids and baby. The Emporium department store will feature the full collection of mens, womens, kids and baby. All locations are scheduled to open by September this year.
Gap will open its first store in Vienna, Austria this October. The free-standing location will be located at the Donauzentrum Mall.
“Gap is known all over the world and we have grown our store presence significantly in recent years to help bring our casual style to more and more customers. We launched into five new markets last year; Hungary, Paraguay Peru, Brazil and Costa Rica, and with the opening of stores in Slovenia and Austria we now bring our iconic brand to customers through stores in almost 50 countries,” said Gap brand president, Steve Sunnucks.