U.S. shopping center industry grew to nearly 105,000 centers in ‘09
Las Vegas The U.S. shopping center industry grew, albeit slightly, to nearly 105,000 centers in 2009, according to the latest statistics from CoStar Group, compiled on behalf of the International Council of Shopping Centers (ICSC).
While both 2009 and the first four months of 2010 were sluggish in terms of growth in number of centers and total leasable area, CoStar said there is cause for an optimistic outlook on retail real estate during the latter half of 2010 when growth within the industry should pick up markedly.
Michael P. Niemira, VP, director of research and chief economist for the ICSC said that “this slowdown in shopping center industry growth — the largest since at least 1971 for which consistent data exist — was not surprising due to the 2007-2009 recession and the difficulty in securing capital from banks and other lending sources. But the prospects for the retail real estate industry appear to be improving and the sector, in time, will likely regain its investment luster.”
The CoStar research, which examined the size of the U.S. commercial real estate market and its segments, suggested “that the retail segment of the property market had the largest market capitalization ($2.98 trillion) at the end of 2009, more than office ($1.64 trillion); industrial ($1.07 trillion); hospitality ($895 billion); and multi-family properties ($1.40 trillion).”
In the recent quarter, retail sales climbed along with consumer confidence and recent employment gains of nearly 400 thousand jobs in April bode well for improvements in the retail sector in the months ahead, according to the research.
International is 4th growth priority
Target will operate stores internationally — some day — but for the time being the company contends it has such ample opportunities domestically that its growth efforts remain focused on American soil for at least the next three years. According to president and CEO Gregg Steinhafel, the company’s top priority is transforming its existing store base to the P-Fresh format, which features fresh food and other category upgrades. In addition, the company intends to continuing opening new U.S. stores in trade areas that make sense for the company’s existing formats. A third priority is to develop a smaller prototype that enables the company to take advantage of more urban opportunities that have great demographics. “We’re looking at downsizing Target to fit the environment where there are guests that have lots of money and love Target, so we’re focused on that as our third priority and then international would come well beyond that,” Steinhafel said.
Using ketchup to capture sales
Combine tomatoes, vinegar, high-fructose corn syrup and salt and what do you get? Ketchup, of course, but also the makings of an early-summer pricing battle involving a staple of summer cookouts. Target featured a 40-ounce squeeze bottle of Heinz brand ketchup in its circular this week for $1.59. That’s quite an aggressive price and would have been a good deal for shoppers except for the fact that Walmart decided it needed to reassert its pricing image and would use the Heinz brand to do so. As a result, Walmart marked down the 40-ounce Heinz to just $1 from its regular price of $2.42, as part of its price rollback campaign touted in promotional materials as involving, “thousands of rollbacks throughout the store.” Fortunately for margins at Target, as well as Walmart, most of the items featured in the rollback program are not subject to such extreme reductions.