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REAL ESTATE

Supercenter retailer to try on smaller-store format

BY Marianne Wilson

Meijer is going urban.

The Midwest retailer plans to open six small-format stores in urban locations, reported mlive.com. Instead of the Meijer name, the stores will have a name that is reflective of their particular neighborhood, according to the report.

Meijer will pilot the concept with a 39,000-sq.-ft. location, called Bridge Street Market, in Grand Rapids, Michigan. The store, due to open this summer, is part of a mixed-use development.

“Ultimately, we hope this is successful enough where it can go all the places where we can’t get in and build a supercenter,” said Mike Kinstle, Meijer’s VP of real estate, in remarks at an International Council of Shopping Centers conference on urban development. “We want this to be a complement to the supercenter format.”

The new format will emphasize fresh foods and locally sourced products along with an assortment of Meijer-branded products, according to the report.

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REAL ESTATE

Report: Toys ‘R’ Us planning to liquidate U.S. stores

BY Marianne Wilson

The nation’s largest toy store retailer is making preparations to liquidate its operations in the United States, Bloomberg reported late Thursday afternoon.

Toys “R” Us filed for bankruptcy in September. So far it, has been unable to reach a debt restructuring deal with its lenders or find a buyer to keep some of its businesses operating, according to the Bloomberg report, which cited people familiar with the matter.

The retailer has been burdened with a heavy debt load since 2005, when it was purchased by private equity investors KKR, Bain Capital, and Vornado Realty Trust in a $7.5 billion buyout. But in recent years, heavy competition from Amazon and other online players, as well as from Walmart and Target, has taken a heavy toll on its results. Toys “R” Us has struggled to update its offerings and processes, both online and in store, and has lagged behind its competitors digitally. Its debt has put a strain on its ability to invest in its business.

In a big blow, the chain had a disappointing holiday at a time when most retailers benefitted from surging consumer confidence and a strong economy. CEO Dave Brandon acknowledged “operational missteps” during the holiday season.

In February, The Wall Street Journal reported that Toys “R” Us was planning to shutter an additional 200 stores and lay off a significant portion of its corporate staff. This came after a court filing in January in which the chain said it was planning to shrink its U.S. store portfolio by as much as 20% — about 180 locations — as part of a plan to emerge from bankruptcy before the 2018 holiday season.

Toys “R” Us’ liquidation would be a big blow for the overall toy industry, as the chain makes up about 15% of U.S. toy revenue, Bloomberg reported.

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Hot Markets: Houston
REAL ESTATE

Hot Markets: Houston

BY Al Urbanski

Last August, Hurricane Harvey blew in off the Gulf Coast and devastated Houston. The $125 billion in damage ranks as the second highest total for a natural disaster in U.S. history. But months later, Houston is open for business welcoming national chains to move into more than 5 million sq. ft. of retail space completed in the past year.

“Harvey’s impact on retail properties was minimal,” said David Luther, first VP at Marcus & Millichap’s Houston office. “There was some flooding in northern areas, but national brand tenants didn’t skip a beat and started repairs immediately.”

Population and job growth continues on the upswing in Houston, which added more than 63,000 jobs last year, a third of them in office locations. The uptick in retail construction comes after some fallow years and is concentrated largely in northern suburban towns such as Tomball, Cypress, Spring, and The Woodlands. The construction of a third beltway around the city is fueling much of the growth, with grocery-anchored centers leading the way.

“The third ring is near completion, and whenever you’ve got a new highway, you’ve got rooftops and commercial following,” Luther said. “Big grocers like H-E-B and Kroger wanted to be first in. They can afford to build in an area and lose money and wait for the rooftops.”

Much of the new retail GLA is emanating from mixed-use projects under construction in north Houston. The recently opened Valley Ranch Town Center in New Caney presents an eclectic mix of entertainment, necessities, and national retail. Among the first to open there are Kroger Marketplace, Hobby Lobby, Cinemark Theater, Mattress Firm, and Chick-fil-A.

CityPlace in Springwoods Village, now under construction, is a 60-acre mixed-use project near the Exxon Mobil campus that will present 400,000 sq. ft. of retail along with a luxury apartment complex, office space, a Marriott Hotel, and City Place Plaza — an open-air venue for concerts, fairs, and other events.

What’s most in demand, however, are neighborhood centers such as the small-shop centers and shadow-anchored centers that have, for example, a Chipotle, a Mattress Firm, and service-oriented centers, Luther said.

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