This has been the biggest topic of conversation after disastrous earnings were announced by Macy’s, JC Penney, Kohl’s, and Nordstrom among others. I’ve written about this before but since January, retail stores seem to be in a free fall while Amazon becomes more and more dominant.
Here are 5 developments I’m keeping an eye on:
The most popular stores in America are now primarily fast food, discount and pharmacy chains: Walmart is #1 with more than half of all shoppers visiting every month, followed by McDonald’s, Subway, Starbucks, Walgreen’s, Target, CVS, Taco Bell, Burger King and Dollar Tree.
The Dollar Store Business is Booming: Dollar Tree, for example, changes their merchandising mix often creating “a treasure hunt experience.” Seasonal and variety categories account for 50% of Dollar Tree’s sales. Also worth noting, these stores are extremely ugly.
Landlords attempt to reconfigure malls: With traditional dept. store anchors in a secular decline, malls are starting to look to mixed-use redevelopment, replicating the essence of a downtown where multiple functions co-exist in a walkable setting. Diversification includes movie theaters, restaurants, farmer’s markets, discount retailers, and offices. Some mall owners are also looking at housing e.g. Kushner Companies is looking to invest $500 million in the Monmouth Mall to expand its lifecycle to 24/7.
Pop-up markets and brand activations energize the mall: Westfield in NYC’s WTC Oculus will have 12 pop-up indoor sites as well as 5 exterior pop-up locations focusing on artisanal, first-to-market and emerging brands. Developers would clearly rather have pop-ups than vacancies. It’s also a good deal for start-up retailers to operate a store with minimal risk.
Food/beverages are finding their way into everything. A combination of retailing and food offering is becoming increasingly popular — IKEA is the latest brand to amp up their brand with an increased emphasis – and remodel – of their restaurants.