Archive for September, 2010

10 Would-Be Buyout Targets

by Elaine Misonzhnik September 30th, 2010

We’ve reported before how private equity players are coming back into the market for retailers. In recent weeks, we’ve already seen the acquisition of fast food chain Burger King by 3G Capital. Meanwhile, bookseller Barnes & Noble has made no secret of its plans to to secure a deep-pocketed buyer.

To help figure out which other retailers might be up for sale, The Street put together a list of most likely acquisition targets. These include American Eagle Outfitters, Saks Fifth Avenue, GameStop and BJ’s Wholesale Club, among others.

In addition to the leveraged buyouts, there might be a powerhouse move by Amazon.com to acquire movie rental service Netflix, a deal that may have big implications for Amazon’s competitors in the bricks-and-mortar realm.

No Comments Related Topics: Commentary, News, Retail, Trends |

Big Moves for GNC (Thursday’s News & Notes)

by David Bodamer September 30th, 2010

Retail real estate execs are always on the prowl to find the rare retailers willing to expand in today’s climate. So there’s some doubly good news on that front from GNC today.

The vitamin and nutrition specialty retailer is planning a $350 million IPO that will help facilitate its plans to open 4,800 company-owned and franchised locations to its store base. The firm currently has 7,100 locations. So this would represent a fairly sizable increase in its portfolio. Its expansion plans also will move it more aggressively overseas, including into China.

There is no timeline for how quickly it would like to add those stores. But that’s an aggressive target no matter how you slice it.

Here are some other news and notes from around the retail real estate world.

No Comments Related Topics: Investment, News, Quirky, Retail, Retail Real Estate, Trends |

Tanger CEO Opines on the American Consumer

by David Bodamer September 29th, 2010

Tanger Factory Outlet Centers CEO Steven Tanger appeared on CNBC yesterday and talked about what he saw happening with the American consumer. In part it’s a reaction to the consumer confidence numbers, which remain quite grim. Tanger says that his portfolio has seen growth and comp income has increased.

You can watch his appearance below.


No Comments Related Topics: Commentary, REITs, Retail, Retail Real Estate, Video |

Not All Fun and Games (Monday’s News & Notes)

by David Bodamer September 27th, 2010

Retailers competing in the toy market have had a notoriously tough time competing with Walmart. The Bentonville behemoth became the top seller of toys in the late 1990s and never looked back. Many department store have reduced or phased out toy departments. Toys ‘R’ Us, once the king of kids retail, struggled for a long time and ended up paring back its portfolio. But at least they are still out there fighting. KB Toys, of course, liquidated in early 2009.

But Toys ‘R’ Us has stumbled upon a way to compete through extensive use of pop-up shops and temporary stores. This season it will operate 600 pop-up shops including 10 under the FAO Schwarz brand.

Nevertheless, the chain may opt to postpone its planned IPO until at least 2011. The reason has more to do with nervousness about the stock market and the appetite for retail stocks than it does with any concerns about Toys ‘R’ Us’ strategy.

But that’s not the only news on the toy front. Sears is trying to claw back market share in the toy sector by opening 85 toy shops at some of its stores. It will open the stores next month, in time to take a bite out of the holiday sales pie.

Given this renewed competition, it will be interesting to see how Walmart responds. Last year it did some pretty drastic price cutting. Could we see more of the same?

Here are some other news and notes from the retail real estate world.

No Comments Related Topics: Commentary, Finance, Investment, News, Retail, Retail Real Estate, Security, Trends |

How to Do Mixed-Use Right (Thursday’s News & Notes)

by Elaine Misonzhnik September 23rd, 2010

For the better part of the past decade, developers and architects have been arguing about the best way to approach mixed-use projects. Mixed-use was the in-vogue concept back in the pre-recession days, but many of those projects ended up being duds. Some architects attribute the failure to the fact that developers were often trying to bring mixed-use into suburban environments where people are not used to living, working and playing in the same place.

On the other hand, an article from this week’s New York Times looks at a mixed-use environment that has thrived over the past several years–New York’s Union Square. The area, which today serves as home to retailers as disparate as Whole Foods, Barnes & Noble, Nordstrom Rack and Filene’s Basement, is successful precisely because it was always a mixed-use place, combining office buildings, stores and restaurants with a transportation hub and a public park. It’s also always had a reliable anchor: a four days a week Greenmarket. In other words, all the mixed-use elements were already there. All the city had to do was invest in better infrastructure and a beautification program. That’s something developers should keep in mind when they think about recreating the feel of an urban downtown on a suburban parking lot.

Here’s a slide show that traces Union Square’s evolution over the past 25 years.

For other stories about retail and retail real estate, follow the links below:

No Comments Related Topics: Architecture & Design, Finance, Mixed-Use, News, Retail |

Borders’ New Game Plan: Hit or Miss?

by Elaine Misonzhnik September 21st, 2010

bordersIt seems that Borders, the second largest bookseller in the U.S. and currently a company that’s struggling to stay afloat, has hit on an interesting new strategy in its efforts to turn itself around–it no longer wants to be identified primarily as a seller of books.

Instead, it’s looking at Canadian chain Indigo as the inspiration for the kind of store it would like to be.

Although Indigo specializes in selling books and music, over the years it has augmented those offerings with lifestyle products ranging from Pilates equipment to flowers. Borders hopes that if it can imitate Indigo’s merchandising model, it will be able to overcome the industry-wide challenges currently faced by booksellers.

This is certainly an interesting idea, but one has to wonder if it will be able to help Borders at this stage of the game. It could be argued that Barnes & Noble, Border’s main competitor, has been a lifestyle retailer for years. In addition to books, music and movies, it sells gifts, games, toys and chocolates and it operates cafes inside its stores to encourage customers to linger longer and hopefully buy more. Yet while Barnes & Noble seems to be on much more solid footing than Borders right now, it’s still facing a formidable threat from Amazon.com and the Kindle.

Indigo-storeA recent story from The New York Times looks at the battle between Blockbuster and Netflix and argues that Blockbuster lost largely because it didn’t integrate its brick-and-mortar and online divisions soon enough and seamlessly enough. Following that logic, Border’s main focus right now should be on coming up with a strategy that would allow it to grab market share both inside its physical stores and online.

It’s made some strides in following Amazon.com and Barnes & Noble into the e-reader business, but those efforts seem half-hearted and have produced lackluster results. Borders still seems more committed to revamping its bricks-and-mortar strategy than to coming up with a unique bricks-and-clicks game.

We’d be curious to find out what our readers think about Border’s new idea and it’s chances for survival.

1 Comment Related Topics: Commentary, News, Retail |

David Simon Speaks (Monday’s News & Notes)

by David Bodamer September 20th, 2010

Simon Property Group CEO David Simon is not one of those real estate executives that is exactly effusive with the media or in appearing on public panels. NREI interviewed Simon for a cover story a few months back. But the story is notable exactly because Simon doesn’t make himself available much.

So it is noteworthy that last week Simon made a rare public appearance and spoke to members of the Economic Club of Indiana on Thursday at the Indiana Convention Center.

According to the Indianapolis Star, Simon did share some interesting insights in both a prepared speech and a Q&A with the audience.

Some interesting stuff in there. Simon went after Internet taxation–long an issue that ICSC has lobbied Congress to legislate on. Overall he sounds pretty measured. He’s not expecting a robust holiday shopping season, but doesn’t think it will be terrible either. The prediction on lifestyle centers being “done” as new developments and retailers gravitating back to regional malls will be something to watch for in the coming years as well.

The Indy Star transcribed the Q&A, which I’ve pasted below:

What is the likelihood of a double-dip recession resulting from the collapse of the commercial real estate market?

“I don’t think it will be because of commercial real estate, and I don’t think it will be a double dip. But I don’t think we can expect significant growth. Very simply, when you regulate more and you tax more, you are going to have less growth, and that’s the agenda that we’re on, by and large.”

What are your predictions for the upcoming holiday shopping season?

“I think the consumer is still under a lot of pressure, so I would be surprised if it’s robust. I think there is a high correlation between back-to-school and the Christmas season. Back-to-school was OK. My guess is Christmas will be OK. . . . The best stimulus that we can offer in America is confidence, and it’s cheap, right? I think if we have the confidence, frankly, we could kind of get out of the rut we’re in. ”

How has the Net impacted retail?

“The Internet is my biggest concern. Not to get on my soapbox, but the state of Indiana and other states have a real opportunity to level the playing field. Let me just explain one thing about the Internet. When you buy on the Internet, you don’t pay sales tax. When you go to the local mom-and-pop store and buy a blouse or anything else, you pay sales tax. Internet has a distinct advantage, which in my opinion, is unfair, and hopefully we’re looking for fairness in our tax system. If you sell it in the physical world versus the virtual world, it ought to be the same. It’s not happening. It’s killed records. It’s hurting books. . . . It’s had a marginal impact on apparel. I’m worried what will be next. We need to level the playing field tax-wise.”

What is the future of lifestyle centers?

“The lifestyle center was kind of the new project built over the last five or six years. I think that new development of that activity is done. . . . I think we are going to have retail real estate obsolescence. But I think what it will mean is the good retailers will gravitate toward where the retail center is, and in a lot of cases it’s the enclosed mall.”

What part of your properties is in downtown areas of cities?

“We’re in some dynamic places, but not a lot of what I would call true downtowns. Retail in downtown is a challenge unless you have a lot of residents there.”

Here are some other news and notes from late last week and over the weekend.

No Comments Related Topics: Commentary, Development, Finance, Investment, News, REITs, Research, Retail, Retail Real Estate, Trends |

Everybody for Themselves?

by David Bodamer September 17th, 2010

I attended Argyle Executive Forum’s 2010 Leadership in Retail and Consumer Goods Forum yesterday. I posted update to the Retail Traffic Twitter before my Droid’s battery decided to quit on me a couple hours in.

The speakers included a mix of top retail executives and tech folks. Social media and mobile marketing were major points of conversation. Yet a lot of the speakers said they have a hard time quantifying the return on these strategies. Everybody agrees that you’ve got to explore these technologies because that’s what customers want. But I just don’t think retailers yet know how to maximize what they’re getting here.

I was also struck by the fact that the companies that spoke have done a tremendous amount of work addressing challenges at their respective firms, but the macro analysis of the state of retail and its future did not come through as clearly.

I definitely get the sense that retailers are doing all they can to retain existing customers and acquire new ones. As one executive put it, retailers need to “get to the consumer first, fast and most often.” That’s the route to success in an environment overloaded with choices and where information is traded at a dizzying pace.

This includes analyzing consumption patterns at a chain’s stores and seeing how spending behaviors have altered in light of the Great Recession. Everyone is trying to understand what’s happened with their traditional customers. And that analysis goes down to the level of seeing how the same customers may alter spending habits at different locations. For example, a shopper may visit multiple Talbots locations and exhibit distinct tendencies. As a result, merchandising strategies can be tweaked at different locations. That’s invaluable information. And it’s something that shopping center owners themselves could gain a lot from knowing.

All of that was great information to hear. And I got the sense from the few retailers that spoke that they are all looking at their customers and their stores in this same way.

I had a tougher time seeing the big picture. And few of the speakers made comments about this. Most talked about their own experiences and strategies. There were not as many observations about whether there has been a secular change in consumer spending behavior.

This is important is because if everyone is just looking at what they’re doing and not trying to understand the broader trends, we’re more likely to see distortions. Retailers may opt to expand too quickly, for example. If they’ve been very successful at tackling their own challenges they may get too rosy a view of the overall marketplace and believe they have more room for growth than actually exists. Or else they may end up with the wrong approach to the various channels that are now available to consumers. When retail spending comes back, it won’t all come back to brick and mortar locations.

What I saw was just a tiny cross section of retail leadership. Ultimately, I was impressed with how savvy firms have been in adapting to the recession and doing what they can to continue to serve and grow their base of customers. But a little more reflection on the big picture wouldn’t have been a bad thing.

No Comments Related Topics: Commentary, Retail, Trends |

Retail Expansion Potential at 18-Year High

by David Bodamer September 15th, 2010

Marcus & Millichap Real Estate Investor Services produced its National Retail Outlook for the third quarter and one chart in particular jumped out at me–something called the Retail Expansion Potential Index.

retailexpansionpotential

That’s a straight shot up from the fourth quarter of 2008 to today. In fact, the index is showing its highest reading in 18 years.

So what exactly is the Retail Expansion Potential Index? According to the M&M report:

The National Retail Expansion Potential Index, which compares retail sales less autos, gasoline and items not sold in stores to retail property stock and effective rent, reached its highest level in 18 years in the second quarter. Driven by a modest recovery in sales of store items and a decline in the national effective rent for the ninth consecutive quarter, the rise in the index during the period indicates new-store openings could represent a high-return strategy for retailers.

The report does hedge its bets, however, by also saying that “retailers will lack the confidence to expand aggressively until the economy improves in a more convincing manner.”

In other words, some conditions make it a great time for retailers to expand and the index is signaling a bright green light. But the macroeconomic risks that remain will prevent retailers from becoming too aggressive in the short term. It could make for pent-up demand from retailers if they go slow. But the overall message is that at some point we should see major expansion by retailers.

So what do you make of the index? Does that analysis hold water? Is the U.S. retail market truly poised for a big run of expansion?

No Comments Related Topics: Commentary, Development, News, Research, Retail, Trends |

CRE Loans Performing Better (Monday’s News & Notes)

by Elaine Misonzhnik September 13th, 2010

Remember all the talk about commercial real estate being the next shoe to drop? Based on recent statistics, that fear might have been overblown. The CoStar Group reports that delinquencies on commercial real estate loans started to subside in the second quarter of 2010 and are expected to fall further by the end of the year. For this and other stories about retail and retail real estate, follow the links below:

No Comments Related Topics: Finance, Management & Leasing, News, Research, Retail, Retail Real Estate, Trends |

  • Page 1 of 2
  • 1
  • 2
  • >