Brokers are trying every trick in the book to fill up vacant retail space in what is possibly the worst leasing environment in memory. Retailers are still looking to grow, but now they must be extremely cautious with how and where they expand. The secret to success may be as simple as a return to the most fundamental principles in real estate: location, demographics and salesmanship. More >
Retailers will continue to need warehouse space, although some have successfully shifted the need to third parties. More >
In 2009, American retailers occupied more than 5 billion square feet of warehousing/distribution space. Although significant new leases are way down, retailers do continue to extend and/or renew their lease holdings. Many are attempting to downsize, but all are said to be reviewing their long-term warehousing strategies.
Marc Wulfraat, a transportation industry expert at TranSystems in Montreal, CA, suggests we look at the distribution strategy of Walmart, the world’s largest and most successful retailer, to better understand why retailers will still need distribution centers. “At last count, Walmart’s U.S. network consisted of 147 large-scale distribution centers, comprising flow-through general merchandise facilities, grocery distribution centers, fashion/apparel facilities and dedicated import facilities,” Wulfraat notes. “Walmart’s distribution centers are absolutely massive. The prototype general merchandise distribution center is 1.2 million square feet; the typical grocery distribution center is 880,000 square feet; and its largest import facility in Texas is 4 million square feet. Most of the distribution centers are an average of 125 to 150 miles from the stores—a huge competitive cost advantage compared to retailers who ship from farther away.” More >
While Mexico is evolving into a promising site for retail expansion by U.S. based firms, the country’s full potential cannot be realized until economic conditions improve and crime is contained.
The dramatic evolution of the retail landscape over the past 20 years has been driven by a number of factors such as education, the shift in the age composition of the population, and the emergence of the middle class. The main catalyst behind the emergence of the Mexican retail landscape has been the significant growth of the middle class, with a substantial demographic shift from a “have and have not” socio-economic composition to a more socially tiered structure. The middle class continues to grow both in numbers and in disposable income due primarily to a stable financial industry that has reintroduced the availability of credit (car loans, Visa/Master Card and now mortgages). More >
Retailers looking to grow follow one of two distinct forms of market expansion. Large, well-established companies typically look to expand their market share on an international scale. Smaller retailers, usually franchised, look to expand into new markets across North America.
Tapping into a market analysis can assist these retailers in identifying which markets are ripe for expansion, how to select a location, and how to decide how large/small a presence to create in the market.
The Retail Delivery Process is divided into three distinct phases. The first phase is Market Discovery, which involves understanding the client, how many potential clients exist in a market, and determining the competitive nature of the market. This phase answers two very important questions: market capacity and store capacity. This process helps the retailer understand its market share and how many locations it can realistically open. Understanding who the client is today, and more importantly, who the client will be in the future, is critical to the successful expansion plans of any retailer, large or small. More >
|At the start of the recession, regional malls were in a difficult position. Battling competition from online retailers and as people turned to lower-cost bulk items to save money, shopping malls lost a lot of foot traffic and were in danger of becoming extinct. New shopping mall developments were put on hold, and even mega-malls, like New Jersey’s Xanadu, had their plans scaled back significantly in an attempt to match consumer sentiment.|
As the recession dragged on, big box retailers started to go out of business, followed by a number of their smaller retail cousins. Mall anchor stores like Macy’s, Nordstroms and JC Penney began to reevaluate their retail footprints and cut underperforming stores, and in some cases halt altogether their chain’s expansion. As the anchor stores closed, many of the smaller retailers that rely on that foot traffic to survive soon followed. Not to mention, chain stores like DVD retailers and toy retailers began to close as people turned to cheaper options like Target and Walmart for their DVD and toy purchases, further changing the shopping mall landscape. And in short order, a number of communities were faced with desolate shopping centers, driving up unemployment in the local area and creating an eyesore. More >
Developing a rolling strategic blueprint is a critical step any retailer needs to complete in order to quantify both revenue and capital expectations. Functioning over a three-year time period, a strategic blueprint should identify not only the expansion of new stores but also the lifecycle of existing locations. The allocation of capital funds to projects should look at which markets and locations would provide the biggest return on revenue.
There are two types of strategic plans: One for long-established retailers, and another for new or emerging retailers. For well established networks, the strategic blueprint may focus on the repositioning/rebranding of current stores more so than opening new locations. The capital allocation would break stores into four distinct groups in order to determine how best to allocate funds: More >
We are often asked whether it is better to work with large companies and conglomerates where your brand is just another spoke in the wheel or with young, hungry entrepreneurs. In working worldwide with leading franchisors, franchisees, retailers, landlords and companies large and small, I’ve seen start-up ventures get lost, delayed and mismanaged in big companies and entrepreneurs who didn’t have sufficient capital and resources to properly grow the brand. Finding a balance between these two extremes is critical.
Big or small, one area that should never be left to chance or dependent on the franchisee/partner is real estate. A new venture can ill afford one or two bad locations; this will kill the brand’s successful launch and introduction to the market. The ability to provide franchisees/partners with extensive global real estate expertise and resources needs to be among a franchisor’s core competencies and services. It is not a coincidence that the world’s largest F&B chain, McDonald’s, has historically devoted as much or more resources toward real estate development as franchise development. More >