Where is Retail's "Safe Space"?

By: Eric Zimmermann and Mike Jordan

In this edition of Insights on the Margin, Eric Zimmermann, Chief Acquisitions Officer and Mike Jordan, Director of Research, outline the compelling reasons behind our steadfast conviction in the power center model. These strategically located, large-scale retail hubs are poised to play an increasingly pivotal role in the rapidly evolving grocery sector, as power center tenants are primed to capture a greater share of the market from traditional brick-and-mortar grocers. The inherent advantages, with their ability to offer shoppers convenience and variety, power centers are an attractive destination for value seeking consumers - enjoy!

Jeffrey Rosenberg

Read Insights on the Margin

By: Mike Jordan, Big V Property Group Director of Research

Monthly Specials

Inventories are Ready for Holiday Sales Surge

National Retail Federation CEO Matthew Shay said that retailers have navigated port strikes earlier this year and are in good position heading into the Holidays Read More >>
NRF expects retail sales to grow 2.5%-3.5% in the final 2 months of 2024
Total sales will likely fall just short of $1 trillion
E-commerce is likely to grow around 8.5%, down from 10.7% in 2023
Read More >>

The Checkout Lane

Source: Retail Dive, Chain Store Age, RetailStat

Amazon will end its “Amazon Today” delivery program in January 2025 after three years. The program leveraged brick & mortar inventories at local stores to help speed same-day shipments of fast selling items from retailers such as PacSun, GNC, and SuperDry. The majority of products will still be available same-day or next-day through other delivery methods.

Beyond, Inc. the holder of Bed Bath & Beyond’s trademarks and a successor to Overstock.com has announced two new partnerships with struggling retailers. Kirkland’s will partner with Beyond on 5 new small format, neighborhood stores. Beyond will also invest $25 million in Kirkland’s that includes $17 million in debt financing. In addition, Beyond announced a $40 million investment in the Container Store that will bring Bed Bath & Beyond’s private label assortments to The Container Store while also leveraging Beyond’s customer data and brand networks.

Buy Buy Baby will wave “bye-bye” again as the current owners have announced plans to close all 10 stores they opened over the last 12 months in order to focus exclusively on e-commerce. The brand was bought out of Bed Bath & Beyond’s bankruptcy proceedings last year by baby furniture maker Dream on Me for $15 million.

Chipotle has invested in a Mediterranean fast-casual concept called Brassica that currently operates less than 10 locations - all of which are in Ohio. The investment comes as fellow Mediterranean concept Cava has embarked on an aggressive national expansion plan following its IPO earlier this year. A Brassica executive noted that the investment will help the company expand to new markets in the coming years.

Nordstrom Rack will open at least 13 new locations in 2025 as its parent company is in the midst of talks to go private led by a group of investors that includes the Nordstrom family. The new Rack locations span every region of the United States, including Prosper, Texas located in Collin County – the fastest growing county in the country.

The Paper Store has announced a $60 million investment in new store expansion over the next 5 years. After emerging from bankruptcy in 2020, real estate firm WS Development invested in the business and helped expand the chain to over 100 locations, primarily in the Northeast. In addition to entering new markets including Florida and Illinois, the retailer will also remodel much of its existing store flee

Popshelf unveiled a new format across all of its 200+ locations that includes expanded offerings in a number of product categories, along with a new app and customer loyalty program. Popshelf’s parent company, Dollar General, will also remove the Popshelf shop-in-shops from its DG Market format and focus exclusively on developing Popshelf as a standalone brand.

REI has reiterated its intention to keep growing store count, despite a recent fall off in sales. The company has announced 6 new stores for 2025 and another 2 for 2026. However, REI’s most recent financial statement revealed the company had a net loss of $311 milion on a sales decline of -2.4%.

Sam’s Club has unveiled its new store prototype in Grapevine, Texas with a number of significant changes to its traditional offerings. Instead of having any checkout lanes, all customers will use a Scan & Go tool to purchase items. Automated receipt verification “trusses” will be placed at exits to finalize the checkout process, along with employees stationed around the store to help with technical issues. The store also will feature a sushi bar and a robotic pizza maker.

Ulta is getting ready for another period of store growth with the announcement that the retailer will open 200 new stores over the next 3 years. That represents an additional 25 stores per year than recent trends. Long term, the company sees room for a fleet of 1,800 stores, up from just over 1,400 today. In addition, Ulta’s partnership with Target has now reached 500 locations which the company said attracts a different kind of customer than full-line locations.

Walgreens announced plans to close 1,200 stores in a reversal of the growth trajectory the company has been on after acquiring hundreds of former Rite Aid locations. The closings will begin this fiscal year with 500 stores and continue into 2027. CEO Tim Wentworth recently noted that about 25% of its 8,700 stores were underperforming expectations.

The Big View

While it was once in fashion to claim that e-commerce – and Amazon in particular – was the future of American shopping, brick & mortar retail has not only survived, but in some sectors, thrived as they’ve risen to meet the consumer challenge of the 21^st Record stores, book stores, bikes, and photography stores are just some of the categories that continue to show resilience by emphasizing the human element of curation and service. Read more in this piece from Retail Dive’s Daphne Howland >>

While dollar stores have struggled in the last few years to maintain the sales growth trajectory that put them on top of the retail landscape over the last decade; the sector shows no sign of slowing down new store openings. Read more on why dollar store execs remain bullish on their prospects in an increasingly bifurcated consumer landscape in this article from Wall Street Journal’s Kate King >>

Video of the Month: We’ve all seen the memes about Spirit Halloween waiting to haunt the abandoned retail spaces that dot the landscape of our towns and cities (and if you haven’t, see below!). But if you’re wondering why this seasonal concept continues to thrive in places where other retailers could not, this CNBC video helps explain >>

By the Numbers

While Americans shop across a wide variety of channels, this latest report from JLL shows that pure
e-commerce is starting to wane as more people take advantage of curbside and in-store pickup options.

% of Americans who shopped via a particular channel

From the Research Desk

Strip malls are having a moment on Wall Street, led by the recent spinoff of Curbline Properties from the power center landlord Site Centers (formerly known as DDR, where I got my start in this business back in 2003). Of course, the term “strip mall” was once seen as a dirty word, but it begs the question, how do you define strip mall, and does it even matter when the investment community is finally bullish on retail?

These are the questions I asked myself when watching this excellent video from CNBC last week. For years, analysts lumped all retail into one bucket. Bad news for malls was bad news for retail. This, despite the continued success of open-air anchors, and the rapid growth of value-oriented concepts. While the video often conflates the smaller, service-oriented retail found in the convenience-oriented assets that Curbline owns with power centers and grocery-anchored centers; the fact that open-air retail is starting to be recognized as a unique asset class on its own represents a form of progress in itself.

The fact is you can no longer ignore a sector that attracts 1.3 billion visits per month and drives trillions in spending annually. With vacancies at an all time low, rents are poised to increase in the coming years. It may be the best time ever to be in the open-air retail space and that’s music to our ears!

Mike Jordan

SONG OF THE MONTH

Listen to the Song of the Month

Before my time researching the world of retail and shopping centers, I thought my career path would look quite different. From 1999-2002 I spent time working at a few different independent record labels in the last years of the CD boom and before the vinyl renaissance. Most of those years were at the venerable, adventurous Thrill Jockey Records. Founded by Bettina Richards in 1992, Thrill Jockey has released over 600 titles spanning genres from country to jazz to post-rock to dark metal. Take a listen to The Sea & Cake’s cover of “Sound & Vision” by David Bowie from their 2002 album One Bedroom, one of my favorite songs we had the pleasure of promoting during those years. Listen here >>

RETAIL MEME OF THE MONTH