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Refreshing Retail - Issue #13

April 2024
Mike Jordan, Big V Property Group Director of Research

Inflation Remains Sticky; Fed Rate Cuts Likely Delayed

  • CPI is up 3.5%, a 30 bp increase from February
  • While down significantly from highs around 9% in 2022, the rate remains elevated from the Fed’s 2% target Read More >>
  • Lowering food prices and strong wage growth have mitigated the impact, with better retail sales than forecasted Read More >>
  • NY Times: Soft Landing or No Landing? Read More >>
  • Forbes: Supply issues are driving inflation more than labor Read More >>

Macy’s To Close Stores; Add Activists to Board

  • Macy’s plans to close 150 stores by 2026
  • The company plans to “go forward” with 350 full sized stores, while opening more small format stores in open-air shopping centers Read More >>
  • The company also announced plans to add 2 activists to its Board of Directors that had previously been part of a $6.6bn takeover bid of the retailer
  • The activiosts will sit on the finance committee and focus on ways of monetizing Macy’s real estate Read More >>
Sources: Retail Dive, Chain Store Age, RetailStat
Academy Sports is planning to grow in a big way over the next 5 years. The retailer announced plans to open as many as 180 stores in that timeframe in both new and existing markets. The first new Academy stores of 2024 are located in Knightsdale, NC and Greenwood, IN.
Amazon announced that it will be phasing out “Just Walk Out” technology at its full size Amazon Fresh and Whole Foods stores. The camera-based system charged customers for items as they pulled them off the shelves and then exited the store via a QR code driven turnstile system. While the system was intended to be fully automated with computer vision, over 70% of transactions were manually reviewed on video by an offshore service. The company announced plans to replace JWO with “Dash Carts”, which will allow customers to scan items as they shop.
Ames discount stores may have gone out of business in 2002, but the concept is set to be revived in 2026. The company announced plans to open up to 35 new Ames stores by 2027. Most stores will feature a café and a pharmacy in addition to buy online pickup in store capabilities. No word yet on where Ames will be launching its comeback, but the original chain was based in Connecticut and at its peak in the 1990s operated several hundred stores primarily east of the Mississippi.
BJ’s Wholesale Club will open a dozen new stores this year including its first Kentucky location. The retailer continues to focus on Southeastern and Midwest markets as it grows to over 250 locations.
Kohl’s will partner with WHP Global, the owners of the Toys R Us and Babies R Us brands, to open 200 Babies R Us shops within Kohl’s stores this fall. The company hopes the newly branded baby goods departments will continue to drive new customers to the retailer like its current partnership with Sephora.
Kroger is pulling back on one of its high-profile initiatives after announcing plans to close its Ocado-powered e-commerce facilities in Miami, San Antonio, and Austin. Kroger had hoped it could expand into new markets where it has little or no physical presence via its digital offerings. The brand’s 8 other robotic fulfillment centers remain open, while others under construction are still planned to open soon.
Lidl has begun to open outdoor garden centers at roughly half of its US store portfolio this spring. The program was piloted at several New York area stores in 2022 and is now available in all states where the German grocer operates on the East Coast.
Petco has been downgraded by S&P Global Ratings following several quarters of underperformance. While the B rating implies that the company will be able to meet its obligations for the foreseeable future, the downgrade highlights the company’s struggles to maintain market share at a time when online competition has intensified while the pandemic boom in pet adoption has largely returned to pre-COVID levels.
In addition to its recently announced plans to enter Mexico, Ulta continues to expand its US presence with plans to open 60 to 65 new stores this year in addition to over 40 remodels/relocations.
Fast fashion titan Uniqlo is planning to open 20 stores this year including its first two in Texas. Nine additional openings for 2024 have also been announced in California. Uniqlo currently has 74 US stores with plans to reach 200 by 2027.
Walmart is moving forward in their plans to become a major player in the healthcare space with the opening of 3 health clinics in Texas this month. This is the first phase in a rollout that will see a total of 18 clinics open in the state by years’ end. The facilities are approximately 5,400 square feet and will all be located next to Supercenters.
Wegmans will continue its push to become a major player in the North Carolina grocery scene with the announcement of its first Charlotte area store set top open in 2026. The new store will be located in the Ballantyne neighborhood of the city and consist of 110,00 square feet. The project is being developed by Northwood Investors.
Wonder, a restaurant and food delivery startup founded by former Walmart executive Marc Lore has announced plans to open up to 90 locations by the end of 2025. The company (which also purchased meal kit maker Blue Apron late last year), currently has 11 locations in NY, NJ, and PA including some inside Walmart supercenters.

Artificial Intelligence seems to be taking over more and more aspects of today’s consumer landscape; however one prominent brand is fighting back. Dove beauty, a division of Unilever, has unveiled a new ad campaign called “The Code” which shows how AI tools perpetuate unrealistic beauty standards along with a pledge to continue using real women in all its marketing images. Read more >>

At the height of the COVID pandemic, one trend that received an inordinate amount of hype around its ability to change how restaurants operate was “ghost kitchens”. As more people refrained from dining out, several restaurant brands began opening kitchens with no consumer facing storefronts that would prepare orders for delivery services like GrubHub and DoorDash. Some brands even hatched delightfully devilish plans to create fake identities to disguise their food as an authentic local startup. Flash forward to 2024, after billions have been invested in the space and firms like CBRE had predicted ghost kitchens would account for over 20% of restaurant sales and the concept has seemingly lost all traction. Read more in this article from the New York Times Julie Creswell >>

The Urban Land Institute held their annual Spring conference in New York City last week amid the latest news that inflation reduction is stagnating in the mid to upper 3% range. While this doesn’t bode well for major interest rate cutting this year, all signs point to increased transaction volume over 2023, while setting up the industry for better times in 2025-26. To read more takeaways from the meeting, click here >>

Looking over the latest retail news this month and one picture about the state of shopping in 2024 is clearer than ever before: the more things change, the more they stay the same. While technology has undoubtedly changed the way Americans live, work, and shop the adage “if it ain’t broke, don’t fix it” still seems to be true.

Kroger’s partnership with the UK company Ocado, which had revolutionized grocery delivery in its home country with innovative robotic distribution centers, was one of the most heralded stories of 2018. Kroger believed so much in the competitive advantages of the technology that they began opening Ocado-based “sheds” in markets like Miami and Austin where the grocery giant has never had a physical store presence. Kroger hoped that Ocado’s convenience and speed would give them market share in places where people had never shopped them before. It turns out that didn’t materialize in a profitable way as customers weren’t interested in buying food from a retailer they couldn’t shop and see in person. As my research colleague Nicole Larson at Colliers put it in a recent LinkedIn post: “For brands eyeing sustainable growth, diversifying into physical retail is not merely an option – it’s an imperative.”

The grocery tech world was rocked again when Amazon announced it was pulling its revolutionary “Just Walk Out” technology from all its full-sized Amazon Fresh locations. The Fresh banner has been a rare misstep for the online behemoth that once hinted it could open as many as 600 Fresh stores by 2023. Today, with less than 50 open and many more projects built out but sitting vacant, Amazon has gone back to the drawing board and erased the primary differentiator between Fresh and other grocers: the ability for a customer to take things off the shelf, be charged for them immediately, and then walk out without ever going through a checkout lane. The stores were outfitted with hundreds of cameras and servers and cost as much as $4mm per store in technology capital expenditures alone. But after all that money was spent, the cameras never worked as intended. Over 70% of transactions had to be reviewed by a team in India before charging the customers which not only was wildly inefficient but raised serious privacy concerns to boot. While the company is now hoping to test a new cart-based scan & go system at its stores; customers have remained loyal to their market leading grocery brands.

In this months “Big View”, I’ve also included an article about the decline of ghost kitchens from The New York Times. Immediately after the pandemic, restaurant brands seemed to be in a mad dash to minimize dine-in options and maximize their footprints for the burgeoning app-based delivery market. However, apps like DoorDash and GrubHub have been largely unprofitable resulting in higher fees and a trend in post-pandemic behavior that emphasizes the social element of dining out, even if it’s just a lunch at a local fast-food restaurant. We want to be near people, and we want to know where our food comes from.

It’s worth remembering all these failures and pull backs as we read about the next big tech hope: artificial intelligence. I have no doubt that there will be major breakthroughs and game changing applications of this technoliogy but we need to be wary of “clever” solutions in search of problems no one is asking to be solved.

Mike Jordan

Listen to the Song of the Month

Karl Wallinger was the creative genius behind the UK-based art-pop project World Party. Following his time in the band The Waterboys, World Party had a string of alternative hits on both sides of the Atlantic in the late 80s and early 90s. Sadly, Wallinger passed away last month after a long illness at the age of 66. World Party’s music started with a heavy helping of Beatles influence, the jangling guitars of the Byrds, and the paisley patterned 80s funk of Prince mixed in with socially engaging lyrics like that of their 1993 hit “Is It Like Today?” which ponders the very nature of pondering the human existence - from the ancient Greeks to the Apollo astronauts. Listen Here >>

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