Jeff Rosenberg, Big V Property Group’s President and CEO, brings you Insights on the Margin—a series of in-depth discussions with Big V’s senior leadership, focused on emerging trends and shifts in the retail real estate market. Each edition explores the marginal factors that influence decisions, value, and success in today’s dynamic open-air retail landscape. Drawing from personal observations, market data, and decades of leadership expertise, Insights on the Margin takes a deep dive into CRE topics to provide unique viewpoints and opinions about the current retail real estate industry.
Academy Sports continues its expansion with the announcement of 9 new stores opening in the 3rd The Q3 openings represent over half of Academy’s planned 2024 new store pipeline of 17 stores. Earlier this year, Academy announced their goal to have up to 180 new stores by 2029, suggesting that the chain will be hitting the gas pedal on new leases in the coming years.
Following the recent bankruptcy filing by Big Lots, the company announced it had received court approval to access up to $707.5 million in financing. This borrowing is expected to provide enough liquidity to keep operations intact through the court process. The company is attempting to auction the leases of many of the 300+ stores it is closing, with several stores in the first round of auctions being acquired by Burlington and Ollie’s Bargain Outlet. Placer.ai reported that Big Lots remaining stores will focus on lower income consumers, noting that household incomes on the closing list are $8,000 higher than the remaining fleet.
Chipotle is testing in-store robots to help speed up order processing and food prep at 2 of its locations in California. One machine is called the “autocado” and will cut, core, and peel avocados in 26 seconds before a store associate hand mashes the fruit with other ingredients. The other robot is dubbed the Augmented Makeline and will create bowls and salads to order, while human employees focus on burritos, tacos, and other orders. The company noted that 65% of all digital orders include a bowl or salad.
Freddy’s Frozen Custard & Steakburgers announced a slew of new franchise development deals that will add over 150 new stores to its pipeline. The new stores span a wide range of the US and will include the chain’s first locations in Washington state, along with expanding the brand in existing markets in Illinois, Iowa, South Carolina, New Jersey, and Texas. Freddy’s has over 500 locations now open, with a goal of 800 restaurants by 2026.
Olive Garden is partnering with Uber to offer delivery on-demand at all its 900 company owned stores starting later this fall. The system is expected to be rolled out to the full chain by May, 2025. Darden Restaurants (Olive Garden’s parent company), plans to offer the service at its other chains (including Longhorn Steakhouse, Bahama Breeze, Cheddar’s, and others) after completing the Olive Garden launch.
Shoe Carnival is expanding a test program to convert some of its namesake stores to its recently acquired Shoe Station banner. The 3 initial test stores in Alabama and Mississippi saw sales increase 15%, over five times expectations. This fall, the company plans to convert 6 or 7 additional stores to Shoe Station, all within the Southern US.
Target named Jim Lee CFO this month. Lee will take over the role from Michael Fiddelke, who became COO earlier this year. Lee is a 25 year veteran of PepsiCo where he was most recently their Deputy CFO. In other Target news, the company announced plans to hire 100,000 seasonal workers with starting wages between $15-$24 per hour. Target also teased a holiday assortment that is 50% larger than last year, with many items priced under $10.
Whole Foods has opened the first location of their new small format concept called “Whole Foods Daily Shop” on Manhattan’s upper east side. The store is just 9,100 square feet and is designed to be optimized for urban lifestyles. The company is expected to open 2 additional small format stores in New York City in the coming months.
The proposed Kroger/Albertsons merger that has been in the works for over 2 years may finally be coming to a resolution soon. Fast Company’s Anna-Louise Jackson takes a look at what’s at stake and how the FTC and shareholders are assessing the impact. Read More >>
Video of the Month: With the rise of fast casual restaurants like Chipotle and Cava over the last decade plus, many people wrote full-service casual dining restaurants as a relic of the 90s. However, one iconic chain has bucked that trend. After closing over 100 locations in the last 10 years, people are starting to return to Chili’s and that has driven a 14% same store sales increase. Check out how they’ve done it in this video from CNBC >>
Not only is available retail space at an all-time low, what spaces are available may not be leased up any time soon as they are disproportionately in older, lesser quality assets:
While our top story this month shows that this year’s Halloween season may fall short of 2023’s record breaking total of $12.2 billion, we’ve also started to see the beginning of Holiday sales projections as well. Deloitte has weighed in with a slower, but still growing, prediction of 2.3%-3.3% increase over last year’s total of about $1.55 trillion.
Deloitte’s reasoning stems from concerns about rising credit card debt, high interest rates, and the lingering impact of inflation; along with a Bankrate survey that found nearly 1/3rd of respondents saying they will be cutting back on Holiday spending this year. However, despite the headwinds that have been present from inflation and credit card debt for over the last 2 years, consumer spending has been robust. So, why the pessimism for 2024?
While it’s true that inflation has landed near the Fed’s preferred target of 2% over the summer, the compounded impact of the post-pandemic spike in prices means that while things may not be getting more expensive as fast these days, goods still cost over 10% more than where they were at the beginning of 2021. Of course, this was largely true last year as well but we are also seeing a slowing job market which caused the Fed to lower interest rates by a half point. This is likely weighing on consumer psychology more than price sensitivity heading into the Holidays, while the impact of the rate cut may not be felt by average consumers until early in 2025.
Still, there is a bull case to be made as well. Not only are gas prices lower than they’ve been in years, the monthly numbers from the back-to-school season surprised on the upside overall, with August sales up 4.3%. Key categories driving the sales spike included a strong rebound for electronics and apparel sales, while home furnishings came in higher than expected posting a small gain, the first increase in the category since 2022.
There is no doubt that American consumers have proven themselves to be nothing if not resilient through the choppy economic waters, but with the Fed’s soft landing largely achieved this year’s Holiday season will be a stress test to find out if things have been stretched too thin.
Legendary guitarist David Gilmour of Pink Floyd returned this month with his first album of new material since 2015 titled Luck and Strange. There are few other artists who could still sound so vital while nearing their 80th birthday. Gilmour’s guitar work remains as soulful as ever on this plaintive collection that takes stock of a life well lived without resting on one’s laurels. The new album is also a family affair, with his daughter Romany taking lead vocals & plucking the harp on a cover of an obscure 1999 song by the Montgolfier Brothers. Far from indulgent, Romany Gilmour’s pensive voice is a highlight of an album that rates as one of the best late career missives from a music icon.
