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Refreshing Retail - Issue #5

April 2023
Mike Jordan, Big V Property Group Director of Research

New Census Population Estimates Show Continued Boom in Sunbelt States

  • All 10 of the fastest growing counties were in the South or West

  • A return to in-person learning at large colleges and universities helped many of those counties recover population lost during the pandemic

  • The counties with the largest cities continued to see domestic outmigration patterns, but the rate has slowed significantly from pandemic levels

  • At current rates, North Carolina and Georgia will surpass Illinois and Ohio as the 6th and 7th largest states by 2030

Percent Change in County Population
July 1 2021 - July 1, 2022

NRF Sales Projections

  • The National Retail Federation is forecasting total retail sales growth of 4%-6% in 2023 to approx. $5.2 trillion (excluding automotive sales, gasoline, and restaurants)

  • The forecast is buoyed by strong consumer spending so far this year, but the NRF warns that the second half may be more challenging and uneven

  • NRF sees inflation moderating to around 3.0%-3.5%, with GDP growth slowing to 1%, shy of a formal recession

Sources: Retail Dive, Chain Store Age, Creditntell, The Verge, Vox
Bed Bath & Beyond announced that if it is unable to raise $300mm through an off-market equity offering, the beleaguered company will have no choice but to file for bankruptcy. The company had previously tried to raise over $1bn in a separate deal with Hudson Bay Capital but canceled that program after failing to achieve even half of the original goal. Markets reacted poorly to the news, with BBBY stock falling as low as $0.34 per share in trading as of this writing. Meanwhile, former CEO Mark Tritton has sued the company for failing to honor his $6.765 million severance agreement.
Belk stores saw higher traffic increases than the baseline for the entire department store category last year, according to an analysis by Belk’s traffic gains averaged over 4,000bps greater than their peers in 2022. The store also found success with its first outlet concept in Greenville, TN. The outlet store saw traffic double from its prior incarnation as a full-line Belk store.
J.C. Penney CEO Marc Rosen reiterated that his plan to turn around the Company remains focused on driving more business from its most loyal customer base with a focus on shoppers of color, rather than chasing new, younger customers who never became loyal shoppers under earlier reinvention attempts. Rosen said, "In the past, you've seen the Company chase shiny objects and try to come out with a 'big bang' solution. This time, we're saying we've got to fix the foundation."
Kroger plans to build three new Marketplace stores in the North Texas cities of Plano, Melissa, and Fort Worth, with construction slated to begin this summer. The units will be in excess of 100,000 square feet and will go beyond traditional grocery store offerings to include an expanded general merchandise department, including outdoor living products, electronics, home goods, apparel, and toys. The locations are expected to open in 2024
Macy’s CEO Jeff Gennette, who has been with the company for over 40 years announced he will be stepping down from the role in 2024, to be replaced by Bloomingdale’s brand CEO Tony Spring. In a related move, Macy’s CFO Adrian Mitchell will take on the additional title of Chief Operating Officer, bringing store operations, technology, and supply chain under his purview
McDonald’s closed its corporate offices this week in advance of a restructuring plan that is expected to result in several layoffs. While the news may not seem like what one would expect from a growing company, the move is likely more about realigning the organization to begin rolling out store-level innovations faster as the restaurant brand hopes to ramp up its efforts to expand in the U.S.
Dick’s Sporting Goods is buying online outdoor retailer Moosejaw from current owner Walmart for an undisclosed amount. Dick’s will run Moosejaw under its Public Lands outdoor business, launched in 2021. There are brick-and-mortar Moosejaw locations in Arkansas, Colorado, Illinois, Kansas, Michigan and Missouri.
Kohl’s has named Tom Alves as Chief Operating Officer effective in April. Mr. Alves comes to Kohl’s with over three decades of experience in retail at Bealls, TJX, and Hudson’s Bay Company. He will oversee all supply chain, real estate, and other store related operations.
Kroger’s 70,000 square-foot ‘spoke’ delivery center in Austin, TX began operating earlier this month to support fulfillment for grocery orders in the Austin market as well as San Antonio. The Company announced plans for the facility last year, as well as for a 67,000 square-foot spoke in northeast San Antonio, which became operational in late October 2022. That same month a 50,000 square-foot spoke began operating in Oklahoma City, OK. All three spokes serve as last-mile cross-dock locations and further the reach of Kroger’s delivery service from a 350,000 square-foot, Ocado-powered customer fulfillment center in Dallas that became operational in July.
Macy’s move to exit declining malls and open smaller stores in strip centers and other off-mall locations has been so successful that the department store may accelerate that shift sometime next year. At the five Market by Macy’s that have been open for more than a year, Q4 comps rose 8%, and at the one Bloomie’s open that long, comps in the period rose 12%. For now, plans are to open four new Market by Macy’s and one Bloomie’s this year, CEO Jeff Gennette said, noting that these stores perform best when they share a location with off-price retailers or grocers.
Ollie’s Bargain Outlet announced plans to open 45 stores this year. While this is slightly lower than the company’s stated goal of 50-55 stores per year, COO Eric Van Der Valk stated that they would return to its normal pace in 2024 and that they still plan to more than double the store count in the long term from 468 stores today to 1,050 stores over time.
Target will close 4 small-format stores in 2023 in the Philadelphia, Washington DC, and Minneapolis markets. Despite these closures, Target stated that they still intend to continue developing small-format stores with at least half of the company’s planned 20 new stores this year in a smaller format. Target’s “Coming Soon” website lists almost 50 locations ranging from 19.000 to 150,000 square feet in all regions of the country.
Walmart unveiled a newly designed website this week that features a more intuitive, clean design that EVP Tom Ward hopes will provide customers a “more engaging way to browse.” According to a press release, the feature-packed homepage has rich imagery, live video and is optimized to better bring Walmart’s massive assortment to life, including a new social-inspired scroll so customers can browse in the same way they’d scroll their favorite social media apps.
Restaurant chains are some of the most innovative businesses in our sector. Whether it is a new take on an old favorite, or a flair for new culinary horizons, staying on top of the trends in food service can often require a scorecard to know which concepts have wings (both the metaphorical and poultry kinds) and which are dishes best served cold. See below for two features from leading restaurant trade publications that will have you salivating over the menu offerings soon to be at a shopping center near you:
Nation’s Restaurant News: 9 Breakout Brands for 2023 >>QSR Magazine: The 2023 40/40 List Spotlighting America’s Hottest Fast Casual Concepts >>
With opening day of the baseball season now behind us, what’s new at the ballpark this year? At Oriole Park at Camden Yards, the answer is frictionless shopping at several concession stands around the ballpark. The technology in Baltimore is provided by startup Shift4, while Globe Life Field in Texas is now offering a similar amenity powered by Amazon’s Just Walk Out Technology. Given the faster pace of the game this season, these technologies couldn’t be adopted at a better time for fans who don’t want to miss any of the action. Read More >>
Video of the Month:
The always hilarious Matt Mitchell imagines a meeting of the country’s largest retailers. Stay tuned to see how K-Mart foils Amazon’s plans to turn it into a warehouse. Watch here >>
In 2022, vinyl albums outsold CDs by unit volume for the first time since 1987 (and surpassed them on revenue in 2020). If you’d told the average music fan in the 80s that vinyl would still be manufactured 36 years later, let alone be outselling those shiny new CDs, they’d have looked at you like you were crazy. What currently “dying” trend do you think is poised for a comeback in the coming years?
With the release of the Census’ population estimates for 2022, sun belt metros are once again leading the nation’s internal growth regions. This story has been playing out for the better part of a century, or more succinctly, since the invention of wide access to air conditioning. Other media articles will recycle the same reasons for these patterns and I don’t necessarily disagree with them, but as a researcher I like to look under the hood to find counter-narratives and other emerging trends that go beyond the headlines.

One thing that I have argued is the best indicator of a stable and vibrant market is the presence of a highly educated populace and so in addition to “sun belt”, the US Census Bureau also pointed out the strong resurgence of college-anchored counties from the big (Franklin County, Ohio) to the small (Whitman County, Washington – which led all counties on a percentage basis). It’s the same reason why Boston and eastern Massachusetts has bucked downward trends present throughout the Northeast. The same reason why the Research Triangle in North Carolina continues to quietly pick up huge swaths of population despite not having the same sexy reputation as Austin and Nashville. And it’s the same reason why Huntsville, Alabama – home to NASA’s research center – has undermined common misperceptions of the South to be home to more residents with advanced degrees than anywhere outside of Silicon Valley.

A growing economy requires innovation, innovation requires intelligence, and where you can put these elements together with several world-class research institutions, you can spin off new companies, while also attracting new centers of excellence from existing economic drivers like Apple, Oracle, and yes, even NASA – who hopes to put people back on the moon by 2026, thanks to our friends in Huntsville.

All growth is not created equal, and high incomes alone are not enough to build a sustainably prosperous region. As long as the world’s best and brightest minds continue to flock to our top institutions of higher learning, the residents of those areas will be the greatest beneficiaries.

Mike Jordan

Rodney Crowell is an American treasure, one of the last living links to great Country songwriters like Guy Clark and Townes Van Zandt as seen in the essential 1970s documentary “Heartworn Highways”. Rodney’s music has been covered by everyone from Bob Seger to Johnny Cash to Waylon Jennings to This Mortal Coil. He’s been a sideman and full duet partner to Emmylou Harris, as well as a commercially successful singer in his own right. Through it all, he’s never conformed to what anyone has thought a country singer should be – publishing a memoir of his years growing up in Houston and several volumes of poetry and lyrics. While at Cooper’s BBQ in Ft Worth with Kenton last week, I was reminded of this gem of a song from 2003 “Earthbound” – his last charted hit and an ode to what makes life on Earth worth living through good times and bad.
Listen to the Song of the Month
BONUS TRACK: Ever the maverick, Rodney has a new album due out this month recorded in Chicago with Wilco’s Jeff Tweedy. Check out their collaborative single, “Everything at Once” >>

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