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Forever 21

Forever 21

So, Colliers International came out with a list of the retailers that are likely to expand this year. They called the list “Companies Likely to Pursue Expansion this Year”, but I would prefer to call it something like…”Retail Expansion for Smart Companies” (Not so original, check out Steve Pavlina‘s book to see where I got the idea from). So many tenants/retailers are sitting on the sidelines while landlords are giving FANTASTIC deals. Oh well, scared money “don’t make none.” Here is the list:

  1. AT&T Mobility
  2. Au Bon Pain
  3. Best Buy
  4. Costco
  5. CVS
  6. Dollar Tree
  7. Family Dollar
  8. Five Guys Burgers and Fries
  9. Forever 21
  10. Fresh & Easy
  11. Gold’s Gym
  12. Goodwill Industries International
  13. Noodles & Company
  14. O’Reilly Auto Parts
  15. Panera Bread Company
  16. Party City
  17. Rainbow Shops
  18. Ross Stores
  19. Rue 21
  20. Smart & Final
  21. Sprouts Farmers Market
  22. Sunflower Farmers Market
  23. Urban Active Fitness

Now, that is Colliers International’s list, but I know of a few more that are making moves in this time of opportunity:

  • Citi Trends
  • Buffalo Wild Wings
  • TJX (Marshalls, T.J. Maxx, HomeGoods)
  • Great Harvest Bread
  • Wal-Mart
  • Kohl’s
  • Aldi
  • Food Lion (Bloom, Bottom Dollar, Food Lion)
  • Advance Auto Parts
  • Auto Zone

So there are definitely some trends here and we will talk about those in coming posts!

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Future Apple Store Location - Georgetown Washington D.C.

Future Apple Store Location - Georgetown Washington D.C.

While people are wondering what is going on in the retail world, Apple is simply trying to get a permit to open their new Georgetown (Washington D.C. store). Well, the people of the Old Georgetown Board  are not bending even for Steve Jobs and Apple. Apple has submitted plans on at least three occassions in order to get approval, but they are just continue to be denied.

Apple is being denied because of their design and there are some people who say “Take that Apple” (they must be PCs!..lol), but I think they need to get that store open. Many people also think Apple should’ve opened the store in Chinatown, but let us evaluate the site selection like the professionals that we are.

Chinatown- Gallery Place (Verizon Center)

  • Emerging Retail Market
  • Direct Metro (Subway Station)
  • Second Best Retail Corridor in Washington D.C.
  • Newer Residential Market

Georgetown

  • Established Retail Market
  • No Metro Stations
  • #2 Tourist Destination after the Mall (Good luck getting a store there)
  • Georgetown University, George Washington University and American University all within a close proximity. Especially GTown.
  • Nearly recession proof housing market with a variety of high househould incomes.

So, should they go to Chinatown? No! They are in the right place, but it is time to get those plans approved and open.

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 This post is available at the new blog: www.triplenetspace.com

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 This post is available on the new Triple Net site: http://www.triplenetspace.com 

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Red Mango, one of the yogurt operators in the Yogurt Wars, plans to open 50 stores in 2008. That is a lot of franchisees! Currently Red Mango has 10 stores in the United States and many more in Korea. It will be interesting to see how they compete with Pink Berry and some of the other concepts already penetrating other markets. Most of the Red Mango stores are located in New York and California, but there others dotted across the United States.

Readers of this blog know that the rules of finding a winning site. If you are new to this blog or need a refresher, click here to catch up on the key elements to finding a winning site. As in everything in life( or almost everything) there are exceptions to the rule. Often times, retailers that do not adhere to the “rules” of site selection are known as destination retailers. Many restaurants are destination retailers because people will drive the necessary distance to eat at a particular restaurant. In the dry goods and soft goods world (non-food), there are not as many specialty retailers as there were in earlier times. This is particularly true for suburban America because some many national chains have a presence in the shopping centers and power centers.

Cities of the world are able to have maintain destination retailers, but no retail destination is as well known around the world as Saville Row. Saville Row is a retail street located in Central London that is famous for its Bespoke (uniquely individual) tailoring. Suits from Saville Row are known for their quality and people travel from around the world just to get bespoke clothing. Saville Row is the ultimate retail destination. It’s not really on the main drag, but people still go out of their way to go there because of the reputation. Is your retail business a destination?

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If you are looking for space in a hot market or in a new shopping center, you might have heard the leasing agent say that. I tell people many times that I would love to have their use/concept, but I cannot and the reason is EXCLUSIVES. Many landlords give particular tenants exclusivity. An exclusivity clause is defined as:

“A lease clause that limits the number of stores that can open in a shopping center competing with the lessee.” (ICSC’s Dictionary of Shopping Center Terms)

Fighting to get an exclusive is worth the trouble (if the landlord gives you any). If you will notice, you never see a Starbucks in the same shopping center as Caribou Coffee. The main reason is to allow each business to flourish and to prevent one business from putting out the other business. I have heard numerous stories of the disasters when two businesses that are near identical are in the same center. The results have never been good. Having a Ben & Jerry’s Ice Cream close to a Smoothie King is not a form of direct competition and should not violate any exclusivity clause. However, if a landlord opened a immediately next to Circuit City, you have a problem – huge violation of the exclusive.

So, I think you get the point. You need to be around retailers that pull you up and help increase sales, not retailers that are competing for sales. There are exceptions to this rule and some landlords just do not give exclusives, but that has more to do with flexibility and keeping options open as changes occur in the retail cycle and life of the shopping center.

Key: Ask your broker and attorney to negotiate exclusive language into the letter of intent and lease. It might not be possible and its not always worth sacrificing a great site for an exclusive, but you must try to get it.

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Right now, there is a war going on in major American cities, especially New York and Los Angeles. Many people call it, the Yogurt Wars. Several upscale yogurt concepts created by Korean Entrepreneurs are competing for the mouths and dollars of American consumers. Currently, the most popular concept is Pinkberry. When I was in New York during the holidays, I saw lines going out of the doors and around corners to get in some of the downtown Manhattan Pinkberry locations. Even uptown locations were crowded. Friends living in Los Angeles say that these yogurt concepts are everywhere! The frozen phenomenon is not new, it is just going through a revival. In the 1980s and 1990s, TCBY was definitely the yogurt champion in the Washington D.C. area. But these new yogurt concepts have a very Twenty First century presentation with many more toppings and choices. Right now in the Washington D.C. area, Ice Berry is the pioneer with their Reston Town Center location. More are coming and it will be interesting to see how the location battles begin.

Here are a few of the new frozen concepts battling for the best territory:

  • Pinkberry
  • Ice Berry
  • Red Mango
  • Cali Yogurt
  • Kiwiberry

Others include:

Blue Cherry Yogurt Bar, CéFiore, YogurtBerry, BerryLine, Yo Berry, Snowberry, Roseberry, Berri Good, Limelite, Bear Naked, Pingo Berry, Peach House, Dolci Mango and Cantaloop.

To read more about the Yogurt Wars, click here.

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I just read the report: Apple stores outperform Best Buy, Saks and Tiffany by Philip Elmer-DeWitt

I thought I would share the report because it is amazing how well Apple is doing. It is pasted below.

How productive are Apple’s (AAPL) retail outlets?

“Out of this world” according to a report issued this morning by Toni Sacconaghi of Bernstein Research. In fiscal year 2007, he estimates, Apple stores generated an average of nearly $4,500 in sales per square foot — a figure far higher than any other consumer electronics or luxury retailer. That’s nearly five times the productivity of Best Buy, for example, one of the most efficient consumer retail outlets, and nearly 12 times that of Saks. Only Tiffany & Company comes close, with sales of $2,750 per square foot. (see charts at right)

The findings were part of a follow-up to the in-depth report on Apple’s retail strategy that Bernstein Research issued a year ago. Since then, Apple has opened 20 new stores (total: more than 200) and reportedly has plans to expand to China, France, Germany and elsewhere.picture-60.png

Among the report’s other findings:

  • Mac sales per store grew 26 percent year-to-year in fiscal 2007. Apple’s brick and mortar stores sold an average of 8,000 Macs in 2007, or a “stunning” 21.4 per day.
  • Apple Stores boosted the company’s total revenue by at least $1.35 billion (5.6 percent) during the year, with gross margins of 42 percent (versus 34 percent for Apple overall)
  • Despite the high gross margins, the stores have somewhat lower profitability than the company overall because of high operating expenses. The average Apple Store has 40 full-time-equivalent employees, double the number four years earlier. All told, Sacconaghi estimates that the retail segment’s operating margin was 16.9 percent for the year, compared with 18.4 percent for Apple overall.

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Yesterday, January 7, 2008, Starbucks sacked their CEO, Jim Donald, and announced that they will close some U.S. based stores in 2008. Starbucks is a great concept, but after thousands and thousands of stores opened in a close proximity to each other, its time to take a breath. The share price has suffered considerably in the last few weeks as a result of declining sales. They likely plan is for Starbucks to close the stores that are not strategically positioned and under performing. To read more about Starbucks closing, click here.

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