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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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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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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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Happy Thanksgiving to all of the people in the United States. Tomorrow is Friday November 23rd, also known to many as Black Friday. This is the day that many retailers wait for during the holidays, some all year long. Government forecasts expect this to be one of the worst Black Fridays in recent years, but with the consumer society of the United States, I cannot see tomorrow as a bad day for many. Well, enjoy the football (American) and left over turkey and let’s see the results.

Here are my three stores to avoid if you want to venture out and take advantage of sales, but do not want to be a victim of the mobs and chaos:

  1. Walmart
  2. Target
  3. Best Buy

I like these stores usually, but tomorrow I expect them to be filled with people and as a result absolute chaos. If you venture out to these stores, good luck and happy holidays.

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In an article called “Meeting of the Minds“, Retail Traffic Magazine talks about Apple‘s plans to open Genuis Bars inside of Best Buy stores…now that is a genius move by Mr. Steve Jobs (a genius). That is not only a great branding move for Apple, it is also a great move for Best Buy.

Best Buy has many more locations than Apple and this is great strategic move as more and more people buy Apple products. Apparently, the Best Buy Genius Bars will have Apple trained staff to give the same great service one receives in an Apple Store.

This is not the first time that Apple and Best Buy have worked together. The relationship between the two ended in 1998 because of a disagreement, let’s hope this time it lasts for a long time.

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