Weekly News

Abercrombie teams up with lifestyle hospitality firm

July 12,2018 04:14

Abercrombie & Fitch's newest partner is a lifestyle hospitality firm that develops, manages and operates cool boutique hotels, restaurants, and nightclubs. The retailer has entered into an exclusive partnership with SBE to launch co-branded events and ...and more »


REAL ESTATE
BY Jason Baker
With off-price player like Marshalls, T.J. Maxx, and Ross Stores entrenched as favored anchors for shopping centers, traditional anchors like Macy’s are finding it harder than they imagined to get in on the act. There’s more to it, it turns out, than just slashing price tags.
The first several Macy’s Backstage stores to open 2015 and 2016 were freestanding locations, and they have proved to be the last. Macy’s last year opened nearly 50 more Backstages as store-within-a-store concepts, with plans to open 100 more in 2018. Was this a strategic shift? Or was it merely a financial decision made by a brand arriving late to the discount gold rush?
Macy’s is trying to elbow its way into a discount market where the standard-setter has long been Nordstrom Rack. Same-store sales at Nordstrom Rack grew 3.7% overall in the fourth quarter of 2017, contributing heavily to Nordstrom’s overall 2.6% increase across all stores. Nordstrom’s performance in recent years has been rocky, and the iconic department store brand has been relying heavily on Rack to fuel growth. In 2018, just one traditional Nordstrom opened in the United States compared to 12 new Rack stores.
Others, meanwhile, experiment with new value concepts. Kohl’s is opening up Amazon return centers and selling specialty Amazon products (the Echo line of electronics, for instance) at a number of locations. The early returns are positive, as Kohl’s posted strong first quarter numbers, and traffic at Kohl’s stores featuring Amazon was up 8.5%.
Experimentation in the discount sector is hardly a new phenomenon. When Mills Corporation came along in the 1990s and began developing the large outlet centers they have become known for, not every discount store was a hit. Many early concepts struggled, in fact. Neiman Marcus Last Call and Saks Off 5th were both early standouts, however, but it’s noteworthy that both of those brands had the added hook of offering what were traditionally luxury products at an accessible price.
Fueled at least in part by the recessionary cycle of the late 2000’s, discount concepts have increased traction in the post-recessionary period, appealing to households in a broad range of economic standing. Here in my home market of Houston, the highest-volume and best-performing Home Goods stores in the region are those located in some of the city’s wealthiest neighborhoods.
This raises two important questions, the answers to which may have less-than-optimistic implications for retailers and, by extension, retail real estate.
The first is this: How do retailers ever go back to full price? With discount now becoming the norm, and the majority of new concepts in recent years (especially in apparel) being discount formats, it is going to continue to become harder to buck the tide of consumer spending habits and expectations. Discount, once a rare and thrilling exception, is now the rule.
The second question is almost a corollary of the first: With so much more discount out there, how can new concepts hope to stand out? Already tight margins and a lack of differentiation in a crowded segment is a worrisome combination.
The reality is that discount isn’t a cure-all for troubled malls and shopping centers. Luxury at a discount is compelling. Deep discount is enticing. But standard products at a modest discount are mildly interesting at best. Ross and T.J.’s continue to perform as traffic builders for in-line retailers, but are they nearing their saturation points?
The bottom line is value retail is a segment that is watered down and cannibalizing its own ability to expand — at the same time making it harder for more traditional concepts to break through. If this is how things look now, with a strong economy and an abundance of quality real estate available, what happens going forward when conditions aren’t so favorable?
For discount retailers, these are hard questions, and they suggest that simply rolling out another iteration of a not-so-new discount concept may not be a formula for sustained success.
Jason Baker is a co-founder and principal at Baker Katz, a full-service commercial real estate brokerage specializing in tenant representation for national chains. Baker can be reached at [email protected].

lifestyle lifestyleshop lifestyles lifestyle magazin lifestyle hotel kupon lifestyle skyn lifestyles skyn lifestyleshop kupon lifestyle cook it lifestyles ultra thin

Share this article

Related videos

Award Winning HighTower Las Vegas Profile
Award Winning HighTower Las Vegas Profile

DON'T MISS THIS STORIES