Make or break? Bon-Ton giving away $1 million in gift cards today

Jon Harris/The Morning Call - If all you want for Christmas is a Bon-Ton gift card, we hope you started your day at one of the retailer’s area stores Wednesday morning.

That’s because, for the second consecutive year, The Bon-Ton Stores Inc. is giving away $1 million worth of gift cards just days before Christmas across its roughly 250 department stores in 24 states.

Starting at 7 a.m., the first 400 customers at each store were set to receive a gift card valued between $5 and $500. While there are several gift card values — $5, $10, $20, $50, $100 and $250 — there is only one $500 gift card at each store, spokeswoman Christine Hojnacki said.

Just before doors were set to open, a line had formed at the Bon-Ton location at Westgate Mall in Bethlehem.

The giveaway fits into Bon-Ton’s efforts during what one analyst characterized as a “make-or-break” holiday season for the company.

But retail expert Jeff Green, owner of Jeff Green Partners in Phoenix, wondered, “is it too little, too late?”

Bon-Ton certainly hopes not.

“Providing a special gift for our customers adds excitement to their shopping experience,” Steve Byers, Bon-Ton’s executive vice president of stores, said in a news release. “It’s the season of giving, and we know shoppers will appreciate receiving a free gift card from their hometown store this holiday season.”

In the Lehigh Valley — where the chain has a big presence because of its 1994 purchase of a large portion of what remained of Hess’s Department Stores — Bon-Ton has stores at South Mall in Salisbury Township, Westgate Mall in Bethlehem, Palmer Park Mall in Palmer Township, on Hamilton Boulevard in Trexlertown, and near Quakertown and Phillipsburg. An entrance at each store was designated with signs for the free giveaway.

Bon-Ton had the same giveaway last year, which Hojnacki said boosted foot traffic. “We had a good turnout,” she said of the previous giveaway, which came on Dec. 18, 2016. “It drove traffic in the morning for sure, and the customers really liked it.”

Bon-Ton is hoping for a similar result this year, at a time when the retailer could really use a boost.

Through the first three quarters of the year, Bon-Ton lost $135.4 million, compared with a loss of $108.1 million during the first nine months of last year. In the company’s third-quarter earnings release last month, Bon-Ton reported a 7.6 percent decline in total sales and announced a plan to close at least 40 locations over the next year.

However, the company has consistently reported double-digit growth in its omnichannel business, and for the four weeks ended Nov. 25 announced a 3.1 percent increase in comparable store sales.

Green, the retail expert, said the giveaway likely will get people in the store faster, though it may not do anything for the company’s bottom line.

“It’s certainly not going to do anything for their profits,” he said. “It might be better for their sales.”

If you happen to get to a Bon-Ton early enough on Wednesday morning to snag a gift card, the company said there are no exclusions or an expiration date. It can be given as a gift or used immediately, even in combination with coupons.

There is a limit of one gift card per person, and customers must be 18 or older to receive one.

The Bon-Ton Stores Inc., co-headquartered in York and Milwaukee, operates stores under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates.


MORNING RUSH

Bon-Ton is giving away $1 million in gift cards on Wednesday morning across its stores.

When: Starting at 7 a.m. Wednesday

Where: At its roughly 250 department stores, which includes six area locations

Why: To provide a "special gift" to its customers, while also attempting to boost foot traffic during a crucial holiday season for the ailing company

Unibail-Rodamco to Acquire Westfield in $16B Deal

Gail Kalinoski/Commercial Property Executive - A plan by Unibail-Rodamco SE—Europe’s largest listed commercial property company—to buy Australia’s Westfield Corp. for nearly $16 billion will create a global leader in flagship shopping destinations, but it may also be the beginning of more consolidation in the coming year.

“It made a lot of sense even though they paid a premium for it. Mall prices have been depressed but the flip side of that is now they have re-set the mall prices to a higher bar,” Jeff Green, a retail consultant, president & CEO of Jeff Green Partners in Phoenix, told Commercial Property Executive.

The deal, announced Tuesday and expected to close in the second quarter of 2018, would create a global company with a gross market value of $72.2 billion, that has 104 assets in 27 of the world’s most attractive retail markets. Stretching across 13 countries, the combined portfolio would feature flagship properties in cities such as London, Paris, Munich, Stockholm, Vienna, Madrid and Warsaw in Europe and Los Angeles, San Francisco and New York in the United States.

Westfield has interests in 35 shopping centers in the U.S. and London and total assets under management of $32 billion. Westfield Century City, a 1.3 million-square-foot upscale shopping center in Los Angeles, which reopened in October following a $1 billion makeover, and Westfield World Trade Center, a $1.4 billion mall with 365,000 square feet of shopping and dining options in Lower Manhattan that debuted in August 2016, are among the company’s premier U.S. assets.

“I believe Westfield is at their optimum value,” retail expert Michael Lagazo, vice president, SRS Real Estate Services in San Diego, told CPE. “My thought is they’re capturing as much appreciation as they can rather than anticipating sustained income growth from retail rents.”

Unibail-Rodamco has a presence in 11 EU countries and a portfolio of assets valued at €42.5 billion, including 69 shopping centers in major European cities and office buildings and convention centers in the Paris region. It has at €8.1 billion of projects in development, including the Mall of Europe in Brussels. The combined company would have a development pipeline of projects valued at €12.3 billion.

“The acquisition of Westfield is a natural extension of Unibail-Rodamco’s strategy of concentration, differentiation and innovation. It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the United States,” Christophe Cuvillier, chairman of the Management Board & CEO of Unibail-Rodamco, said in a prepared statement.

Westfield was founded in 1959 by Frank Lowy in Australia and grew into one of the biggest owners and operators of shopping centers and malls in the world. Under the deal, the Lowy family would no longer run the company but would have a 2.8 percent stake in the combined entity.

Lowy said the deal is “a culmination of the strategic journey Westfield has been on since its 2014 restructure.”

The deal calls for Westfield shareholder to get a combination of cash and Unibail-Rodamco shares at a price of $7.55  per share, a 17.8 percent premium above Westfield’s closing price on Dec. 11. The transaction implies an enterprise value for Westfield of $24.7 billion.

“If you are the Lowys and are looking to exit the investment cycle, this would be it,” Lagazo said. “If I were part of the Lowy family, the best transaction would be to capture as much valuation as possible.

More Consolidation to Come?

In addition to selling non-core assets in recent years, Westfield has been one of the industry leaders in reshaping America’s malls and shopping centers into more experiential destinations featuring upscale dining, entertainment and shopping options. Still, the U.S. retail market is facing a wave of bankruptcies and store closings as brick and mortar outlets contend with the rising impact of online retailers.

Both Lagazo and Green said the acquisition of Westfield by Unibail-Rodamco is probably the harbinger of more consolidation next year. This deal was announced the same week it became public that Brookfield Property Partners offered GGP, Inc., offered $14.8 billion to buy the remaining portion of GGP that it doesn’t already own. The $23-per-share cash and stock offer was rejected in November by Chicago-based GGP, one of the largest owners and operators of U.S. shopping centers.

“They’ll get General Growth eventually. That was just the first volley,” Green said. “I don’t think anyone expected it to go on the first round and on the first bid and now that bid goes up. Now Brookfield is going to have to really sweeten their deal.”

Real Estate's Next Chapter

With the holiday shopping season now underway, the final chapters of 2017 are already being written. While we don’t know exactly how the story will end, we can safely say that this has been a rough year for retailers–and for the retail real estate industry.

As everyone begins to look forward to the new year, here’s a look at what are shaping up to be the most important retail real estate trends for 2018:

Malls

When it comes to America’s struggling malls, I think 2018 will largely be more of the same–but even worse (at least for C malls). I do think we’ll see more clear segmentation among mall categories, with C malls essentially becoming obsolete. B malls will be somewhat bifurcated: some will get the upgrades and improvements they need to move toward the A category, while others will slide further down towards their imperiled C mall brethren.

It’s impossible to think about what comes next for traditional malls without considering the status of iconic department store brands like Sears, Macy’s and J.C. Penney. I think Sears will continue to close more stores (including Kmart stores), and it wouldn’t necessarily surprise me to see Sears close the bulk of its stores by the end of 2018. Macy’s continues to plan to integrate its off-price Backstage concept into existing Macy’s stores. If that move proves to be successful, that could limit Macy’s closures in 2018. My gut feeling is that this is unlikely to work out for Macy’s. There are already so many other established off-price concepts that do a better job (Nordstrom Rack, Marshall’s, TJ Maxx, Ross, Saks Off 5th and Stein Mart). It’s a crowded and competitive segment, as evidenced by Bloomingdales decision to pull back on new outlet openings, and Neiman Marcus’s recently announcement that it plans to close 25 percent of its Last Call outlet stores. Building the Backstage brand seems like a big ask, especially when others have been refining and strengthening their position for so long. I also question Macy’s decision to bring its off-price brand into traditional stores in the first place. This seems like a surefire way to muddy the waters and create brand confusion. As for J.C. Penney, while we may see some additional closures, I think it’s unlikely to be on the same scale as Sears and Macy’s. I expect those closings to primarily be smaller stores in smaller markets, as part of J.C. Penney’s ongoing effort to trim lower-performing locations from its portfolio.

Digital crossover

Online and mobile retail will continue to be a big story in 2018. I think the headline is less about “competition,” and more about the way the lines between traditional brick-and-mortar and its digital counterparts continue to blur. We’ll likely see more retailers following brands like Restoration Hardware, Warby Parker, Bonobos and the new Nordstrom Local concept, by not carrying a full array of merchandise. Instead, these stores use their space to showcase products that can be ordered on the spot and delivered to your home.

Many larger retailers are going to be looking to buy smaller online brands in 2018, in moves similar to Walmart’s acquisition of Bonobos. I’m not sure who it’s going to be exactly, but it wouldn’t surprise me to see more of this from Walmart or Target. Traditional department stores don’t really have the cash required to make this kind of a move–with the possible exception of Nordstrom, who may make a smaller-scale purchase (perhaps acquiring an emerging brand that has already performed well in Nordstrom stores).

Speaking of digital/traditional crossovers, I expect we’ll continue to see more online retailers working to establish a brick-and-mortar presence with mixed success. This “clicks to bricks” phenomenon had led to some high-profile successes, and some equally high-profile struggles. It’s unclear if the latter are the result of concepts that don’t lend themselves well to brick-and-mortar, or if some online retailers simply don’t have the necessary brick-and-mortar expertise to execute that transition successfully.

Soft big boxes

In 2018, the big box market will likely continue to soften. Power centers are continuing to see some sluggish performance, with an abundance of vacant space and a limited number of concepts available to fill those spaces. Home Goods has a new concept on tap, but it’s still in testing mode. We’ll certainly see some new TJ Maxx, Marshalls and Home Goods locations, but we are beginning to max out on those. Continued softness in the office supplies segment isn’t going to help, with Office Depot taking over more Office Max stores and closing others, and Staples closing more stores. Best Buy and other consumer electronics seem to be somewhat stabilized and holding steady, but the Sporting Goods segment was decimated in 2017. With Gander Mountain closing stores, and Sports Authority and MC Sports now defunct, the category winner is Dick’s Sporting Goods–but there are only so many of those stores to go around. The bottom line is that this category is shrinking, and I expect that to continue in 2018.

Supermarkets

The supermarket segment has been an industry bright spot for some time now. However, a combination of international competition and an influx of new concepts has left the grocery landscape very much in flux heading into 2018. Competition between two German brands–the established Aldi, which is expanding significantly stateside, and relative U.S. newcomer Lidl, which is opening an eyebrow-raising five to 10 stores per month–has driven prices down and created serious market share issues for traditional supermarket brands. Those traditional concepts will also be pressured by the continued expansion of specialty markets. Sprouts continues to open 40-60 stores a year, and names like Earth Fare and Natural Grocers occupy a growing share of the organic and specialty market. Trader Joe’s is also a significant player in this increasingly segmented category. One wild card is Whole Foods, where questions remain in the wake of its acquisition by Amazon. There seems to be little doubt that the iconic organic brand will gain market share, but Amazon’s strategy of lowering prices will almost certainly bring down profits in the process.

Bottom Line

Every retail format will feel the impact of the ongoing challenges that have emerged or continued in 2017. Malls will continue to struggle, power centers will face some headwinds, and–with the grocery market in flux–it’s possible that even neighborhood centers will face some rough air.

Here’s the good news: if 2017 was almost exclusively bad news, 2018 will likely be more of a mixed bag. Yes, we will see closures, but there are creative new concepts that are growing, changing and emerging. It may be a bumpy ride for retail real estate in 2018, but with turbulence comes innovation and creativity–and the prospects of clearer air ahead. It will be fascinating to watch it all unfold.

Why they're going gaga over Wawa in Washington, D.C.

Laura Olsen/The Morning Call - For District of Columbia residents, it’s tough to satisfy a craving for a hoagie. But South Jersey native Travis Hughes does what he needs to do when he gets a Wawa fix.

Hughes once used a car-sharing service for the sole purpose of renting a vehicle to drive to the nearest Wawa location in the D.C. suburbs. With hoagie in hand, he drove back into D.C., returned the car, and went on with his Saturday.

For Hughes, who grew up near Atlantic City, N.J., and D.C.’s sizable population of Pennsylvania ex-pats, the trek to the nearest Wawa is about to get a lot shorter.

The Delaware County convenience store chain with a devoted fan base is opening its first storefront in Washington, D.C., on Thursday morning.

Wawa fans have been eagerly anticipating the opening since the company announced the downtown D.C. location — a few blocks south of Dupont Circle, and not far from the White House — over the summer.

They have tweeted at Wawa, pleading for updates on any changes in the opening schedule, and planned commutes and lunch plans around when to stop by.

Hughes added it to his online work calendar when he learned when the store would be serving its first cups of coffee. His devotion to Wawa is so well-known colleagues also added event notifications to his work calendar.

“I’ve been considering if I would want to eat an Italian hoagie for breakfast,” said Aaron Myers, 39, who grew up in Northeast Philadelphia and now works at the Aspen Institute, a think tank based a few blocks north of the new store. “It might be nice to claim the mantle of getting the first hoagie served.” 

Wawa aficionados interviewed ahead of the D.C. store’s opening cited a reliable menu and affordability as among the reasons for the store’s intense brand loyalty.

More than a gas station or a convenience store, Wawa boasts an array of menu options. And by offering other essential items, the store has branded itself as a one-stop shop and community hub.

And as new arrivals launch careers in D.C., Wawa can be a reminder of home.

“I don’t know that there’s anywhere else that reminds me of Delaware County here,” said Deb Landau, 27, who grew up not far from Wawa’s headquarters and its original dairy.

For Landau, Wawa was a gathering place. Everyone in Nether Providence Township and the surrounding towns had their regular store, which they would frequent for a cup of coffee or a snack.

Customers more often than not would end up chatting with someone or run into a friend while waiting for a sandwich to be prepared, Landau said.

“Whether or not you planned it, you found yourself at Wawa every day,” said Hughes, 28, an editor at the sports news site SB Nation. “The Wawa parking lot was definitely the place to hang out in high school. It was more than like a town square or a park.”

While the new storefront is the first in D.C. proper, Wawa fans haven’t had to travel all the way back to Pennsylvania or New Jersey for a taste of nostalgia.

There’s a suburban Maryland location just inside the eastern side of the Washington beltway, and another north of College Park, home of the University of Maryland’s flagship campus — a location that’s a 40-minute drive or more from downtown D.C.

One die-hard devotee recalled how, as a student at Washington’s Catholic University, college officials would rent buses during finals week to shuttle sleepy students out to a suburban Wawa to stock up on coffee and other provisions.

You also don’t have to drive too far from Washington to find a Sheetz — the Altoona chain that makes up the other half of Pennsylvania’s convenience store rivalry. For Wawa groupies, it doesn’t compare.

They’ve waited patiently for Wawa. That reflects one strategy that may be at play with how the chain has expanded, retail analyst Jeff Green said.

The chain has “grown adjacently,” Green said, describing how instead of conquering huge swaths of geography, Wawa has expanded slowly and deliberately, an approach that can drum up excitement in the periphery of a brand’s territory.

“They have great word of mouth,” Green said.

The D.C. Wawa will look a bit different than the stores of Myers’ childhood, where he remembers picking up huge hoagies with his family before heading to Phillies games.

Wawa officials last week declined interviews until Wednesday, the eve of the grand opening. But they explained the allure of opening a D.C. location to The Washington Post over the summer.

The location “has all of the important demographics for us: Population growth, millennials and lot of foot traffic,” company President Chris Gheysens told the newspaper.

Perhaps best of all for Wawa fanatics: Gheysens said to expect as many as 10 Washington stores by 2020. A Georgetown store is in the works for next year, and another location is under contract in Chinatown, Wawa’s director of store operations told the Washingtonian magazine.

Fans already are hunting for clues on whether additional locations will align with their daily commutes.

Marijuana grow operation proposed for closed JC Penney store

Paula Gardner/MLive - Malls across the United States are seeking tenants to fill vacancies created as retailers close stores.

Shoppers will find offices, service businesses and schools amid traditional apparel stores - and, in one Michigan mall, a medical marijuana dispensary.

Now its owner wants to expand by establishing a marijuana growing operation in a closed JC Penney at the Copper Country Mall, just south of Houghton. Township officials will consider the request for the former anchor store in December.

The dispensary - and the possibility of a grow facility in a closed department store - appear to be rare in the U.S., said retail expert Jeff Green.

So far, he said, most mall managers decline legal marijuana dispensaries in shopping centers, Green said, citing a recent conversation with a broker in Colorado. And in Pennsylvania, mall owner Simon Property Group is going to court to keep a medical marijuana dispensary from opening in a former restaurant on an outlot at the former Franklin Mills Mall.

"It is unique to what I'm seeing across the country," Green said of the dispensary in Houghton.

The Portage Caregiver Center moved into the Copper Country Mall within the past year. It came before the township in fall 2016 when licensed caregiver Tyler Ross and Chris Hoffman spoke at a board meeting, following a conversation with two trustees, according to meeting minutes.

Ross, who's the registered agent of the company, came back to the township in August, describing to trustees how the JC Penney store could be converted to a grow operation.

"He indicated that it would require about forty individuals to renovate JC Penney site for a grow operation," according to meeting minutes. Ross did not respond to MLive's requests for comment.

"(He) discussed the "need" for medical marihuana in a community of this size - he indicated that he thought that most of the markets are located down state."

The request to expand in the mall comes amid an overhaul in Michigan's medical marijuana licensing regulations and a retail climate creating struggles for shopping centers.

Michigan requires communities to opt in and adopt a local ordinance if they want to allow marijuana facilities under the new licensing system. The situation - which has included a lot of uncertainty over the past few months as the state sets up new parameters - prompted a flurry of requests from the medical marijuana industry.

The Copper Country Mall is located on M-26, about two miles southwest of the Houghton-Hancock Bridge across the Keweenaw Waterway between Portage Lake and Lake Superior.

The mall is about 50 miles south of Michigan's northern-most community of Copper Harbor. Houghton is home to Michigan Technological University, which adds thousands to its year-round population of about 8,000. Nearby Hancock has about 4,600 residents; the full trade area is about 40,000 people.

The mall was developed in the early 1980s by Developers Diversified Realty, which sold it in 2012. It's about 250,000 square feet, compared to a typical suburban mall downstate that might be 1 million square feet or more.

Today, it is managed by Moyle, a construction, development and leasing company in Houghton. The company did not return two calls seeking comment.

A post on DeadMalls.com offers some unverified history of the mall: "Overall the mall enjoyed 20 solid years of success with both national and local retailers," it says. "Trouble arrived in 2002 when Kmart, in bankruptcy, shut its doors. A massive wave of store closings followed."

Today's tenants include a veteran center, Department of Health and Human Services, Gogebic Community College, laser tag, a cinema and Dunham's.

Information wasn't available on its vacancies, but JC Penney became one of them after the department store announced in March that it would close 138 stores. They were part of what Green calls "the most tumultuous year in ... retail in history."

This year's thousands of store closings - some to cut costs, some part of bankruptcies - reach into most regional malls in Michigan. They include Macy's, Sears, Gymboree, The Limited, MC Sports and Wet Seal.

They're leaving weaker malls in smaller markets particularly vulnerable, Green said.

And while most malls aren't yet turning to marijuana dispensaries as paying tenants, it's possible for the future.

"You would see it in distressed malls where the rents are very low," Green said. "You're certainly not going to find them in malls like Somerset (in Troy) or Twelve Oaks (in Novi).

"... You're not going to see them where the malls have a real general appeal and they're able to lease to more traditional retail."

That appears to be the central issue at Copper Country Mall, where other retailers - like Walmart - operate nearby.

Bruce Peterson, Portage Township supervisor, said the dispensary is located at the back of the mall, where some of the newer non-retail tenants are finding success.

"Some areas are put to good use," he said, naming the community college.

Peterson foresees a building that can re-grow its relevance though its mix of tenants, possibly through more remodeling that adds exterior doors to the traditional mall configuration.

"It has potential," he said. "Hopefully, in the future, more businesses will locate there."

Unclear, though, is whether a marijuana growing facility will be one of them. The township board will weigh the proposal during a board meeting on December 11.

"The pivotal issue is the number of people serviced by this facility," said Peterson.

Peterson said Portage Township received an additional few requests from medical marijuana providers ahead of the state's new licensing regulation, but has so far decided not to opt in. Unclear, he said, is what that will mean for the dispensary in the mall.

And the board is willing to hear more about what the plans could be for the JC Penney store and how it could fit into the township and benefit area residents who use medical marijuana.

"(Ross) could come to the board on the 11th and say, 'My clients are in need of this,' and give us some ideas on scope and need on having a facility in the township."

 

10 psychological retail tricks to make you splurge this holiday season

Quentin Fottrell/Market Watch - This year is shaping up to be a bumper year for retail. The National Retail Federation, the industry group representing retailers, said that it expects sales in all of November and December — excluding autos, gas and restaurant sales — to hit $682 billion this year, up 4% on last year. Last year, America had its biggest online shopping day ever on Cyber Monday with $3.39 billion in sales, and that’s in addition to the $5 billion spent online on both Thanksgiving Day and Black Friday. Shoppers are bombarded by tricks worthy of a magician when they walk into a store and, some at least, are growing wise to them.

To avoid overspending, there are some rules of what not to do, says marketing consultant Martin Lindstrom, author of the book “Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy.” Rule No. 1: “Don’t bring your kids with you,” he says. They’ll help you spend 29% more than your budget, according to a study of nearly 3,000 consumers Lindstrom carried out. No. 2: “Don’t shop with your partner,” he says. He or she will make you spend 19% more than planned. No. 3: “Don’t use a shopping cart. People who carry their stuff spend 8% less.” No. 4: Carry $100 bills. “People are far less likely to want to break bigger notes,” he says.

People like to believe they’re getting a good deal, experts say, even if they doubt stores are being honest about the original retail price. But we don’t always know that we’re being manipulated, especially when navigating crowded malls.

1. They treat you like a long lost friend

 Graphic designer Daniel Drenger had an odd experience when he went to a J. Crew in New York two weeks ago to buy a pair of skinny jeans. “I wasn’t sure if the pants would get tighter after they were washed,” he says. “Out of the blue, the sales clerk told me his father was a cyclist and had large thighs, and had a problem finding jeans that fit.” Drenger was taken aback, but the story amused him and put him at ease — as if he were getting advice from a friend. After more sharing by the sales clerk, “I bought five pairs of jeans in different colors — and a bunch of other stuff too,” he says. (He decided to return half the loot a week later.) “Customers want more meaningful experiences,” Daye says. The overly-friendly staff at perfume counters are trying to fulfill that desire, he says.

2. They sell you a reusable bag or supply large trolleys

Why not send a message that your company cares about the environment and — at the same time — ensure customers hit the stores armed with an empty bag? Ikea, Wal-Mart WMT, +0.49%  and Whole Foods US:WFM  are among the many retailers that offer reusable shopping bags or large trolleys. The bags sometimes even bear the company’s logo, providing free advertising for the store. (Ikea’s blue bags are instantly recognizable even without a logo.) But mainly the bags create a void that needs to be filled, encouraging consumers to buy more than they need, says Johan Stenebo, author of the book “The Truth About Ikea.” “There’s a reason why they’re so big,” he says. (Ikea, Wal-Mart and Whole Foods did not respond to requests for comment.)

3. They give you a place to put your feet up

Some stores are even more thoughtful: They provide a path through the store punctuated with relaxing spaces for weary shoppers to rest their feet. Don’t loiter too long though: These rest areas are often placed next to displays of products that stores want to unload, says Stenebo, who worked at Ikea from 1988 to 2008 in a variety of roles from product development to management, and is also the former assistant to the group’s 90-year-old billionaire founder Ingvar Kamprad. “Retailers call this the hot-hot-hot spot for inventory that’s not shifting,” he says. That said, Ikea is a destination store usually situated on the outskirts of a city, and not a department store where people pop into for five or 10 minutes while running errands.

4. They offer comparatively pricey luxury items

The “compromise price effect” is most often used by discount retailers and electronics stores that want customers to pay extra for a better camera or computer, says Michelle Barnhart, associate professor of marketing at Oregon State University College of Business. Here’s how it works: If a $225 Polo Ralph Lauren down winter jacket is strategically placed next to a slightly cheaper — but very similar — $195 jacket by Kenneth Cole, the customer might be tempted to opt for the latter and walk away still believing that he or she got a good deal. The “compromise price effect” can be effective in a store or even online, she says.

5. They price everything one cent short of a whole number

Nobody believes they’ll be persuaded to buy something simply because it’s priced $9.99 instead of $10, but studies say otherwise. It’s called the “left-digit effect.” The difference of one cent can turn a window shopper into an actual shopper, according to a 2009 study by researchers at Colorado State University and Washington State University, published in the Journal of Consumer Research. In one test, the researchers asked participants to evaluate two identical pens: They priced one at $2.00 and the other $3.99 — amazingly, 44% of the participants chose the higher-priced pen.

6. They offer to solve your life problems

The influence of the Apple Store AAPL, -0.11%  can be seen in other electronic outlets from Best Buy to Microsoft MSFT, +0.77% Apple Store employees are not paid on commission and they often remind shoppers of that fact, says Carmine Gallo, author of “The Apple Experience: Secrets to Building Insanely Great Customer Loyalty.” Apple’s “genius bar” is a team of sales people designed to solve problems and empower the customer rather than (just) make sales, he says. It’s been paying off: There are roughly more than 500 million visits to Apple retail stores per year, according to market researcher Asymco; that’s roughly equivalent to the population of the European Union. (Apple did not respond to requests for comment.)

7. They offer free shipping

Even retail pros fall for this: Free shipping is rarely offered without strings. Instead, stores set a threshold for each purchase, encouraging you to buy more. And they move that threshold depending on demand, says Brent Shelton, savings expert at deals website DealCrunch.com. “I catch myself looking for more items to qualify all the time,” Shelton says. “I tell myself, ‘There’s got to be something that I need.’ It’s pretty rare that my shopping will be exactly $35 or $59.” Walmart.comWMT, +0.49%  offers free shipping on orders over $35, but Target TGT, -0.16% offers free shipping on all purchases on every purchase. Amazon AMZN, +1.78%   offers free shipping on orders of $25 and over, plus free two-day shipping for all orders for Amazon Prime customers, which costs $99 per year.

8. They use cheap items as the thin end of the wedge

Beware of half-priced socks, chocolates or bags of tea lights positioned next to the entrance. They are designed to break a psychological barrier and get consumers shopping, independent retail consultant Jeff Green. In retail parlance, they’re “open-the-wallet” items and they often appear as an elaborate and random display. Displays could include everything from plastic to-go cups to tea-and-cookie gift bags. U.S. retailers have also taken the “open-the-wallet” concept to a whole new level by promoting cheap stuff in October in the hope that people will keep shopping in November and December. “Americans are cautious,” Green says, so they need a little extra push to get them in the mood to spend money.

9. They turn bargain hunting into a game

There’s a reason a minimalist design works at the Apple Store, but turns off regular shoppers in a store like J.C. Penney JCP, +0.58% Apple sells luxury gadgets and rarely discounts its prices, while J.C. Penney is a promotional store where people enjoy the voyage the bottom of the bargain basement, Shelton says. “Big box department stores make you dig around and see what’s on sale,” he says. “People feel like they’re on a treasure hunt and finding a bargain that someone else missed.” (Music is used to either keep people moving briskly through the store or to slow them down, depending on how busy they are, according to an analysis of big supermarkets by Casino.org. Plus, there’s no free shelf space at the checkout, leaving no room to dump unwanted items.)

10. They pile on the accessories

Buying toys for kids can be a gift that keeps on giving: Batteries are often not included and — as Barbie might tell you if she could — dolls are more fun with a range of accessories. The same goes for adult toys, Shelton says. Case in point: The battery life of Apple’s iPhones has long been a bugbear for Apple fans. But customers still complain about the impact of apps and downloads on the phone’s battery life. One solution: Apples sells a Mophie Juice Pack Plus charger case ($120), which doubles the time to talk, text and surf the Web. Retailers are like Lieutenant Columbo, Shelton says, “There will always be ‘Just one more thing.’”

19 store openings and closings in Michigan in time for 2017 holidays

Paula Gardner/MLive - Store closings came fast and furious in 2017.

South Mall, under new ownership, on an 'upward path'

Jon Harris/The Morning Call - It wasn’t too long ago when the South Mall in Salisbury Township hit its low point. The roof sprang leaks and shoppers had to dodge water buckets throughout the mall’s promenade during the winter four years ago. Meanwhile, the mall’s marketing budget was nonexistent, and its website wasn’t even optimized for viewing on a cellphone.

Then-owner Pennsylvania Real Estate Investment Trust, or PREIT, dubbed it a “non-core mall” in its portfolio and unloaded it for $23.6 million in June 2014 to a group of seven New York-area investors.

It may end up being the best thing that ever happened to the 406,000-square-foot shopping center, putting it under control of a hands-on ownership group at a crucial time when online sales continue to chew up a larger portion of all retail sales.

“They’re in it for the long term,” said Rachel Berosh, South Mall assistant manager. “They’re not trying to flip it. They definitely are giving it the love and care it needs.”

Fast-forward more than three years since the sale, and several improvements have been made. For one, the mall has a new roof, meaning shoppers no longer have to play hopscotch around 5-gallon buckets catching the melting snowfall. The aging mall was freshened up with a new coat of paint on its exterior and also brightened up with a full LED light conversion inside and outside.

The mall also is putting on more events, such as last Saturday’s Santa Spectacular where shoppers and their children got to meet the big guy himself and see the mall’s new Santa display, just acquired from the now-defunct Schuylkill Mall near Frackville. The 2018 event list continues to grow, all part of a plan to give shoppers an experience and get them through the doors to see what the mall has to offer.

The mall still has plenty of stores, with more than 40 retailers and less than a handful of vacancies. Its most recent closure was Freeman Jewelers earlier this year — the retailer also closed its location at the area’s premier mall, the Lehigh Valley Mall in Whitehall Township — and thus far has been able to find replacements for most stores that have closed up shop. For example, Limerick Furniture & Mattress early this year filled some of the space vacated by Black Rose Antiques — the remaining space is being built out as a 20,000-square-foot gym.

While it hasn’t been easy, and questions are swirling around the mall’s largest tenant, The Bon-Ton, Berosh actually has run out of storage space.

“I’ve seen the ups and downs, and we’re definitely, finally, on an upward path,” said Berosh, a 36-year-old who has worked at the mall in one facet or another since she was 19.

Berosh and the staff — the property is managed by Metro Commercial and leased by KW Commercial-The James Balliet Commercial Group — are doing everything they should be to survive a difficult retail climate, but it’s still going to be a tough battle moving forward, according to retail expert Jeff Green, owner of Jeff Green Partners in Phoenix.

Green grades the South Mall as a C mall with great real estate off the interstate. By comparison, he considers Lehigh Valley Mall to be a B+ or A- mall from a national perspective, though it’s the strongest mall in the area.

The issues with C malls, Green says, are they have few anchors — South Mall has two: The Bon-Ton and Stein Mart — and community events don’t necessarily translate into sales at them. That’s because C malls typically don’t have a large enough selection of stores to convince event attendees to stick around and shop for a long period of time, he said.

South Mall does have, however, some things working in its favor. Aside from its location, Green commented on what he called an “excellent strategy” of exterior entrances at the mall. It gives South Mall a similar appearance to a power center, with outside entrances to retailers such as Petco, Staples and Ross, the latter of which offers off-price apparel and is a Wall Street darling after last week reporting a 4 percent uptick in third-quarter comparable store sales.

In addition to outside entrances, the mall also has given some tenants lit signage on the building’s exterior, facing Lehigh Street, noted James Balliet, president of the group handling mall leasing. For example, Yocco’s opened at South Mall last December and has exterior signage.

“They could survive,” Green said of South Mall. “They’ve already taken certain steps to morph a little bit into a power center.”

The biggest key to survival, however, could be an ownership group focused on South Mall. The mall ownership group, called Nicholas Park Mall, LLC, is led by Richard T. Krantz, a longtime retail executive who was once vice president of merchandise for Macy’s and, in 2007, founded consulting firm Church Hill Advisors.

While Krantz did not return a call and email seeking comment this week, Berosh said Krantz comes to the mall once a month, walking around and talking to tenants and learning of their needs. Krantz was at the mall last week, she said, and spoke about ongoing negotiations with The Bon-Ton, a debt-laden retailer that is planning to close at least 40 stores over the next year and is currently working with its landlords to bring occupancy costs more in line with sales.

Krantz is there often enough that even the cleaning lady has met him.

“She knows who the owner of the mall is, and that does wonders for people’s morale, especially all we’ve been through,” Berosh said.

But even after all the changes — in long-overdue maintenance, in store lineup and in ownership — Berosh keeps having the same conversation out in the community.

People will often say, “Ah, that mall’s falling apart.”

Berosh then asks them, “Well, when’s the last time you’ve been here?”

“Three years ago,” they’ll say.

Berosh then gets to smile — thinking of how South Mall is no longer a “non-core” asset — and reply: “A lot has changed in three years.”

Retailers are ready for you to spend money during holidays

Paula Gardner/MLive - You're expected to spend quite a bit in the next few weeks.

Black Friday has officially taken over November

Anna Marum/The Oregonian - For the second year running, Black Friday started the day after Halloween.

 
Candace Corlett, president of WSL Strategic Retail in New York, said the retreat on Thanksgiving Day hours shows that retailers are weighing their decisions carefully. And in some cases, the sales aren't worth the costs to staff the stores.

"I think it's more of a cultural ambivalence," she said. "If people were rushing out at 5 p.m. to shop, believe me the retailers would be open."

And while JC Penney will open at 2 p.m. on Thanksgiving – one hour earlier than last year – it will be among the few stores open that early. Similar to last year, Macy's, Kohl's and Toys R Us will all open at 5 p.m.

 
Tim Campbell, a senior analyst with Boston-based Kantar Retail, said that shoppers have more choices in terms of how and when they shop, and that they're increasingly dictating what retailers do during the holidays.

For instance, shoppers can get many of Thanksgiving's doorbuster deals on their phone without leaving the dinner table or braving any lines. Choice is key, Campbell explained: Shoppers can get products delivered to their doors, or, if they'd rather not wait, they can pick up products in-store.

"The shopper has taken control of the season," he said, "and (retailers) are scrambling to keep up."

Consumers also are taking advantage of the early November discounts by starting their holiday shopping earlier.

According to a survey by RetailMeNot, 45 percent of respondents said they planned to start their holiday shopping before Nov. 1. And 54 percent said they hoped to start buying gifts before Black Friday.

But analysts like Corlett insist procrastinators haven't missed out on the season's best deals.

To score a great price on an item, she suggests leaving it in your online cart and waiting for the retailer to email you with a coupon code or news of a sale.

"The nature of retail now, is there's a sale 24/7," she said. "If what you want isn't on sale now, hold your breath for 10 seconds and it will be on sale."

Apparel retail is ceding its lead role at the mall

Joel Groover/Shopping Centers Today - Mall landlords are doubling down on a strategy that would once have been unthinkable: reappraising their apparel-based tenant lineups. Several have been outspoken of late about this pivot, a signal to Wall Street of their commitment to this new direction. “If there’s any criticism to be made on our industry, it’s that we’ve been way too apparel-focused,” Simon Chairman and CEO David Simon said during a conference with analysts this past September.

Both he and Sandeep L. Mathrani, chief executive of GGP, touted their portfolios’ lowered exposure to apparel chains during second-quarter earnings calls this summer. In Simon’s portfolio the percentage of apparel tenants is now down to the low 40s as an allocation of gross leasable area, according to a call transcript. The exposure to apparel for class-A assets at GGP is also in the low 40s, Mathrani told analysts. That number, which would have stood at about 70 percent at the typical mall as recently as eight years ago, is now down to about 50 percent sectorwide, according to a report by Boenning & Scattergood, a securities, asset management and investment banking firm. So far this year only 25 percent of GGP’s new leases have been with specialty apparel retailers, Mathrani said.

CBL Properties is similarly conveying a new approach to tenants. “Our properties are not just about retail or shopping — they serve as gathering places for their respective communities,” said Stephen D. Lebovitz, president and CEO of the Chattanooga, Tenn.–based mall REIT, in a press release last month. “They are evolving through the addition of more food, entertainment, service, fitness and other new uses, and we are actively exploring adding hotels, medical, office, residential and education components.”

These shifts are notable, given U.S. malls’ heavy focus on specialty apparel and accessories over the years, experts say. Back in 2010 the top tenants in the portfolios of Simon and GGP were the same: Abercrombie & Fitch, Foot Locker, Gap and Limited Brands, according to an analysis that year. By contrast, today only a few of GGP’s top 50 tenants fall into the specialty-apparel category, according to Mathrani.

The dip in enthusiasm for these stores has everything to do with trends in the category, says Jeff Green, a Phoenix-based retail consultant. “We have been seeing this since the beginning of the year because of the number of store closures in the specialty-apparel segment,” he said. “Everybody in the mall space is trying to diversify away from apparel by bringing in entertainment and restaurants, or [by] moving big-box chains into the mall so as to downsize small-shop space.”

These moves come just as retailing in general happens to be growing nicely: According to an IHL Group report titled Debunking the Retail Apocalypse, retailers and restaurants this year will have opened 4,080 more units than they have closed. The fastest-growing categories include mass merchandisers, convenience stores and grocery chains. Specialty apparel is another story: By IHL’s count, the sector is set to lose 3,137 stores. Among the apparel chains closing stores this year are Abercrombie & Fitch, American Apparel, Ascena Retail Group, BCBG, BeBe Stores, Gap, The Limited, Rue21 and Wet Seal. “Shoe stores are also having a tough go here, and part of that has to do with Payless [ShoeSource] — they’re closing 700 stores,” said Lee Holman, IHL’s vice president of research and product development, during a webinar about the report. Among department stores, JCPenney, Kmart, Macy’s and Sears are scaling back store count, with a loss of about 400 department stores in total.

The IHL report underscores the reality that store closings are normal even in times of economic growth. And any notion that all of specialty apparel is in a nosedive is a misconception as well, according to Kelly Sayre, an IHL retail analyst. “The data in our study shows that 2,783 store closings in specialty soft goods are attributable to just nine retailers,” Sayre said. “Further, there are no less than 16 specialty soft-goods retailers that are showing a net increase of 20 or more stores for 2017. Five of those are opening more than 50 stores each.”

When it comes to apparel retailers and department stores, the real issue is sluggish growth and productivity relative to other tenant types, explains Melina Cordero, head of retail research in the Americas for CBRE. “The traditional mall model that was developed nearly 70 years ago is heavily dependent on categories that are no longer fast-growing or meeting today’s consumer demands,” she wrote in a September report.

To understand why some of these tenants fall short, start with the cash-strapped consumer, says Paco Underhill, founder and president of New York City–based Envirosell, a behavioral research and consultant firm. According to the Census Bureau, it was only last year that U.S. median household income hit $59,039, surpassing what it had been in 1999. As Underhill sees it, this stagnant income growth goes a long way toward explaining why fewer shoppers are loading up on full-priced fashions at the mall: Once Americans pay for cable TV, mobile phones, Internet access, health and child care, insurance, taxes, tuition and more, he says, they have little money left over for discretionary spending. “There are only two places where you have flexibility in your wallet: one is apparel, and the other is food,” Underhill said.

The need for consumers to stretch their dollars to the max is reshaping tenant mixes across much of the retail real estate landscape, says Mark Hunter, managing director of retail asset services for CBRE. “Overall, value and off-price apparel is a growing category,” he said. “You’re seeing this not only in outlet centers but also in traditional malls and typical power-center-format locations.”

In this bifurcated U.S. economy, Cordero says, luxury and discount retailers alike are well positioned, but stores selling branded, midprice apparel and accessories often struggle. “It’s the midrange pricing that has been hit the most, and that tends to correspond with the tenants you see in the malls,” she said.

In this environment, off-price retailers such as Burlington, Ross and T.J.Maxx are among the winners. According to a September report by JPMorgan, the off-price retail sector will grow by up to $19 billion over the next five years. If current trends hold, department stores will lose about $22 billion in sales during that period. Off-price chains deserve credit for smartly capitalizing on the rise of the value imperative, Cordero says. “Off-price retailers like T.J.Maxx have really invested in their store formats and in their branding and marketing,” she said. “Going into a lot of these stores, you do not feel like you’re in a bargain basement. There has been a change in the image or the stigma around buying off-price.”

Fast-fashion chains Forever 21, H&M, Uniqlo, Zara and others, known for their discount pricing, also continue to perform well in ways that are reshaping mall tenant mixes, Green says. “They’ve taken a big chunk out of the sales of traditional U.S. apparel chains,” he said. As Holman noted during the IHL webinar, so far this year clothing and shoe sales are off by 1.1 and 0.9 percent, respectively, but fast-fashion sales are up by 6 to 7 percent. On the department-store side, IHL cites the deleterious effects of cosmetics and beauty concepts striking out on their own. “Companies like Sephora, Ulta Beauty, Lush and Body Shop are opening individual stores instead of being sections of department stores,” said Greg Buzek, IHL’s president, during the webinar. “Those are big, big changes that have affected the margins and the traffic within department stores.”

Slashing prices is one way for mall-based apparel chains to try to compete, Cordero says, but this is hardly optimal for businesses that had mostly been charging full price before the recession. “Consumers may actually be purchasing the same number of apparel items they were buying 10 years ago,” she said. “It is just that the pricing on those items has changed significantly, so the volume, in terms of sales, is actually lower than it once was.” Competing in the e-commerce realm, too, tends to become a drag on these chains, Cordero says. “The pressure apparel retailers are facing is much more on the profit-margin end of things as opposed to losing a ton of share to online players,” she said. “The problem is that the cost of operating e-commerce is much more expensive than the cost of operating a store. So even as sales may be flat or growing, [retailers’] costs are going up.”

But just because specialty apparel is down does not mean it is out, some say. One intriguing possibility is that a breakaway fashion trend could reinvigorate sales, Cordero says. It has been about 12 years since so-called skinny jeans became enormously popular, she notes. “When a fashion trend like that comes out, it then spurs all of these other purchases around that item: certain kinds of tops that go with skinny jeans, or shoes,” Cordero said. “There are some in the apparel industry who believe we are overdue for the next new thing.” Individual chains can also shine by scoring a hit with shoppers. American Eagle Outfitters, for one, surprised Wall Street by posting same-store sales growth for the second quarter ended July 29. The retailer credited the popularity of its Aerie lingerie, sales of which had jumped by 26 percent.

or well over a decade, Underhill, author of the books Why We Buy (1999) and The Call of the Mall (2004), has urged U.S. mall owners to make their malls more like those in Europe or Asia, where tenants typically include grocers and other nonapparel uses. Now Underhill lauds the accelerating efforts of U.S. landlords to take their properties in this direction. “They are recognizing that if a mall is going to succeed, it has to be more of a destination,” he said. “That means bringing in other things that drive traffic. It could be food, electronics — everything from a locksmith to an art gallery.”

GGP’s portfolio now includes 58 movie theaters, 36 entertainment concepts, 14 fitness centers and 12 grocery stores, as Mathrani noted in his earnings call. The firm has also added mixed-use elements to roughly 75 percent of its properties, he said. The latter tally includes 15 hotels, 6 million square feet of offices and 2,000 residential units. “It’s all about location, location, location,” Mathrani said. “Our centers are within an hour’s drive of 56 percent of the U.S. population.”

Already, U.S. malls have doubled the amount of space they lease to entertainment and food-and-beverage tenants, according to the Boenning & Scattergood report. The report writers caution, however, that so far the prime beneficiaries of these moves have been the owners of higher-end malls; those with lots of class-B and ‘C’ properties will have a harder time replacing department stores or wooing the best nonapparel chains.

“U.S. malls have seen declines in traditional retail categories, particularly among apparel tenants,” the analysts wrote. “However, nontraditional retail categories, including food-and-beverage, have seen a consistent increase in sales during the past five years. For the first time ever, the value of restaurant sales surpassed those of grocery stores last year. The operators within our coverage universe have continuously repositioned their store base and tenant mix to maximize tenant sales and rental income.”

Apparel trimming seems to be a good fit for many malls.

Retail Store Closings Have Workers Wondering What’s Next for the Industry

Nicole Dow & Alex Mahadevan/The Penny Hoarder - Many days, Christine Capra gets up, gets dressed and heads to her local library. She’ll stay there from about 9 a.m. to 4 p.m., just as if she’s working a shift at a job.

But for Capra, searching for work has become her full-time job.

Since being laid off from her food management position at Kmart in Crystal River, Florida, back in March, Capra spends countless hours on the public library’s computers or her smartphone, searching for work and filling out job applications.

She says she applies for about 25 jobs per week.

“I have had several interviews with a great resume and some [of the responses] I get is that I am overqualified,” she says. “What is that?”

When a Good Thing Comes to An End

Capra, 51, moved to Florida from Connecticut in late 2007 to help her mother after her father died.

She started working at Kmart in 2011 as a cashier. When the department store opened a Nathan’s restaurant inside, Capra, who has over 30 years of restaurant experience, asked to switch roles.

After a year, Capra was promoted to a management role. She worked at the Kmart for a little over five years total.

But in January, store employees were informed their location would be closing permanently. The closure is one of over 200 Kmart announced as of Oct. 2017, as plunging sales have resulted in its parent company making drastic cuts.

“I felt like someone ripped the carpet right out from under me,” Capra says.

Then, Capra’s unemployment benefits, which were less than half her former salary, ran out in mid-August.

To adjust, Capra had to make some lifestyle changes: no weekly lunches with her best friend, no trips to the movies, no cable.

She’s already tapped into savings. Her brother helps out with expenses for her two dogs.

How is Capra planning to cover expenses without unemployment benefits? “Pray.”

Disappearing Brick-and-Mortar Stores

If you’ve been following business news recently, you know that Kmart’s financial woes are not unique in the retail industry.

Sears Holding Company, which owns Kmart, also announced the closure of about 82 Sears department stores this year. J.C. Penney is shutting down up to 140 stores, and Macy’s will be closing 68 stores in 2017.

Large department stores aren’t the only ones shutting down locations: Smaller retailers like Payless ShoeSource and RadioShack announced hundreds of closures this year.

Some retailers aren’t just downsizing — they’re closing up shop altogether. This year, Wet Seal decided to close all 171 of its remaining stores. The Limited shuttered all 250 of its stores, accounting for about 4,000 workers being laid off.

As major anchor stores shut down, shopping malls across the country sit vacant, becoming sad shells where commerce and activity once thrived. While some malls have revamped themselves to keep up with changing times, others struggle to find money-making tenants.

Jobs Going, Going, Gone…

 The retail apocalypse isn’t hyperbole when you put the industry’s importance to U.S. jobs in context.

As of September 2017, 15.2 million people work in brick-and-mortar retail in the U.S. That’s nearly 10% of the American workforce.

One factor contributing to the massive loss of jobs is the glut of retail space. There’s enough retail space to fit every human in the U.S. with room to spare — 24 square feet per person.

In Canada, that number is 16, and Germany has roughly two square feet of leasable retail space for every person, according to International Council of Shopping Center data.

By 2022, 30% of the 1,000-plus malls in the U.S. will be gone, says Jeff Green, a retail analyst who is also president and CEO of Jeff Green Partners.

“It’s going to happen fast,” Green says. “It’s going to be across the board. It’s going to be department stores, big-box stores, it’ll be some of the inline mall space — it might be even the supermarket anchored stores as that industry changes.”

Not even our grocery stores are safe.

Yet another factor is the rise of online shopping.

Since 2001, e-commerce has consistently eaten up a larger share of retail sales, from 0.6% in 1999 to 8.5% in the first quarter of this year, according to data from the Federal Reserve Bank of St. Louis.

And e-commerce is becoming even easier to use. This year, for example, the $135-billion company Amazon introduced Alexa, which allows you to order a product just by saying its name out loud.

Now, people go into home goods and clothing stores to try something on, but they buy it on their phones.

“They’re not walking out of the store with it,” Green says. While it may be a sale for the company as a whole, it won’t help pay for the merchandise and massive rental fees a physical store likely pays. “It’s still not a brick-and-mortar purchase.”

The Times Are Changing

Julie Rice, of Hernando Beach, Florida, began her career in retail in 1973. She retired in October 2016, and over the course of her 43-year career, she’s seen the effect the internet has had on traditional retail.

Rice was a merchandise buyer for Dillard’s in the early 2000s when retail stores first launched websites, and then online shopping.

“That’s when things started to change,” Rice, 66, says.

Around that time, she noticed a bunch of consolidation throughout the company and a decline in the numbers of buyers employed.

In 2011, Rice started working in a management position at the Dillard’s at Gulf View Square in Port Richey, Florida. While working at that mall, she watched the J.C. Penney’s anchor close, and then Macy’s.

“There was a lot of stress in the store,” Rice says. “We had another pool of employees to pull from when the other stores closed, and that put a stress on the hourly people in our own store.”

She says she thinks the future of retail is online shopping. But, Rice says, fewer in-store shoppers means a reduced need for staff, and it also means more woes for workers.

Internet shoppers, she says, buy “six or eight of something, especially if they want to try it on. They buy it on the internet, and then they return all but the one they keep to [local stores]. It floods them with unwanted inventory. It makes it very difficult for those stores to make a profit.”

Though retired from retail, Rice still thinks it’s an enjoyable career path.

“It was exciting to me — even at the end,” she said.

Getting Back to Work — in Another Industry

Though it’s undeniable that the retail industry is undergoing some drastic changes, that doesn’t mean retail jobs are completely gone.

“There’s a pretty good number of retail jobs out there,” says Ed Peachey, CEO of CareerSource Tampa Bay.

He says at any given time, there are about 3,000 retail positions open in the Tampa Bay market.

Still, for people laid-off from a retail job (or any job), a place like CareerSource is a good resource. Peachey says they assist job seekers with their resumes, soft skills and online job searches.

Individuals can come in and meet with staff members who’ll assess their specific needs — whether that means simply finding new opportunities to apply to or receiving training or education in order to change careers.

Peachey says CareerSource Tampa Bay has partnerships with local schools and training programs for trades that don’t require degrees.

Similar career resources can be found in communities across the country. The U.S. Department of Labor’s Employment and Training Administration also provides useful information to assist those laid off from a job.

An Uncertain Future

Whether workers stick with retail or adapt to new careers, they will need to adjust to some change.

Green, the retail analyst, says you’ll see a lot of redevelopment to add bowling alleys, movie theaters and sit-down restaurants for shopping centers to weather the retail apocalypse. And the centers will need to add residential components, apartments or townhomes.

But if a struggling mall redevelops the skeleton of a former Sears or Dillard’s into apartments, what does it mean for the retail workers who once stocked shelves in the department stores?

Will the skills picked up in retail easily transfer over to that of a movie ticket-taker or waiter?

And then there’s this statistic: Since 2010, jobs in the warehousing and storage industry have grown 50%. Amazon may be disrupting the retail industry, but it is also adding jobs in other sectors thanks to its distribution centers.

You can fold a cashmere sweater, but can you drive a forklift?

“There will be a lot of people whose job isn’t terribly relevant anymore,” Green says.

The retail industry might be tumultuous for some, but for others, it’s where their future lies.

After working about 30 years in retail, Mike Bagley, of Tampa, decided to try something new.

In September, he got a job working at a local call center but didn’t find that to be the right fit.

“After a while, I just felt a bit frustrated with it all,” says Bagley, 53.

By the beginning of November, Bagley found himself heading back for the retail industry — and back to a familiar role supervising a shop at the Tampa International Airport.

He’d worked as a retail supervisor in newsstands at the airport from 2009 until he was laid off in April. Construction inside the airport had deterred shoppers from entering stores, Bagley says, and business went south.

After he left the airport but before he landed at the call center, Bagley snagged a part-time job with Target that lasted about a month. It was there he realized working for big-box retailers wasn’t exactly for him.

“All you do all day is just stock, stock, stock, stock, stock,” Bagley says. “I just got to a point where I said, ‘You know, this really isn’t that fun.’ I don’t mind working. I love working, don’t get me wrong. But you also want to have a little fun at what you’re doing.”

Bagley looks forward to the new role at the airport because he’ll be supervising a store selling sports memorabilia instead of working at one of the shops selling newspapers, magazines and refreshments. He’s a sports fan — with a passion for soccer in particular.

He says he has no reservations about going back to retail because he’s accustomed to that line of work. Plus, he says there’s a chance he could branch out to working at a retail shop at one of the local sports arenas.

“There are other opportunities than just working at the store at the airport,” Bagley says. “I’m just looking forward to it.”

What the fright? How did Halloween turn into such a huge holiday?

Justine Griffin/The Tampa Bay Times - Not that many years ago, Halloween consisted of a Peanuts special on television, a few hours of dressed-up kids stomping house to house to fill pillow cases with candy, and maybe a costume party at school or the library for older kids or adults.

And that was it.

Today, the Halloween season starts in September with pumpkin spice coffee and beer. Not long after, retail chains, pop-up stores and thrift shops devote aisles and aisles to costumes and accessories.

On television, monthlong scary movie marathons start before summer temperatures cool and you can be sure the movie theater will have at least one scary movie series sequel. Quaint costume parties have grown into throbbing block parties and VIP costume galas, while neighborhoods like St. Petersburg's Old Northeast have turned trick-or-treating into an all-night, family-friendly extravaganza.

All this hoopla has turned Halloween into a major windfall for retailers and entertainment companies.

After all, 157 million Americans are expected to celebrate the holiday this year, and they will spend $6.9 billion doing it.

So what transformed Halloween — that once tiny fall holiday before the biggies Thanksgiving and Christmas — into such a mammoth?

For one, it's the anti-Thanksgiving and anti-Christmas. It's a holiday that thrives on creativity, and isn't so cookie-cutter with matching holiday sweaters and mandatory trips to Uncle Bob's and Aunt Karen's in frozen Ohio.

"Christmas is great and it's fun to be around family, but those holidays feel so commercial now," said Allison Kay, 27, a self-proclaimed Halloween enthusiast from Pasco County who works at, of all things, a blood bank. "Halloween is the day you get to go out and be weird. There's no family obligations, no family photos to look nice for."

But retail experts say there's more to it than that. Halloween has always had a hey-look-at-me quality to it, which is exacerbated by social media today. Put together a clever outfit for you and your kid or your dog or your cat — and people spend weeks doing just that — and post a photo with the correct hashtag and you're sure to get a ton of likes and perhaps even go viral.

"Thanks to social media, families can't get dressed up without posting a photo on Facebook or Instagram. That buzz that social media generates brings friendly competition to a whole other level — from costume ideas to who has the better decorations outside the house," said Jeff Green, a retail analyst in Phoenix.

Halloween also used to be almost entirely about kids and trick-or-treating. But it is just as much an adult holiday today, which explains why humor, camp and nostalgia are all modern Halloween traits. At any party, you're likely to see costumes that are funny, culturally relevant or that spoof on the '70s, '80s or '90s.

"It's almost like Halloween has become the extension of Comic-Con," said Green, referring to an annual comics convention that draws thousands of super fans who come dressed as their favorite characters. "That's gotten so much visibility and buzz over the years, it's beginning to translate into Halloween venues, and they can charge more money because of it."

Adults-only nighttime events, which are packed with gruesome haunted houses and booze, have become an offseason moneymaker for theme parks such as Busch Gardens and Universal Studios. Haunted house attractions generated more than $300 million last year, according to the trade group Haunted Attraction Association.

This year, Tampa's main theme park attraction hired Robin Cowie, producer of The Blair Witch Project, to lead the annual fright fest Howl-O-Scream at all three Busch Gardens parks in Tampa, Williamsburg, Va., and San Antonio, Texas.

It's a business model that feeds off putting audiences in uncomfortable situations, a feeling people really seek out only around Halloween.

"People get a kick out of being scared," Cowie said. "It will be interesting to see how technology will continue to change horror and the entertainment industry. Theme parks are in an interesting position to experiment with this."

This year, Ashley Carnifax, a teacher from Melbourne, will go to Halloween Horror Nights in Orlando and attend the wedding of a friend who purposely is having it on Halloween.

"It's like the only time of year where you have an excuse to act like a kid again," she said. "If it was more than a once-a-year thing, I don't think it would have such a draw. It's a time to splurge."

Halloween spending across the country rebounded after the recession at a surprising rate. From 2009 to 2012, it nearly doubled to $8 billion. While it's tailed off in recent years, the holiday still holds its weight.

"It was a strange time when we were predicting that Halloween spending was going to be up right after the start of the recession," said National Retail Federation spokeswoman Kathy Allen. Christmas spending was way down the same year.

"The bottom line is Halloween is a nongift-giving holiday. There's no emotional connection — it's just digging into your wallet and seeing how much extra money you have to work with," she said.

The National Retail Federation, which tracks spending on major holidays, has noticed increases in spending every few years on Halloween, Allen said. She attributes most of that to replacing accessories.

"It's still a holiday that's accessible to most people. You don't have to cook for family or buy presents, and you can spend $5 on a costume," said author Lesley Bannatyne, who has written extensively about Halloween.

Whole companies have spun out of the holiday such as Spirit Halloween stores and Halloween Express, which open more than 1,000 temporary stores in empty big-box lots for a few weeks to sell costumes and accessories.

Unlike Christmas or Easter or even St. Patrick's Day, Halloween isn't restricted by religion or history or tradition. It can change over time — and it obviously has.

"That's the freedom to it," Bannatyne said. "You can make your own traditions."

As Omaha's urban boom continues, downtown area is ripe for more grocery offerings

Barbara Soderlin/Omaha World-Herald - Brian Kamp loves his new home in The Breakers in downtown Omaha, where he and his fiancé have rented an apartment since March.

The redeveloped historic building, one of many new residential projects downtown in recent years, has riverfront views and a rooftop pool, and it’s just a mile to Kamp’s workplace, National Indemnity, an insurance company on 13th and Douglas Streets.

There’s a drawback, though, Kamp says: the distance he has to go to get to a grocery store. To do his weekly shopping, he drives to Hy-Vee on Center Street, almost 5 miles away, or crosses into Iowa to shop at a closer Hy-Vee in Council Bluffs, although, he says, “I really like to keep my money on this side of the river.”

Kamp might soon have more options, with some brokers and supermarket location experts saying Omaha is ripe for more grocery development downtown.

If true, it would make Kamp’s downtown experience complete. He occasionally picks up a few items at Cubby’s, a gas station and convenience store at 13th and Jackson Streets in the Old Market that also has a produce section, meat counter and as wide a selection of dry goods as fits in the corner of its 8,700-square-foot shop. But it’s not a place to do all your grocery shopping, Kamp says, and he can’t count on it having every ingredient should he discover he’s out of something in the middle of making a meal.

Other downtown dwellers drive to the several grocery stores along Saddle Creek Road, about 4 miles from downtown, including Baker’s, Walmart and Family Fare.

But the options for brick-and-mortar grocery shopping downtown are now limited to Cubby’s since Patrick’s Market near 14th and Howard Streets closed last week after 10 years in business. Its owner blamed online grocery ordering and delivery services in part for a lack of business.

Meanwhile, plans to open a year-round public food market on 10th Street just south of downtown have fizzled, organizers told The World-Herald earlier this month.

For people who live downtown, “They’d really like to have more choices,” said apartment developer Todd Heistand, whose NuStyle Development was behind The Breakers, near Fourth and Leavenworth Streets, and many other major downtown renovation projects, such as The Wire, The Highline and the Old Market Lofts.

The residential population in the census tract that most overlaps with downtown grew by a third, to nearly 4,000, between 2000 and 2010, according to David Drozd, research coordinator at the Center for Public Affairs Research at the University of Nebraska at Omaha.

Since then hundreds more residential units have opened up.

Commercial real estate firm Colliers International estimates that the population within 1 mile of downtown grew 28 percent from 2010 to 2017, to 11,802 people, and is expected to grow an additional 4 percent by 2022.

So the lack of a sizable grocery store is not stopping people from moving downtown, Heistand said. Many of his buildings’ residents grew up in, or raised a family in, suburban Omaha, still own a car and can put up with driving for groceries.

Still, a successful grocery store would be a sign of a stable and thriving downtown, said commercial real estate broker Trenton Magid, executive vice president at NAI NP Dodge Commercial Real Estate Services.

“When we see a full-service grocery store downtown, we’ll know we’ve really hit a mark,” he said.

More cities are getting downtown grocery stores, as urban populations grow and supermarket chains experiment with new store formats. Iowa-based supermarket operator Hy-Vee in February opened a 36,000-square-foot store in downtown Des Moines, heavy on prepared and ready-to-eat foods and built in a hip design with millennials in mind. (There’s a smoothie island and a bar where you can get your beer growler filled.)

In 2016, Hy-Vee Chief Executive Randy Edeker told The World-Herald that the grocer has explored building a smaller-format store in downtown Omaha similar to its Des Moines project. At the time, he said site-selection efforts hadn’t panned out but Hy-Vee was still interested. Hy-Vee declined to comment for this story.

Broker Barry Zoob, who represents the Patrick’s location for Colliers International, where he is senior vice president, reported a “tremendous” amount of interest in recent days for the Patrick’s spot, at 1416 Howard St. Zoob envisions a store with a mix of groceries and prepared foods.

“We’re talking to grocers right now,” he said. Does that include Hy-Vee? “Let’s just say they know about it,” he said.

He added that a name new to Omaha might also be interested.

But the Patrick’s site, at just 8,700 square feet — about a tenth the size of a surburban Hy-Vee store — still isn’t as big as what some would like to see.

Meanwhile, the developers for the now-vacant former Civic Auditorium site, Tetrad Property Group, have said they envision a grocery store in that planned mixed-use development. That site is the size of four city blocks and is close to Interstate highway access.

Existing grocery operators were skeptical that a larger competitor would make it, or even that any other grocery store could be successful.

“Patrick’s went out of business because there wasn’t enough business for them,” said Mike Schwarz, owner and operator of Wohlner’s Neighborhood Grocery & Deli, which has seen its sales growing at Midtown Crossing at 33rd and Dodge Streets. “I just don’t think there’s a great enough concentration for a full-service grocery store down there, personally.”

Cubby’s President De Lone Wilson said his Old Market store is tops in the Cubby’s chain for sales not including gasoline, and sales continue to grow. He’s lowered prices, expanded the produce section and added an outdoor patio to gain more traction with downtown residents.

“There’s a lot of room for us to grow,” he said. “Now, is there room for somebody to come and put in a full-service grocery store? I don’t know.”

Some industry experts do think there’s room, or soon will be.

“I think your downtown is on the cusp of supporting a full-line grocery store,” said retail location expert Jeff Green of Phoenix-based Jeff Green Partners, which has done work in Nebraska.

Given the limited population, it would have to be smaller than a suburban store — something like the downtown Des Moines Hy-Vee, he said.

And it would have to serve not only downtown residents but also draw in the significant daytime population of downtown office and service workers.

That’s because the cost equation is different for a downtown store, said Chris Randall, retail location consultant and a partner in L.E.K. Consulting’s Boston office.

Supermarkets already run on tight profit margins, and with rent and labor costs higher in urban areas, a grocery store would have to do significantly more sales per square foot to be profitable, he said.

That’s one reason the new urban markets are designed to sell more prepared and take-out foods than a typical supermarket. These items are more profitable, and they serve a customer who’s grabbing lunch during work or picking up something to eat for dinner that same night — not doing a week’s worth of stock-up shopping.

“Most people don’t know what they’re going to have for dinner tonight,” said Santa Monica, California-based grocery consultant Phil Lempert, who has worked with Nebraska food businesses.

Lempert said a downtown store should serve customers all through the day — the before-work breakfast, the coffee break, the lunch on-the-go, the prepared dinner and late-night drinks or snacks. It can reach people through social media — say, tweeting about the daily lunch special.

And it can offer convenient services that help overcome a downtown parking crunch, like how Des Moines’ Hy-Vee has lockers where people in a hurry can pick up the grocery order they placed online.

“You’ve got to really understand your consumer base,” he said.

 

From Easton to Philly: Three vendors expanding to City of Brotherly Love

Jennifer Sheehan/The Morning Call - Maryland firm turned to the Easton Public Market when it was seeking vendors for a trendy food hall planned in historic Center City Philadelphia.

“We looked for the most passionate, enthusiastic makers of certain products,” said Mike Morris, principal of Cana Development, which is managing a $40 million redevelopment of the historic Bourse building and several nearby properties. “These are people that are hard-working and creative and have this distinct passion for their products.”

Three Easton Public Market vendors — Taza Stop, Chocodiem and Olive with a Twist — are making the leap. They decided to build on the success they’ve seen in Easton and expand to be among more than two dozen vendors coming to the Bourse Marketplace.

The ambitious food hall project will be in the Bourse, a 105-year-old Victorian building listed on the National Register of Historic Places. It’s just across Independence Mall from the Liberty Bell. 

Cana Development approached Tim and Hala Bonner of Taza Stop and J.P. Hepp, owner of Chocodiem, Morris said, because of their dedication to unique and quality food. Taza Stop offers Egyptian dishes. Chocodiem sells hand-crafted, hand-painted chocolate truffles made by Hepp, a Belgian master chocolatier.

“We saw them as passionate food-makers,” Morris said of the two vendors. “We approached them and we really like what they are doing. And what they see in the Bourse is an opportunity to take their products to a much larger audience.”

The Bonners decided to quit their Lehigh University jobs in 2014 and open the Taza Truck, which serves Egyptian fare. With its mix of halal meats (following strict Muslim rules, akin to kosher) and vegetarian options, the truck’s popularity soared. They decided to open a location in the center of Easton Public Market.

Hepp’s business originated in Clinton, N.J., and he expanded to Easton. His truffles are made with seasonal fillings and flavors, often from other vendors in the market. He moved the main operation to Easton and just recently reopened a location in Clinton.

The Bourse hopes to draw a range of visitors, including office workers, commuters and tourists visiting the Liberty Bell. Like New York City’s Chelsea Market, it will offer in a historic setting both foods to eat on site and stores selling specialty food items for home cooks.

That’s where Olive with a Twist comes in.

Founded in 2014 in Frenchtown, N.J., Olive with a Twist specializes in organic olive oil, balsamic vinegars, imported cheeses and charcuterie.

The Easton Public Market, which opened more than a year ago on Northampton Street, is an indoor food market open five days a week. It’s a smaller, hipper version of Philadelphia’s Reading Terminal, housed in a building that was once home to Rader’s Dry Goods and the H.L. Green Department Store.

The Easton market, which draws about 5,000 people weekly, was envisioned as a place where vendors would grow and then expand.

“When we selected our vendors we assumed that many would use the Easton Public Market as a launch pad for additional businesses,” said Megan McBride, Easton Market District manager. “It's a testament to their quality and professionalism that they have garnered the interest of a major food city like Philadelphia.

“Diversifying their sales outlets will build their brand and strengthen their businesses, not to mention that they can provide a voice for Easton in the Philly area,” she said.

Food halls such as Easton Public Market and Bourse Marketplace are a hot trend, said Jeff Green, a retail analyst.

“It’s basically taking the old food court idea and updating it with innovative concepts,” he said.

Food halls offer a host of interesting options and communal dining spaces.

“It becomes an immersive experience,” Green said.

Places such as the Easton Public Market find success because they are unique to an area.

“To me, I’d rather be the smaller food hall in the secondary market,” Green said.

The Bourse project will likely have to contend with competition from the popular Reading Terminal Market, a food market first opened in 1892 that is a short walk from the Bourse. What the Bourse does have is its prime location, adjacent to Philly’s major historic attractions and close to the commuter train station, Green said.

Tim Bonner of Taza said expanding to Philadelphia is the perfect next step for his business. At the Bourse, Taza will take on the new name of Ka’moon, which is Arabic for cumin, a spice that’s central to Egyptian cuisine.

“It’s right on track with where we want to be,” Bonner said.

Mall musical chairs: How PREIT landed Zara at Cherry Hill Mall

Suzette Parmley/The Philadelphia Inquirer - The powerhouse mall owner Pennsylvania Real Estate Investment Trust seemingly moved heaven and earth to make room for the wildly popular, fast-fashion retailer Zara at its top-tier Cherry Hill Mall.

Well, close.

To accommodate the retailer’s first suburban Philadelphia location (Center City has had a Zara on Walnut Street since 2004), PREIT moved five existing tenants: the apparel retailers Banana Republic and Hollister; the shoe seller Clarks; Call It Spring, which sells shoes, handbags, and accessories; and Aveda, the skin- and hair-care brand.

 In addition, the mall underwent a 5,000-square-foot expansion for the coveted brand from Spain.

Those efforts came to fruition Sept. 28, when Zara debuted a 26,000-square-foot store on the first level between Nordstrom and Macy’s. The space is evenly divided between a women’s and kids’ apparel wing and a men’s wing.

“The interesting and exciting byproduct of this was that we, in turn, got new store prototypes and designs,” said PREIT chief executive officer Joseph Coradino. “We, as landlords, often discount relocated tenants as ‘not new,’ but the customer actually sees a new store.”

Hollister’s new design, Coradino said, is sleeker and more contemporary with a more inviting entrance, featuring a large-screen TV and windows showcasing product.

Meanwhile, the new Banana Republic store has an elevated, upscale look and urban feel; Aveda has a larger store with poster-size LED ads on both sides of the entrance; and Clarks’ new location features a more modern design with greatly improved lighting to highlight its merchandise.

This version of mall musical chairs, retail experts say, is playing out nationally as malls fight to retain foot traffic.

“This is something that’s starting to happen more as mall landlords look to strategically place strong retail, restaurant, or entertainment-focused tenants in their malls,” said Garrick Brown, vice president of retail research for the Americas at Cushman & Wakefield.

Phoenix-based consultant Jeff Green, who advises national retailers, said mall developers are leaning toward adding tenants that are least affected by online shopping.

Zara, for instance, “appeals more to the millennial generation,” Green said. “It is about making sure you are offering exactly what your market consumers are looking for.”

PREIT has another tenant relocation in the works for 2018 at Cherry Hill when it adds Intimissimi, an Italian intimates store. PREIT said the move will allow it to relocate the cosmetics store Lush into a new prototype later this year.

Coradino said PREIT had been in discussions with Zara for several years about opening a store at Cherry Hill Mall. An opportunity came up in early 2016 after Uniqlo left the mall.

“After Uniqlo moved out, we had the flexibility in space to shift tenants around to accommodate this new and in-demand retailer,” he said. “The brand is very selective in their real estate … so we always believed Cherry Hill Mall was a natural fit.”

Saba Awan, 30, of Cherry Hill, a full-time homemaker and mother of two young children, was at Zara’s grand opening, pushing her 8-month-old son, Hamza, in a stroller through the kids’ section.

“It’s one of my favorite stores,” said Awan, who has gone to Zara in Baltimore, New York, and downtown Philadelphia. “There are only a select few in our area. It’s trendy and up-to-date and really reasonable in pricing, especially for kids.”

Coradino said it was important to create a unique, customer retail experience and stay relevant.

“As the mall and retail landscapes continue to evolve, we view underperforming tenants as an opportunity, and really an advantage, to amass space that we otherwise may not have been able to,” he said.

But Brown at Cushman & Wakefield said changing things up comes with risks and should be executed carefully.

“Moving your existing and often longtime tenants to accommodate new concepts can potentially backfire if done improperly,” he said. “The reality is, that if the leases of those tenants that you want to move still have years left on the term, they need to see some benefit from it.”

Brown said this can include tenant improvements financed by the landlord for a fresher store look, a bigger space at the same rent, or moving the tenant next to another retailer catering to the same demographic so each can feed off the other’s traffic.

Another consideration, he said, was that with some of the larger institutional mall landlords — such as PREIT, which owns and operates malls in nine states along the East Coast, including Plymouth Meeting, Exton Square, and the former Gallery at Market East that’s being redone into Fashion District Philadelphia — a relocated tenant in one mall may seek similar deals at other PREIT properties.

“These deals can get complicated,” Brown said.

So far, the Zara chess move has been positively received.

Last week Rick Sides, 42, a history teacher at Thomas E. Harrington Middle School in Mount Laurel, accidentally stumbled upon the just-opened Zara. He shops at the Walnut Street Zara.

As hip, techno music blared from the speakers, Sides bought a bomber jacket that retailed for $89.90 and a shirt for $49.90.

“The clothes have an urban chic to them,” said Sides, of Medford. “You have a lot of folks coming here by bus or car from Philly and Camden — two urban centers — which I think will be drawn to this type of fashion. This will bring a lot more people to this mall.”

That’s sweet music to PREIT.

Walmart ditches plans for Bethlehem supercenter

Sarah M. Wojcik/The Morning Call - Plans for the first brick-and-mortar Walmart supercenter in Bethlehem’s city limits ground to an abrupt halt Thursday when the retail giant announced it is withdrawing its proposal for the site — the second time in as many weeks the company has ditched stores slated for the Lehigh Valley.

158,000-square-foot facility pitched for Lehigh Valley Industrial Park VII, at Route 412 and Commerce Center Boulevard in south Bethlehem last year would have made it the ninth storefront in the region and the first in the Christmas City.

Phil Keene, Walmart’s director of corporate communications, said the company has been focused on finding new, innovative ways to serve customers.

“With that in mind, after rigorous review, and consideration of several business factors, we have made the difficult decision not to move forward with building a new Walmart store in Bethlehem,” he wrote in an email. “We remain very grateful for the support and professionalism of city leadership while we worked through the development process.”

Bethlehem hosts two of the company’s massive fulfillment centers to support the growing e-commerce side of the retail business, where it goes head-to-head with rival Amazon.

The Bethlehem announcement marks the second time this month that Walmart’s plans for a new Lehigh Valley storefront have crumbled. The retail company announced at a Sept. 11 Lehigh Township Planning Commission meeting that plans to build a supercenter at Route 145 and Birch Drive were being tossed.

The township board of supervisors approved the company’s withdrawal of its land development plan for the 34.5-acre site. The company had secured variance approval for the site in May 2013, but then progress stalled. The planning commission was addressing access concerns in December before the proposal again went quiet.

A Walmart store along Route 309 in Schnecksville also earned approval in 2009, but has yet to move forward.

The Bethlehem location would have been about seven miles from the next closest store on Linden Street in Bethlehem Township.

In May 2016, Bethlehem Mayor Robert Donchez said he looked forward to reviewing the plans and working with the company. Walmart’s public relations team expressed an eagerness to bring jobs and affordable shopping to the South Side. Donchez did not return a message seeking comment.

Kerry Wrobel, president of Lehigh Valley Industrial Park Inc., said the organization is disappointed by Walmart’s decision. “However, we will now market the tract to local and national retail developers,” he said.

National retail analyst Jeff Green said Walmart appears to be revaluating its plans for new brick-and-mortar stores.

“I think what they’re doing is actually slowing down the supercenter development because of what is going on with brick and mortar, and even more important, the supermarket industry,” said Green, who owns Jeff Green Partners in Phoenix.

Green said 60 percent of Walmart supercenter sales come from groceries, and recent events — such as Amazon’s $13.7 billion acquisition of Whole Foods on Aug. 28 — have forced Walmart and other competitors to rethink their building strategies.

Walmart reported $485.9 billion in total revenue for the fiscal year that ended Jan. 31, 2017, according to its corporate website. It operates 11,723 retail stores throughout the world, including 4,692 in the U.S. The company has 160 Walmart and Sam’s Club stores in the Pennsylvania.

Early last year, the company shuttered 269 stores around the country, but none in the Lehigh Valley.

When Lehigh Township learned the company pulled the plug on the supercenter there, township Supervisor Cindy Miller speculated that the retail landscape could be playing a role in the company’s change in plans, especially Amazon’s takeover of Whole Foods.

As Digital Sales Grow, Shopping Centers Face a Seismic Threat

Justine Griffin/941CEO - When Sarasota's Southgate Mall lost two of its three anchor stores—Dillard’s and Saks Fifth Avenue—it faced a familiar crossroads in today’s retail landscape: reinvent itself or perish.

Reinvention seems to be winning. Today, the center has a new name—Westfield Siesta Key—and more the feel of a community gathering place than a traditional mall. Macy’s is the lone department store remaining. But new additions, some open and others coming soon, include Lucky’s Market, LA Fitness, L’Core Spa, CineBistro and a slew of restaurants new to the area, including Metro Diner, Connors Steak & Seafood, Bravo Coastal Bar & Kitchen and Naples Flatbread and Wine Bar. Construction crews have been busy, adding 22,000 square feet of new space, the biggest expansion since the mall was enclosed in 1988.

“I know there were people who wondered whether we would be able to survive,” says Christa Kremer, Westfield’s South Florida marketing director. “But we took our time because we wanted to do it right and give the community what it wanted. Today, it’s hard not to get excited about where we’re heading.”

Kremer still refers to Westfield Siesta Key as a mall, but not in the traditional sense where customers go simply to shop. Instead, she says, patrons may come in the morning for a workout or spa treatments, grab a meal or a craft beer at Lucky’s and pick up a blouse to wear that evening at one of the boutiques. At night, customers might come for dinner and a movie, and browse shops in between. “We’re offering a lot of experiences in a great location,” Kremer says.

TooJay’s Original Gourmet Deli, which has been a fixture at the mall for nearly 20 years, has been so pleased with the changes that it extended its lease for 10 years and plans to upgrade the restaurant late this summer with a remodeling project costing “several hundred thousand dollars,” says TooJay’s CEO Chris Artinian. 

“They answered the call,” Artinian says of mall operator, Westfield. “We did have a decision to make on whether to stay. But when we saw the direction they were going, we wanted to be part of the rebirth. It’s become more of a lifestyle center and we’re really excited to be part of a vibrant restaurant scene that is coming together there.”

Yet challenges remain. While business is expanding on the mall’s periphery, Westfield Siesta Key’s map shows around a dozen empty storefronts inside the mall. The fate of the mall’s lone department store also remains tenuous: Macy’s has closed 68 stores across the nation already this year and analysts say more closings are likely.

The picture is even more clouded at two other local malls. DeSoto Square in Bradenton, which has been sold three times in the past five years, has more empty storefronts than occupied ones. Its movie theater has not reopened since closing last spring amid reports of a rat infestation.

DeSoto Square’s new owner, New York-based Meyer Lebovitz, who paid $25 million for it in February, has pledged to spend $7 million in upgrades. In Sarasota, Westfield Sarasota Square has lost two anchors, Macy’s and Sears, as well as several smaller retailers such as Men’s Wearhouse and Hobby Marketplace.

Even the $315 million jewel in the crown of local retail, the Mall at University Town Center, has lost more than 10 stores since its opening three years ago, though its anchors Dillard’s, Saks Fifth Avenue and Macy’s remain in place, along with popular smaller stores such as Apple.

Strip malls and shopping centers also have been hit hard by closings of chains such as hhgregg, Gymboree, Sports Authority, RadioShack, Kmart and Payless. Through June 23, analysts Fung Global Retail and Tech reported that 5,321 chain stores had closed nationally, a 213 percent increase over the first six months of 2016. The number was surpassed only once, in the first six months of 2008 during the start of the Great Recession. That the closings are happening today at a time of rising wages and near full employment raises questions about how quickly the pace will accelerate when the next recession hits.

From 2011 to 2016, the number of people employed in the retail industry increased by about 25 percent and wages increased by 14 percent in the Sarasota-Bradenton-North Port region, according to data collected by CareerSource Suncoast.

One area that continues to boom is the University Parkway corridor. Benderson Development has built a half dozen shopping centers along University Parkway that surround its centerpiece mall. From The Fresh Market to the Whole Foods Market under construction, the strip centers are near capacity, despite the challenging landscape for retail these days. Restaurants seem to have the greatest turnover in the corridor. But more is coming. Benderson Development has proposed office, apartments and retail development along I-75, hoping that the growing neighboring Lakewood Ranch development will continue to support this network of stores and restaurants.

“Our region’s population growth has increased the demand for retail, and you can see that just by driving down University Parkway on any given day,” says Jen Zak, a spokeswoman for CareerSource Suncoast. “New stores are constantly popping up and ‘now hiring’ signs are in most storefronts. With the saturation of retail outlets in our region, we expect the wages to increase as retail businesses try to retain their employees who have many options in the job market.”

 

The recent trend may not be predictive of what’s to come. The combination of store closings and automation is expected to eventually curtail employement. But Zak had no predictions on how jobs will be affected in the rest of the year forecast, given the recent closures in the region. Nationally, the U.S. economy has lost more than 71,000 retail jobs since the beginning of the year, according to the U.S. Bureau of Labor Statistics.

Beyond the macro-economic picture, there are many million reasons that trend is likely to intensify: 80 million, to be precise, which is the number of Americans who now subscribe to Amazon Prime, paying $99 annually to get expedited shipping, movies and other services from the online behemoth. In the past three years, the percentage of retail sales shifting online to Amazon and other digital retailers has grown from 5 percent to 14 percent. That leads one prominent retail analyst to say that even though Sarasota-Bradenton’s population is growing, housing construction is booming and tourism remains strong, the number of stores here is likely to decline in coming years.

“There’s no doubt about it, Sarasota is over-retailed now,” says Jeff Green, an analyst from Phoenix who has studied the Sarasota retail market. “It’s not unique to Sarasota. It’s part of a seismic shift that’s taking place for brick-and-mortar retailers. And even though the Sarasota-Bradenton area is experiencing significant population growth, I expect the number of stores to decline as the internet continues to grow and baby boomers age and cut back their spending.

“It’s like watching needles stab the pincushion right now,” Green adds. “It’s not a quick death, it’s more like a disease.”

The financial firm Credit Suisse reports that 20 percent to 25 percent of the nation’s 1,100 shopping malls will close within the next five years. That’s up to 275 malls. The study also predicts a sharp rise in e-commerce sales.

“Malls are still great real estate and have the potential to become something completely different,” Green says, adding that the changes at Westfield Siesta Key show the possibilities when mall owners look beyond the traditional four department store anchor formula. “The key is finding the highest and best use for these properties.”

Beyond adding restaurants, fitness centers and groceries, some mall owners have added offices and even residential units. Green says the potential to live or work in an area close to shopping, recreation, dining and entertainment is attractive for millennials in particular. DeSoto Square Mall is an example of a struggling traditional mall that could prosper by taking a new direction. Local commercial brokers say a medical center, school or even apartments could work there.

“We’ve been through this before. We’re looking at retail today and seeing a lot of vacancies, but also a lot of rehabs of existing centers and main streets. There are great, busy shopping corridors out there that we’ve never had before,” says Faith Hope Consolo, chairman of The Retail Group with Douglas Elliman Real Estate in New York City.

 

One center that seems to have hit the bull’s-eye in the new retail landscape is Pelican Plaza off U.S. 41 in south Sarasota. Last spring, while Macy’s was advertising its store closing at Westfield Sarasota Square across Tamiami Trail, the parking lot at Pelican Plaza was packed with customers at Sprouts Farmer’s Market. In 15 years, Sprouts has grown from one store in Chandler, Arizona, to more than 270 nationally. It is part of the healthy, specialty grocery niche that includes recent local additions Trader Joe’s, Earth Fare and Lucky’s and the continued growth of Detwiler’s Farm Market. Green expects the growth to continue because consumers are looking for more healthful options and are willing to shop at different stores for staples and specialty items such as organic vegetables and humanely raised meats. Amazon’s interest in Whole Foods Market, which it acquired earlier this summer, further shows the demand and interest in the health foods concept. The trend, Green says, will hurt traditional full-service groceries, like Florida’s staple, Publix.

“The 40,000-square-foot supermarket with 40,000 products on the shelves is a dinosaur. It’s going extinct. Consumers don’t want that anymore,” adds Phil Lempert, editor of SupermarketGuru.com.

Sprouts is not Benderson’s only success story at Pelican Plaza. Another thriving business is Ulta, the beauty and makeup chain with stores in malls and strip centers, that continues to post positive double-digit sales growth quarter after quarter and skyrocketing shares. Despite investing heavily in its e-commerce operations, Ulta officials say that online business is only incremental compared to its in-store business. Analysts credit Ulta’s success to its nimbleness. The brand is known to partner with major beauty labels and market to millennials. The third major store in Pelican Plaza is Total Wine and More, which has grown to 162 stores nationally since starting in Delaware in 1991. A typical store offers 8,000 different wines, 2,5oo beers and 3,000 spirits, the company says.

One thing Sprout’s, Total Wine and Ulta have in common is seeking interaction with their customers beyond selling products. At Sprouts, monthly classes include topics like baking organic cookies. Total Wine offers classes about wine from different regions and others devoted to trendy liquors such as bourbon. In addition to selling beauty products, Ulta has full-salon treatments focusing on makeup, hair and skin. “People want value and they want experiences,” Green says. “Stores that can deliver those things can be successful.”

Winners & Losers in Retail

Winners:

1. TJ Maxx—This value-oriented chain store is expanding when many other apparel stores are shrinking. The focus on brand names for value prices has pushed TJ Maxx and its similar competitors (think Marshalls) ahead of relic department store chains. TJ Maxx is nimble because it can mix up its assortment of product more easily than a department store. And the prices are low, similar to the fast fashion trend seen in malls from new players like H&M and Forever 21.

2. Ulta—Another nimble player is Ulta, which knows how to use its ecommerce business to support its in-store business. The beauty chain has seen positive double-digit sales growth quarter after quarter and skyrocketing shares. Its in-store business far outweighs its online business.

3. Walmart—The Walmart chain is investing heavily in new ways to reach customers, both online as it competes against Amazon on price and convenience, and in stores where it butts up against everyone from Publix to Target. Customers can pay by app in some stores now. The chain is expanding its grocery curbside pickup program.

Losers:

1. Sears—The longstanding department store chain has reported declining same-store sales for years. More closures come every quarter, including the recent shuttering of its store at Sarasota Square Mall. Sears sold off some of its household brands, like Craftsman Tools, in an effort to save money, but ultimately it pushed more customers away. There’s no resurrecting the flailing chain at this point.

2. Sports Authority—The chain closed all of its 450-plus stores across the U.S. after it went bankrupt and couldn’t secure a buyer earlier this year. Sports Authority failed to be innovative to reach new customers as competitors came into the market, like Dick’s Sporting Goods, and boutique specialty fitness chains, from lululemon to Athletica, emerged.

3. The Limited—Once a classic staple in any American mall, women’s fashion retailer The Limited filed for bankruptcy earlier this year and shuttered all stores. The Limited failed to reinvent to keep up with new trends from newer brands that captured the attention of women shoppers.

High and Dry: Retailers count the cost of private equity ownership

Steve McLinden/Shopping Centers Today - Retail chains under the ownership of private equity firms are declaring bankruptcy and liquidating at an alarming rate, as the practices of high-leverage borrowing and equity stripping make it harder for vulnerable retailers to turn around. “If you look at the record of private equity in the retail industry, it is appalling,” said retail analyst Howard Davidowitz, chairman of Davidowitz & Associates, a New York City–based consulting and investment banking firm. “Retailers that accept one of these deals in this environment are almost certain to go bankrupt.”

Of the 43 large retail companies owning chains of 10 or more stores and that have filed for bankruptcy since January 2015, private equity firms owned 18, according to news reports. “Most times these private equity companies still make out through giant fees and other payments they get, despite the company collapsing around them,” Davidowitz said. “They are a disaster.”   

Indeed, a Fitch Ratings study of 30 retail bankruptcies dating back a decade found that about half of them ended in liquidation, versus only 17 percent across other industries. And some observers note that factors like mounting debt maturities, supplier squeezes, operational missteps, overdue interest and lackluster online stores have already begun to push struggling retailers to the brink of bankruptcy, even apart from any involvement of private equity firms. “Any retailer that is not selling customers what they want and has an inappropriate capital structure is destined to fail,” said Brad M. Hutensky, founder and CEO of Hartford, Conn.–based Hutensky Capital Partners. “I don’t think the type of ownership alters that fact.”

Private equity companies, also known as leveraged-buyout firms or financial sponsors, generally acquire retail chains by contributing small amounts of cash toward the purchase price and borrowing the balance. They use the real estate of these target companies, which assume responsibility for repaying that debt, as collateral.

Among the retailers that have gone bankrupt under private equity ownership are Aéropostale, A&P, Bob’s Stores, Eastern Outfitters, Gymboree, Gordmans, The Limited, Pathmark, Payless ShoeSource, Rue21, Sports Authority, True Religion, Waldbaum’s and Wet Seal.

Gymboree, which is in the process of closing 450 of 1,300 stores worldwide, filed for Chapter 11 bankruptcy protection in June. The company says it continues to struggle with debt from its October 2010 buyout, when Bain Capital took the chain private for $1.8 billion, including $524 million in equity. In court filings, Gymboree outlined plans to improve its online store to compete with peers Gap and The Children’s Place. Gymboree’s unsecured creditors, for their part, have said in court filings that they are considering claims against Bain and other insiders.

Payless and its creditors have complained that the hundreds of millions of dollars in debt it assumed through the private equity ownership of Golden Gate Capital and Blum Capital led to the discount shoe chain’s financial collapse. Meanwhile, struggling luxury retailer Neiman Marcus says a sizable chunk of debt from its $6 billion leveraged buyout in 2013 by Ares Management and Canada Pension Plan Investment Board from other private equity companies is frustrating its attempts to right the ship, according to published reports. A term loan of nearly $3 billion is slated to come due in 2020. Neiman Marcus, which has struggled with problems on its e-commerce site, backed out of an IPO filed in 2015.

Another private equity company, Sycamore Partners, is acquiring Staples for about $6.9 billion, paying $10.25 a share, a 12 percent premium to its June 27 price when news of the acquisition broke. To help fund the takeover, Sycamore is dividing the office-supply chain into three separately financed units. About 60 percent of Staples’ revenue comes from online orders, according to GoodHaven Capital Management, which owns 1.2 million shares of the chain.

Davidowitz says private equity companies tend to seek out retailers they perceive as undervalued, then look to remove costs by cutting facilities and employees, but fail to devote sufficient funds to branding, digital operations and other key areas.  “They’re loading up these chains with debt and leaving them with no way to go but down,” said retail consultant Jeff Green, proprietor of an eponymous firm in Phoenix. “Private equity obviously doesn’t know how to operate a retail company.”

Muddying the situation is an accounting method that no longer requires fund investors participating in private-equity buyouts to pay for their shares when a deal is struck. The private equity firms instead tap so-called subscription credit lines to complete the buy and only later ask for investor money. This practice tends to inflate funds’ annualized results, wrote Howard Marks, co-chairman of Oaktree Capital Management, in a company newsletter. The practice can also be gamed to increase fee payments to general partners, Marks wrote.

In its Global Private Equity Report 2017, Bain & Co. says private equity firms have not had time to adjust their acquisition models because the retail industry has changed so rapidly. Often overlooked are retail price erosion, cost inflation, capital expenditures, reinvestment costs and the need to respond rapidly to changing product mixes. “Companies in fast-moving consumer goods or fashion retailing, for example, have to contend with sudden shifts in consumer taste that can reshuffle their product mix in a matter of months or weeks,” reads the report, which notes that the need to ramp up marketing programs to increase revenue is overlooked too. Though private equity managers are unable to predict every industry shift, “they can anticipate the risk through a version of scenario planning that lays out a best and worst case for each product line,” the report says.

Defenders of private equity acquisitions say these investors have a history of providing long-term capital to transform acquired companies into healthier businesses. Many large institutional investors, including CalPERs and TIAA (formerly TIAA-CREF), actively invest in private equity funds. TIAA, in fact, has done so for two decades, a strategy that “provides access to illiquid investments that historically have generated attractive risk-adjusted returns,” according to its website. Such co-investments offer “unique investment opportunities alongside experienced private equity fund managers,” the organization said.   

For a long time, retail executives deliberated the complexities of operating as a public company, Green says. “Now they talk about the challenge of being a private company.” To be competitive “you’ve got to have adequate dollars available to pay people to keep you up and running,” he said, “and these companies aren’t getting that under private equity ownership.”

So why do the CEOs, shareholders and other company officials of struggling companies consent to private equity takeover? Many times the top executive is offered a bonus, and shareholders are offered a substantial stock premium and unusually generous dividends, notes Davidowitz. “The CEO says to himself: ‘How can I turn this down? I am supposed to be working for the shareholder.’ And it’s all done with borrowed money, of course,” said Davidowitz. The net result is often liquidation, he says.

Deal scenarios change when a family owns a retail company, as is the case with Nordstrom, says Davidowitz. At press time Nordstrom family members were in talks with potential private equity partners that include Apollo Global Management, KKR & Co. and Leonard Green & Partners to take the luxury chain of 354 stores private. Family-held retailers are less likely to accept risky deal structures, because the decisions are shared among the family members, who usually want to ensure the company’s survival as a legacy, says Davidowitz.

Too many struggling and bankrupt retailers simply failed to adjust their business models fast enough to accommodate meaningful e-commerce trade, Hutensky says. “As the announced purchase of Whole Foods by Amazon demonstrates, online-only retailers have embraced the necessity of the brick-and-mortar stores as a part of any retail strategy,” Hutensky said. “Successful retailers are providing their customers with a great experience both online and in the store.”

More bankruptcies are coming, many say, particularly if the retailers turn to private equity. “In the past seven years or so,” said Green, “private equity has gone from turning retailers around by cutting expenses to using creative debt financing when they saw a lot of these retailers weren’t going to make it.” 

Walmart expands grocery delivery service in Florida markets

Malena Carollo/The Tampa Bay Times - Walmart is formally launching its grocery delivery service in Tampa, the company announced Monday, as it expands its delivery test into Orlando and Dallas. Five locations around Tampa are offering delivery for online grocery orders.

 

"Last year, we began testing grocery delivery through crowd-sourced services like Uber," the company said in a release. "Here's what we've learned: customers like you love the convenience of a delivery option."

Walmart employees called "personal shoppers" gather customers' requested items and hand them off to be delivered via Uber, which is partnering with Walmart.

The retailer said it has successfully completed an unannounced soft launch in March at the five Tampa locations.

This program is similar to Walmart's in-store grocery pickup, where customers collect their fulfilled online orders at the store. With the delivery option, the only added step is Uber takes the groceries to customers' homes.

Walmart is a relative latecomer to the local grocery delivering sphere. Shipt started delivering groceries from Publix Super Markets in 2015. In June, Publix announced it would offer same-day grocery delivery from all of its locations by 2020, many of which are already operating in Tampa Bay.

Safeway, Amazon Prime Now, Google Express and WeDeliverGroceries.com also deliver groceries.

But Jeff Green, a Phoenix-based retail analyst, said that while Walmart might be late, at least it showed up. "It's almost a requirement right now that every grocery retailer deliver," Green said.

The challenge, he said, will be the economics.

"Their customer base is going to be the hardest nut to crack of any supermarket customer because they're more price sensitive," he said.

For Walmart deliveries, there is a $30 minimum customers must meet before they can check out. Then, there's a $9.95 delivery fee.

Notably absent from the accepted forms of payment listed during its checkout process is food stamps. The retail giant told The Wall Street Journal in 2012 that it received 18 percent of all food stamps spent nationwide that year.

Walmart currently has 22 stores that offer delivery across Tampa, Orlando, Dallas and Phoenix.