Tim Hortons goes to college: Chain opens first U. S. campus store at UB

Jul. 31--With coffee cups in hand, University at Buffalo dining staff and Tim Hortons executives cut the navy blue ribbon in front of the company's first U. S. college campus location.

A line of anxious and hungry customers waited for pink frosted, sprinkle-topped donuts, a quick sandwich or a mid-day cup of caffeine at the noon ceremony on Wednesday. For Tim Hortons, though, the opening symbolized the beginning of a new chapter in the story of the Ontario-based company.

"We look to UB as the flagship location for us in the United States," said David Clanachan, Tim Hortons chief operations officer, United States and international. "If we can continue to push and penetrate the way we have in other markets, we think there is a tremendous amount of opportunity."

Two Tim Hortons are open at UB's North campus, one in the Jacobs Management Center and another in the Student Union. They both serve a full menu. The Jacobs Management Center store opened two weeks ago, but the official ceremony was held at the Student Union, where the bakery items are made.

For Chelsea Lopez, a junior at Hutch Tech High School and the first customer in line, the opening was timely for her lunch break. She is a participant of the Upward Bound summer program on campus and grabbed a toasted plain bagel with cream cheese, to go.

"Tim Hortons is very popular," she said. "Sometimes it gets old going to Starbucks every day."

UB approached Tim Hortons about a campus location after it conducted a survey and focus groups, asking students and faculty what stores and businesses they would like on campus. Tim Hortons was the overwhelming answer, said Dennis Black, vice president for student affairs.

It took 90 days from the first serious discussions to the end of construction, Clanachan said. The construction had to be completed by July 9, when student orientation began.

Jeff Brady, executive director of food service, said that a portion of the profits will go back to UB. Both UB and Tim Hortons declined to give specific figures.

There are currently 123 Tim Hortons on college campuses in Canada. Soon, more will join UB in the United States. Plattsburgh State College is expected to open a Tim Hortons in mid- September, and one is due at Canisius College in October, said Dale Kezer, director of new business development.

Clanachan said that by the year's end, the current 410 Tim Hortons -- concentrated mostly in Michigan, Ohio and Northeast markets -- will be up to 500 stores.

Among college students, the popular orders are iced cappuccinos and bagels, said Jon Maurer, Tim Hortons regional manager for Buffalo.

Maurer said of overall sales, 50 percent are beverages, 25 percent are baked goods, and the rest are various items, including soups and sandwiches.

Even though Starbucks is directly across the street from the Student Union, Clanachan brushed off the threat of its coffee competitor. He said Tim Hortons is a comfortable and affordable location for a wider audience.

"With $4 a gallon gasoline, no one wants to pay $5 for coffee," he said.

Source: Plain Vanilla Shell

Costco Proposed For Upper West Side

New Yorkers Seem To Like Idea, Which Is In Early StagesNEW YORK (CBS) ― Is Costco about to go cosmo?

One of the biggest of the big box stores may be coming to Manhattan. There's talk of putting a new Costco store on the Upper West Side.

CBS 2 HD spoke to New Yorkers on Tuesday to find out what they thought of the idea.

"Well that's great," one person said. "Sounds good."

It's the gigantic store featuring endless inventory and discount deals. Now, it's potentially coming to Gotham.

"I think, potentially, it could be good," one woman said. "Could drive a lot of business to this neighborhood."

A developer is reportedly in talks with Costco to bring a supersize store to the Riverside South area by the West Side Highway, between 59th and 61st streets.

But not everyone's thrilled.

"This is not a good location for Costco," said NYC Councilwoman Gale Brewer, D-Manhattan.

Brewer is worried about the noise and traffic the store would bring.

"The traffic is always so intensive and this would exasperate the traffic situation ... because you need a car to take home all that toilet paper," Brewer said.

In Long Island City, where Costco has a huge store, residents say its impact has been mostly positive.

"It's good to have it here," one resident said. "It helps out a lot of people here."

But the proposed project is still being called a work in progress, with public hearings in the community to be scheduled if and when the plan goes forward.

Source: WCBSTV.com

Study finds Americans reduce credit card spending

NEW YORK — Americans in all age and income groups have reduced credit card use and cut spending on non-essential items as oil and food prices soar, home prices sink and lenders tighten credit, a new study shows.

Thirty-seven percent of consumers said they have reduced spending on credit cards, while just 10% said they are spending more, according to the study released Wednesday by Javelin Strategy & Research of Pleasanton, Calif.

Meanwhile, 54% of consumers said they plan to spend less on "discretionary" or luxury items, while a mere 5% plan to spend more. The percentages of consumers spending less were even higher among consumers aged 35 to 64.

And 57% said they are "more careful" about eating at restaurants, where bills are often paid with plastic.

COMPARING CARDS: Find the credit card that suits you best

On Tuesday, the company behind Bennigan's and Steak & Ale filed for Chapter 7 bankruptcy, joining a few other operators of casual dining chains that succumbed this year as more people chose to dine at home.

"Consumers are getting more cautious and the credit crunch is far from over," said Curtis Arnold, a consumer advocate and founder of CardRatings.com.

Americans in May had $961.8 billion of revolving debt, U.S. Federal Reserve data show, equal to roughly $3,150 per person. The total amount is up about 58% this decade.

Card issuers face pressure as credit problems brought about by the housing slump extend into other forms of debt, causing higher delinquencies and forcing even the wealthy to cut back.

Among 13 issuers polled by Javelin, nine said they have pared efforts to solicit new customers, while eight have reduced customer credit lines.

Several issuers reported lower second-quarter results from cards, including Bank of America, Citigroup, JPMorgan Chase, Washington Mutual and American Express.

On July 21, Amex Chief Executive Kenneth Chenault called the U.S. credit situation "disappointing."

Regulators are keeping watch. The Fed said it received more than 41,000 public comments on proposed rules to thwart "unfair or deceptive" card practices, such as excessive rates and fees. (Two-thirds of the comments came on form letters.)

Fed Chairman Ben Bernanke, in announcing the proposed rules in May, said cardholders "should be better able to predict how their decisions and actions will affect their costs."

Arnold said many consumers are charging more day-to-day expenses, as issuers offer rebates to encourage such card use.

But he added that some issuers, including Wells Fargo & Co, have also begun reaching out, even to customers who pay bills on time, to prepare them in case times get tough.

"Yes, the card issuers want to collect finance charges, but they don't want their customers to be delinquent," Arnold said. "We've never before seen the industry start to reach out to their customers, saying, 'we know you're hurting."'

Wells Fargo spokeswoman Lisa Westermann said that bank recently promoted counseling and automatic payment services to "select" customers, whose responses were "mostly positive."

Javelin's survey covered 1,500 consumers who answered questions online in April.

Source: USA Today

Shoppers to face higher prices for holiday shopping this year

NEW YORK (AP) - Christmas in July? Maybe not a bad idea this year.

Retailers are already talking about price increases of up to 15 percent this year on holiday goods, from staples like tree ornaments and toys to luxury gifts like European handbags and clothing. The main cause? It’s the same old chestnut, soaring energy prices.

While most consumers are just starting to think about back-to-school shopping, retailers are already preparing for the critical holiday season. Consumers have been seeing prices creep up for many products, but now escalating cost pressures - which are also being fueled by the weaker dollar and higher labor costs in China - are forcing merchants from low-price warehouse clubs to upscale clothiers to pass on more of the burden in the months ahead.

Many stores are still deciding on their holiday prices, and receding oil prices in recent weeks could provide a bit of relief. Still, buying that status handbag now might help shoppers save a little - but for some items, it’s already too late.

And any big surge in demand could lead to more bad news on the inflation front, serving as a catalyst for prices to spiral.

With bigger price increases, the nation’s merchants risk turning off shoppers who may end up buying fewer holiday gifts to keep to their budgets. That could mean a serious hit for the economy, since consumer spending accounts for two-thirds of all economic activity and the holiday period accounts for a huge chunk of merchants’ sales and profits.

“Truthfully, I probably won’t purchase items that go up that much - especially something like Christmas decorations,” said Marilyn Reese of Cincinnati, who works at an insurance company. “I will just go with what I have.”

Carl Steidtmann, chief economist at Deloitte Research, says that price inflation will be yet “another factor that undermines consumer purchasing power and will hurt spending even more.”

“This will be a very difficult holiday season,” he said.

The price increases come as stores also have to be pushing even deeper discounts this holiday season to attract customers. But that 50 percent off may not be as good a deal as last year since the original price could be higher.

Even Costco Wholesale Corp., which had been one of the bright spots in retailing, warned last week that its profit was getting squeezed by rising energy costs and it would have to raise prices more. Richard Galanti, Costco’s chief financial officer, specifically cited holiday decor and rotisserie chickens, which are popular for holiday meals.

Holiday decor will be as much as 12 percent pricier this holiday season than a year ago, and the price of rotisserie chicken, which had been $4.99 for years, was raised to $5.49 about three months ago and just went up to $5.99 last week.

Toy prices are likely to be about 10 percent higher for the holidays than a year ago, said Sean McGowan, an analyst at Needham and Co.

K-B Toys Inc., which focuses on selling past toy hits at discounted prices, says it isn’t increasing prices for now. The chain even unveiled a program Monday that offers temporary price cuts on some already reduced toys. But the discounts are a result of logistical maneuvering. Advertising director Geoffrey Webb said the chain has started consolidating trips from the distribution centers to stores to save fuel costs.

Kathleen Waugh, a spokeswoman for Toys “R” Us, Inc., said that prices for some products will stay steady, while others will have “gradual” increases beginning in early fall. Waugh declined to comment further because pricing is still being worked out. But at Kidstop Toys and Books in Scottsdale, Ariz., which offers mostly European brands as Haba and Corolle, 10 percent price hikes have already begun, according to owner Kate Tanner.

European luxury goods are also getting even pricier as the dollar erodes against the euro. New York-based luxury consultant Robert Burke estimates that the price tag on European status handbags, shoes and clothing, whose prices have been creeping up in recent years, will rise as much as 15 percent starting this fall.

“No one expected the weak dollar to last this long or get weaker,” said Burke.

Sandy Neiman, director of marketing for clothier Paul Stuart Inc., whose tailored men’s suits are priced from $1,700 to $5,000, expects up to a 10 percent increase on European clothing starting in September. While he believes that his wealthiest clientele won’t “blink an eye,” others may switch to less expensive labels or shift their purchases away from items like knit shirts and more toward suits, which can be worn for several seasons.

Prices for mass-market apparel, which have fallen for decades because of oversupply and cheap labor from China, are also seeing prices rise a bit because of higher wages from that country and that’s forcing stores to shift production to other low-cost countries like Vietnam. Quentin Crenshaw, a spokesman at J.C. Penney, which sources in 17 different countries, said that the department store chain doesn’t expect to increase overall prices for the holidays - even for goods that are sourced primarily in China like footwear and porcelain, which are expected to see an increase in costs.

Officials at Wal-Mart Stores Inc., Sears Holding Corp., and Target Corp. declined to comment, but a clearer picture on inflation is expected after they report their second-quarter results in August.

The profit outlook isn’t pretty. Retailers have been forced to absorb costs at the expense of profits but can’t do it any longer, since the holiday period accounts for about 40 percent of merchants’ profits and 50 percent of sales, says Ken Perkins, president of research company RetailMetrics LLC. The retail industry is set to report an overall profit drop of 5.2 percent for the current quarter compared to a year earlier, what will be the fifth consecutive quarterly declines. Excluding Wal-Mart’s figures, Perkins estimates a 13 percent drop.

Customers shouldn’t expect to see relief after the holiday season, either. Galanti, of Costco, said prices for patio furniture for next spring will rise as much as 15 percent.

Source: WSLS.com

MA schedules sales tax holiday

For the fifth year in a row, Massachusetts shoppers will have a brief reprieve from state sales taxes this summer.

Gov. Deval Patrick signed legislation Wednesday that established a tax-free weekend, which will take place August 16-17. Purchases of items $2,500 or less will be exempt from the 5 percent tax.

“I am glad we can provide people with this small break in time for back-to-school purchases,” Patrick said in a statement. “We hope it stimulates all sorts of sales activity during what is otherwise a slow time of year.”

This year the proposal was under fire from fiscal watchdog groups as the state grapples with potentially a $1 billion budget shortfall. Regular sales tax receipts, which exclude food and motor vehicles, are up a paltry 0.8 percent over last year, but $48 million below state Department of Revenue benchmarks used in budget calculations.

Retail groups say the holiday will provide a needed boost to the economy.

“The sales tax holiday weekend is a highly effective way to stimulate economic activity and couldn’t come at a better time for the retailing community,” said Jon Hurst, president of the Retailers Association of Massachusetts in a statement.

More than dozen other states have established sales tax holiday this year, according to the Federation of Tax Administrators.

Source: Boston Business Journal

Retail Construction Hits a Red Light

Consumers are checking discretionary spending and, seemingly everyday, new retailers come out with announcements that they are filing for bankruptcy, shuttering stores and constraining expansion plans. As a result, construction is coming to a screeching halt at projects across the country as developers reevaluate proposed centers' economic viability.

Most recently, site work of the planned 215-acre open-air center, Bridges at Mint Hill in Charlotte, N.C., came to a halt. Chicago-based General Growth Properties and local partner Childress Klein Properties originally announced plans for the center in June 2005. It was slated to open in 2007. A series of delays pushed projected completion back to 2009. As for now, no new timeline has been announced.

Elsewhere, Memphis, Tenn.-based Poag & McEwen Lifestyle Centers scrapped plans to build Boise, Idaho's first lifestyle center, a 200,000-square-foot, $50 million project. The developer initially had planned to open the center in 2009. Now the project no longer appears on the company's list of new developments on its Web site. Poag & McEwen did not return calls seeking comment.

CBRE/Torto Wheaton Research, a Boston-based research firm that tracks completions of neighborhood and community shopping centers, estimates that developers delivered 6.3 million square feet of space in those sectors during the second quarter--two-thirds of the planned 9.7 million square feet of space that was supposed to come online. “That, to me, signals that some of the projects are being either taken away or delayed,” says Abigail Marks, economist at CBRE/Torto Wheaton.

However, Marks forecasts the full impact of the current downturn won’t be realized until next year, when only 14.7 million square feet of new neighborhood and community center space is projected to come on-line. In the first half of this year, developers in the U.S. began construction on 71 million square feet of retail space, according to CoStar Group, Inc., a Bethesda, Md.-based commercial real estate information provider. That figure represents a 24.5 percent decrease compared to the first half of 2007, when construction was started on 94 million square feet of new projects.

With the conditions in the retail sector deteriorating precipitously, real estate developers are abandoning projects that appeared to be sure bets a year or two ago. As retailers pull back, many developers have opted to forgo construction of centers that have gone so far as breaking ground. That trend is expected to escalate as the retail market continues to deteriorate, says Gary E. Mozer, managing director/principal with George Smith Partners, a Los Angeles-based real estate investment banking firm. Speculative projects in secondary and tertiary markets especially face a risk of being delayed or scrapped, Mozer says.

The credit crunch is in part responsible for the increase in construction halts and delays. The market's capacity to finance new projects has diminished with CMBS issuance year-to-date down to $12.1 billion from $158.9 billion during the same period in 2007, according to Commercial Mortgage Alert.

To help address the void, Continental Retail Development, in Columbus, Ohio, has formed the Continental Opportunity Fund, a $200 million fund, to provide equity and mezzanine financing for retail developments that have a first mortgage, but require additional funds to begin construction. It will contribute as much as $40 million towards a project.

One reason there hasn't been an even steeper decline in completions this year, says Continental's CEO David Kass, is that most of the financing for retail projects scheduled for delivery this year was completed years ago. Retail centers scheduled to come online after 2008 will be hit harder, he says. Completions in 2009 could be off by as much as 70 percent, Kass estimates.

For example, unable to shore up financing for its $3 billion project, the Grand, in downtown Los Angeles, Related Co. sought and received approval by city officials to delay the groundbreaking of its 3.6 million square foot mixed-use center by eight months, until Feb. 15, 2009. If Related does not begin construction by that date, the city of Los Angeles has the option to impose a $250,000-a-month penalty for up to 24 months. The Grand's groundbreaking has already been delayed three times. Related says it was due to design considerations and not because of financing. Read more here.

A spokesperson for Related says the firm is in the process of putting together the necessary construction documents, which is why it still hasn’t secured a construction loan. As the debt markets have tightened over the past year, lenders won’t negotiate with a developer until all the paperwork is complete, she added.

Mozer says banks would rather lend on a cash-flowing asset than a construction project because you don’t have as much lease-up risk. For Continental to provide financing, a project must have committed anchors and at lease 50 percent of its leases signed.

The ebb in retailers’ expansion is a big issue, according to Bernie Haddigan, national director of the retail group with Encino, Calif.-based Marcus & Millichap Real Estate Investment Services. “I don’t see retailers getting more aggressive at this point,” he says. “I see them getting more cautious.”

Source: Retail Traffic

Retail Detail. The Top Ten List of The World's Most Expensive Retail Addresses

Fifth Avenue - NYC

Location, location, location! Sometimes a location is more than a location, it's a brand.

The CEOs of Tiffany & Co., Bergdorf Goodman and Harry Winston already know this real estate tidbit as their flagships are located on Fifth Avenue between 56th and 58th streets in Manhattan...some the most coveted and expensive retail stretch in the world.

Retailers looking to set up shop on Fifth Avenue - between 59th and 42nd streets - can expect to spend $1,500 a square foot. To put that into context, many shops on that stretch are around 20,000 square feet, making annual payments about $30 million a year.

Even as stock prices and consumer confidence slide, the world's elite addresses, like New Bond Street in London, Ginza in Tokyo, Bahnhofstrasse in Zürich, Switzerland, or Avenue des Champs-Elysees in Paris are not showing signs of stress.

Gangnam Station - Seoul, South Korea This month, Abercrombie & Fitch signed a lease for 90,000 square feet at 666 Fifth Avenue (at 53rd Street) and agreed to pay over $2,000 a square foot. British retailers Topshop and Reiss are in the midst of an international expansion, especially in the U.S, and Apple opened its first flagship store in London.

Still, that doesn't mean retailers aren't aware of the slowdown. "People are using a slowdown as a negotiating tool," says Jeffrey D. Roseman, executive vice president of Newmark Knight Frank Retail, the New York arm of the London-based firm. "But once it's all said and done, retailers are not necessarily losing business from it. The folks buying the $5,000 or $10,000 suits, or $1,000 shoes aren't as affected by what's going on in the world."

In Asia, Hong Kong is home to luxury shoppers. Foreigners can visit on a passport, and Chinese can travel freely to the city because of its status as a special administrative region. Guess where the huge shopping districts for Chinese and international wealth form as a result? In Hong Kong's Causeway Bay, a district built on fill, retail goes for $1,213 per-square-foot per year.

Pitt Street Mall - Sydney, Australia While the highest-end properties continue to hold out, the big questions for the remainder of 2008 and into 2009 are how long properties, retail and office can hold up in the face of a global economic slowdown as investors and businesses alike start to feel the pinch.

But no matter how much you worry about real estate, it's safe to think that the draw and status of places like Ermou Street in Athens, Greece, or Grafton Street in Dublin, Ireland, along with Fifth Avenue in New York, will hold their value longer than other neighborhoods.

Here is the top ten list of the world's most expensive retail real estate:

10. Gangnam Station
Seoul, South Korea
Price-per-square foot, per year: $431

9. Ermou Street
Athens, Greece
Price-per-square foot, per year: $451

8. Pitt Street Mall
Sydney, Australia
Price-per-square foot, per year: $489

7. Bahnhofstrasse
Zürich, Switzerland
Price-per-square foot, per year: $492

6. Grafton Street
Dublin, Ireland
Price-per-square foot, per year: $669

5. Ginza
Tokyo, Japan
Price-per-square foot, per year: $683

4. New Bond Street
London, U.K.
Price-per-square foot, per year: $814

3. Avenue des Champs-Elysees
Paris, France
Price-per-square foot, per year: $922

2. Causeway Bay
Hong Kong, China
Price-per-square foot, per year: $1,213

1. Fifth Avenue
New York City, N.Y.
Price-per-square foot, per year: $1,500

Source: SecondCityStyle.com

How long can Americans stick to newfound frugality?

NEW YORK - Adrienne Radtke plans to keep riding her bike to work even if gas prices drop. Steve Pizzini got rid of his Cadillac Escalade in favor of a 16-year-old Acura and doesn't expect to have another gas-guzzler.

"I had a paradigm shift," said Pizzini, a financial analyst. "I spent the money on a nice car. But to me, it's not worth it. I don't think I will go that route again.

"Every economic downturn changes shoppers in some way. But this time, experts say the new behavior -- fueled by higher gas and food prices, tightening credit and a slumping housing market -- are the most dramatic and widespread that they have seen since the mid-1970s.

So retailers, marketers and investors are all trying to figure out which habits shoppers will keep and which will they drop when the economy recovers. Will the people who switched to store-brand ice cream go back to Breyers or Edy's? Will shoppers return to department stores or keep looking for labels at T.J. Maxx?

"We are looking at stuff that reminds me of the 1970s," said Patricia Edwards of investment manager Wentworth Hauser and Violich. "Americans have seen a huge amount of their balance sheet evaporate. The effects will be more lingering.

"Wendy Liebmann, president of WSL Strategic Retail, says people's new spending patterns are forcing companies to change the kinds of products they sell and tweak their marketing to appeal to cost-conscious shoppers. She points to the last big recession of the early 1990s that helped trigger a fundamental shift in retailing as affluent shoppers started buying at discounters as well as upscale stores.

Radtke, 31, who holds down two jobs -- at a veterinarian's office and at a flower shop -- recently picked up shoe glue to fix the soles of her worn sneakers. She's buying store-label soups and crackers and bought a bike for her commute after not having ridden one for five years.

"We weren't big spenders, but now we are watching our money more," said Radtke, of Manitowoc, Wis., whose husband works in construction. "Even if I fell into a pile of money, I still wouldn't be spending a lot.

"According to a survey released recently by market research company Nielsen Co., which tracks consumer habits, about two-thirds, or 63 percent, of consumers are cutting spending due to rising gas prices, up 18 percentage points from a year ago.

According to the study, which queried nearly 50,000 consumers by e-mail during the first week of June, 78 percent of them are combining shopping trips and 52 percent are eating out less often. Consumers are also cutting more coupons, doing more of their shopping at supercenters and buying less expensive brands, the survey found.

A rebounding economy may let some consumers revert to their old ways -- like people who switched to smaller cars when times were hard in the 1970s but flocked to sport utility vehicles when gas got cheap again. But with more economists believing that the current woes will last well into next year, many think the underlying frugality will linger. Some Americans say their parents or grandparents affected by the Great Depression are still hoarding buttons and squeezing out several soup meals from ham bones.

"I shop cautiously," said Edna Sott, an 88-year-old resident from Berkeley Heights, N.J. "I would say that is a hangover" from the Depression.

Marian Salzman, chief marketing officer for public relations agency Porter Novelli, cites a "Depression mentality" that's making people "rethink their optimism in the economy.

"The widening gap between discounters and mall-based apparel sellers was evident in monthly retail sales figures released last week. The International Council of Shopping Centers-UBS tally of 38 stores found that same-store sales at discounters rose 5.1 percent in June and 9 percent at wholesale clubs. Discount giant Wal-Mart Stores Inc. posted a robust 5.8 percent, its best June performance since 2002.

At department stores, though, same-store sales -- or those at stores opened at least a year -- dropped 4.1 percent.

"People are spending money on food and the products they need to sustain life," said Todd Hale, senior vice president at Nielsen.

He noted sharp declines in visits to clothing, office supply and hardware stores. He also pointed out that sales of store-brand products in grocery items are up 9.1 percent for the year ended April 19, while sales of branded products rose a more modest 3.9 percent. More than half the sales growth from store label grocery items is now from dairy like milk and cheese, an area that has seen soaring inflation.

Liebmann says Americans are trying to take "control of the little things" like mending socks or buying more store-brand food because they can't control the big things like gas and food prices.

Their little changes, though, are forcing some companies to respond in big ways.Auto executives predict that consumers' newfound appreciation for smaller cars will be permanent, causing major pain at auto plants. Toyota Motor Corp. was among the latest to announce a product overhaul, saying it will shut down truck and SUV production to meet the changing consumer needs.

Pizzini, 29, of Eagleville, Pa., says his elderly Acura gets almost three times as many miles per gallon as the Escalade, whose lease he got out of through a company called LeaseTrader.com. Since last October, LeaseTrader.com has seen a 24 percent increase in the number of people who want to downsize to a smaller car, spokesman John Sternal said.

Fred Clements, executive director of the National Bicycle Dealers' Association, said consumers stung by $4-per-gallon gas are shifting toward utility bikes and away from recreational versions. That's forcing bike shops to change their inventories and offer more training for consumers who may not have ridden a bike in years, he said.

Plenty of stores that have benefited from shoppers' woes are hoping to retain them when the economy rebounds.

Andrea Thomas, executive vice president of private brands at Wal-Mart, thinks that many shoppers will stick with store labels since the quality has improved so much. Overall, Wal-Mart expects to retain the affluent customers when the economy recovers because it has made improvements in its stores and customer service.

Edwards, of Wentworth Hauser and Violich, agrees that new fans of discounters will keep buying at discounters as long the products measure up. And she sees lower-income shoppers switching back to meat from beans and rice before going back to name-brand food.

At the Alexandria Shoe Repair and Leather Service in Virginia, sales have increased 18 percent since February.

"I am seeing a younger crowd who lives in the disposable world," said owner Barbara Steube. "They are learning an economics lesson. They will see the benefit of the savings and how much money they walk away with when they fix their shoes."

Source: Baltimore Sun

Circuit City store still in works, despite retailer's challenges

Hyannis, MA-Construction crews are building a Circuit City store on Route 132, but the company's fortunes are hardly written in stone.

The new store, slated to open in September or October, comes at a time when Circuit City is trying to counter its well-documented financial trouble. Sales fell more than 11 percent in the first quarter of this year, resulting in a net loss of $164.8 million. A takeover proposal from Blockbuster stalled and now appears unlikely to occur.

But in the midst of financial uncertainty, Circuit City is expanding.
The Hyannis location will be one of 45 to 55 new stores opening across the country over the next year, Circuit City Stores, Inc. said. The move is raising eyebrows among industry analysts, who caution that expansion might not cut losses.

"Circuit City is pinning its future on turning around its retail options," said Alexandra Biesada, a retail expert at Hoover's, a corporate analysis company.

Biesada said it is becoming more difficult for companies to secure the capital to expand.

"Circuit City, to continue to grow, will need credit," Biesada said.

"But retail is getting hit in the credit crunch."

Circuit City is reinventing itself aggressively, overhauling the layout and sales strategies of its stores. Public relations representative Jennifer Stills said the company is confident the new-model stores will have a positive impact on business.

The new design, called "The City," uses a smaller layout and sales representatives who are trained to be more technology-savvy. The Hyannis location will be built on the new model.
"All of the models have had more success (than traditional layouts)," Sills said.

Sills said she could not comment on whether the strategy was designed to counter the company's recent losses. But retail analyst Donna Flagg, of The Krysalis Group corporate consultancy firm, said other companies have tried the strategy before. The results have been mixed.

"Starbucks kept expanding and expanding and now it has to pull back," Flagg said.

However, she added that expansion strategies can work if they are carefully managed. She cited the Duane Reed chain of pharmacies in New York, which struggled through a period of expansion before business stabilized.

But the factor that will most determine the Hyannis store's success might be its location -- just down the street from the Best Buy in Cape Cod Mall.

Flagg said it will be hard to gauge the competition until the store opens.

"It depends on how loyal the Best Buy customers are," Flagg said. "If they aren't satisfied, Circuit City might have an advantage."

Source: Plain Vanilla Shell

Restoration Hardware introduces children’s line

Restoration Hardware has introduced Baby & Child, a line of products for the little ones that includes apparel, lighting, stroller and security blankets, cribs, play tables and chairs, beds, changing tables, room decor, and toys and playthings.

Of the new line, the company relates on its Web site: “We believe that your design aesthetic shouldn’t end where the nursery begins, we’ve taken the same classics and reinvented them for the little ones in our lives. The same quality craftsmanship and attention to detail. The same luxurious Italian linens and soothing color palette. The same iconic aesthetic that makes us who we are. All in a smaller, sweeter package.”

The retailer that helps consumers upgrade their homes now is going to help the upgrade their baby rooms. The effort is comprehensive, certainly, a turnkey baby operation, so to speak. It will take Restoration Hardware into new categories including layette apparel. It also offers a selection of organic layette apparel and bedding. The Baby & Child operation includes a catalog presentation and a registry. Prices range up to about $1400 for furniture to as little as the $10 range for, for example, shower curtains.

The program is coordinated in several collections, including organics and certainly makes for a handsome presentation. However, retailers have tried to develop upscale baby presentations in the past with limited success.

Not that people won’t spend money on luxurious baby goods. The question is: which people? Parents tend to be or become pretty frugal after a certain point in the whole process of raising kids. A lot of the luxury baby gear is purchased by grandparents, godparents, aunts and uncles, in other words those friends and relatives whose disposable income isn’t overshadowed by the cost of diapers, baby food and education. As Restoration Hardware is something of a DIY operation, one where people shop for their own homes and not for gifts, it may have a particular challenge making an upscale baby program work.

Source: Retailing Today.com

Office Depot to slow store openings, cut jobs

ATLANTA, July 30 (Reuters) - Office supply retailer Office Depot Inc (ODP.N: Quote, Profile, Research, Stock Buzz) said on Wednesday that it is cutting its store-opening plans and slowing its remodeling efforts to cut costs and reduce capital spending as the tough U.S. economy pressures sales.

The retailer also said during a conference call that it was reducing its North American staff and had offered a voluntary exit program for some employees.

Company executives said the chain will open less than 15 stores for the balance of this year and plans to open a total of 45 stores for 2009.

Source: Reuters

BIGresearch: Walgreens Losing Ground Among Prescription Drug Shoppers?

Wal-Mart Filling More Prescriptions Among Lower Income Shoppers

Walgreens remains the retailer of choice in the Prescription Drugs category among all adults (14.4% say they shop there most often), according to the July Retail Ratings Report from BIGresearch ( http://www.bigresearch.com). However, it appears that Wal-Mart is closing the gap and increasing share of preference in this category.

Walgreens' share decreased almost a point from July 07 (15.2%), resulting in a negative Consumer Equity Index(TM) (CEI)* of 94.35. #2 CVS saw a marginal decrease in consumer share year over year (13.2% in Jul 08 v. 13.6% in July 07), giving them a negative Consumer Equity Index(TM) (CEI)* of 97.68. Conversely, #3 Wal-Mart is growing in popularity with a two point increase in share to 10.4% (v. 8.4% in Jul 07) and a CEI of 123.71, indicating almost a 24% growth in share. *CEI measures growth in share year over year. An index of 100 is flat, while an index of 105 indicates 5% growth.

Wal-Mart is also improved among consumers with household incomes greater than $50,000. 8.2% say they shop there most often for prescriptions (v. 6.3% in July 07), giving third place Wal-Mart a CEI of 131.73. This is a significantly higher rating than the leaders in the category: Walgreens (94.53) and CVS (100.31).

Over the past year, CVS and Wal-Mart have been battling it out for the number 2 position among consumers with household incomes less than $50,000. However, Wal-Mart surpassed CVS in July. This coupled with Walgreen's two-point nose dive in consumer preference share, gives Wal-Mart a piece of the lead among this consumer group.

Prescription Drugs (Shop at Most Often) - HH Income Less Than $50K
           Share           Share          Share
Store        Jul 2007        Jul 2008       +/-       CEI
Wal-Mart     12.0%           13.8%           1.8      115.43
CVS          13.9%           12.2%          -1.8      87.36
Walgreens    15.8%           13.8%          -2.0      87.37
Source: BIGresearch, Retail Ratings Report, Jul 08

"The current economic environment appears to be helping Wal-Mart increase their share among lower income shoppers," said Pam Goodfellow, Senior Analyst at BIGresearch. "Wal-Mart's growth seems to be at the expense of Walgreens and CVS."

Source: MarketWatch

Mervyn's files for bankruptcy

In a move that has been rumored for weeks, Mervyns LLC filed for Chapter 11 bankruptcy late Tuesday.

Officials of the struggling Hayward-based department store chain said they plan to keep their 177 stores, including nine in the Sacramento region, open while they restructure the retailer's debt and "realign" business operations.

"Mervyns needs to reorganize its finances and operations due to the state of the economy and difficult operating environment for our industry," John Goodman, CEO of Mervyns LLC, said in a statement. "After careful consideration of available alternatives, the company's management board determined that a Chapter 11 filing was a necessary and prudent step that allows us to operate our business without interruption as we seek to restructure our debt and other obligations in a controlled, court-supervised environment. We are committed to serving our customers and maintaining regular operations as we undertake this reorganization."

The company also announced it has received a commitment for $465 million from a lender group led by Wachovia Captial Finance Corp., which will be combined with operating cash flow to fund its continuing operations.

Goodman, who became CEO of Mervyns LLC in March, remained upbeat despite the bankruptcy filing.

"The decisive action we are taking provides the company with the most effective means to restructure our operations, strengthen our balance sheet and position Mervyns to compete more effectively," he said. "I want to thank our customers and vendors for their continued support during this process... In addition, we are grateful to all of our associates for their hard work, loyalty and dedication. Our management team is committed to making this financial restructuring successful and leading Mervyns toward a bright future."

Mervyns LLC was created in 2004 after the retailer was sold off by former parent Target Corp. to a group of investment firms, led by Sun Capital Partners Inc. of Boca Raton, Fla., and Cerberus Capital Management LP of New York. Even when still owned by Target, the retailer, founded 59 years ago in San Lorenzo, struggled with increasingly stiff competition from a variety of rivals, ranging from Wal-Mart on the discount end to such mid-range department store chains as Kohl's and JCPenney.

The investment group has closed more than 70 Mervyns stores in the Midwest, South and Pacific Northwest during the past four years, but had also begun opening new locations in what was considered the retailer's core markets — California and neighboring states throughout the Southwest.

Source: Sacramento Business Journal

Court revives U.S. case against Whole Foods deal

WASHINGTON (Reuters) - A U.S. appeals court revived a government antitrust case against Whole Foods Market Inc's (WFMI.O: Quote, Profile, Research) purchase of rival Wild Oats Markets Inc, reversing on Tuesday a lower court decision that allowed the deal to proceed last year.

Whole Foods said it was disappointed by the decision and could seek a review by the full appeals court. Meanwhile, it would carry on "business as usual."

The U.S. Court of Appeals for the District of Columbia said a district court judge erred when he turned down a Federal Trade Commission request for an injunction to block the deal.

U.S. District Judge Paul Friedman "underestimated the FTC's likelihood of success on the merits" when he denied the agency's request, the three-judge appeals court panel said in its ruling. One of the judges dissented from the opinion.

The appeals court remanded the case back to Friedman for further proceedings.

Whole Foods shares fell for a time after the ruling was issued Tuesday morning but closed up 1.6 percent at $22.39 in trading on Nasdaq.

Rating agency Standard & Poor's said it did not see the ruling changing Whole Foods' daily operations or its continued integration of Wild Oats stores. Wild Oats had been effectively "deconstructed" since the acquisition, S&P said in a statement, with store divestments, closures and rebrandings.

Howard University law professor Andrew Gavil said it could take a long time for the FTC to get an injunction because of legal procedures, giving Whole Foods even more time to integrate the two companies.

"Given where things are in this case it's going to be very hard to really undo the merger and come up with an effective remedy," Gavil said.

Nevertheless, he said the ruling could be important for the FTC as it sets a precedent strengthening the agency's hand in seeking a preliminary injunction in future cases.

The FTC is seeking an administrative trial before the agency's five commissioners.

The director of the FTC's competition bureau, Jeffrey Schmidt, issued a statement on Tuesday saying agency officials looked forward to future proceedings before the district court, leading to a full trial on the merits before the commission.

ORGANIC GROCERY MARKET

Whole Foods first announced its plan to buy smaller rival Wild Oats in February 2007. The FTC sued to block the $565 million deal in June 2007, saying it would hobble competition in the market for natural and organic groceries.

Judge Friedman denied the FTC's request to block the deal in August of last year, concluding that the FTC had failed to prove the merger would hurt competition. The agency then asked the D.C. appeals court to stop the merger, but was turned down. The companies went ahead with their deal that same month.

The appeals court on Tuesday rejected Whole Foods' argument that the FTC appeal is irrelevant because the agency does not have the authority to undo a completed merger.

Federal courts "have the power to grant relief on the FTC's complaint, despite the merger's having taken place, ..." the court said.

The FTC had said the combination of Whole Foods and Wild Oats raised antitrust concerns in 21 geographical areas where the two chains were each other's closest competitors.

Whole Foods argued that its stores compete in a broader market against all supermarkets, not just organic grocery stores. The FTC disagreed, saying they compete in the premium, organic niche market.

The appeals court said judge Friedman had misconstrued a key legal point, leading him to give short-shrift to the FTC's main argument: that Whole Foods and Wild Oats were in a battle of their own over a distinct market for "core" organic grocery customers.

But the reversal drew a sharp dissent from one of the three judges on the panel, Appeals Court Judge Brett Kavanaugh, who accused his colleagues of trying to "unring the bell."

Source: Reuters

Bennigan’s files for Chapter 7

Casual dining chain Bennigan’s Grill & Tavern, owned by Metromedia Restaurant Group, filed for Chapter 7 bankruptcy Tuesday, closing company-owned stores.

It was unclear which of the five Bennigan’s locations in the Washington and Baltimore regions were affected. Only the Bennigan’s in Glen Bernie, Md., answered its phone, saying it was franchise-owned and open for business. . . more

Best Buy to open in-store music centers

Hoping to cater to everyone from the garage guitarist to a recording musician, Best Buy Co. Inc. is announcing a massive new initiative that sets aside store space for an array of musical instruments and gear in dozens of sites nationwide.

The nation's largest consumer electronics retailer will announce Tuesday that it plans to open as many as 85 of the music centers inside its stores by the end of the year and could add even more locations in the future, executives told The Associated Press.

Each site will use about 2,500 square feet of retail space and include roughly 1,000 different products with well-known brand names such as Fender, Gibson, Drum Workshop and Roland.

"We're not just extending the shelf space in the store, we're creating a designated area specifically for this experience," said Kevin Balon, the company's vice president of musical instruments. "And we're trying to create an authentic and genuine musical instrument store look and feel inside of Best Buy."

The Richfield, Minn.-based retailer - already an industry leader in sales of everything from digital cameras to video games - will use its headfirst jump into the $8 billion U.S. musical instrument market to carve out new revenue opportunities as sales of CDs and DVDs slow, experts said.

When the rollout is complete, Best Buy - already considered by many investors to be a global powerhouse in the electronics retailing world - will become the second-largest instrument seller in the country based on locations.

But some observers are cautious about whether the expansion efforts will reap big rewards, particularly as the nation's economy slows and consumers become even more particular about spending hard-earned paychecks.

"It's not a high-growth area and it's obviously going to take up a lot of real estate," said Morningstar retail analyst Brady Lemos.

Executives declined to comment on how much the company is investing in the project or how much they expect to gain from the store-within-a-store effort.

So far, ten sites are already open, including five in California, two in Illinois and two in Minnesota.
Best Buy's selection will include everything from accessories - picks, sheet music and cases - to high-end basses, guitars, keyboards and DJ equipment. Instruments will be housed in separate rooms and the company also plans to offer group music lessons.

Acoustic guitars will sell between $89.99 and $3,200 and drum kits will retail for as much as $5,000.

A selection of the offerings will also be available online in early August.

"However you want to play, if play means you're just learning and you want to play with a bunch of buddies, or you want to play on stage, we can support any of that," Balon said.

Source: Seattle Times

Williams-Sonoma to Bring West Elm to Canada

Williams-Sonoma Inc. (San Francisco) has announced plans to bring its West Elm division to Canada. According to the Toronto Globe & Mail, the younger and hipper version of the parent operation will open its first Canadian stores in October in Toronto's King Street West area.

Later this week, Inter IKEA Systems B.V. (Delft, Sweden), which is going after the same young, on-a-budget, urban apartment-dweller, will launch a temporary "pop-up" showroom in the same Toronto neighborhood.

West Elm has been expanding rapidly. There are 32 West Elm stores today and industry observers told the Globe & Mail that it could have 200 or more outlets over the next several years. "We really want to take on more of the mass market, below Pottery Barn, which is why West Elm was conceived," said Dave DeMattei, group president at Williams-Sonoma. "We go after the upper tier of the mass market. We are a specialty version of IKEA."

Source: VMSD.com

Retail Fundamentals Look Solid for Second Half 2008

While some REIT sectors more than others reveal signs of the economic slowdown, retail REITs are heading into the second half of 2008 with their fundamentals still on solid ground. The sector is largely unaffected in the short-term by changes in consumer confidence and spending, both of which have been slowly receding since last summer. “Retailing is a constant,” says Wachovia Securities Equity Analyst Jeff Donnelly. “The average lease is four to seven years, and there are still positive earnings. Retailers are still paying the rent.” Sector Stats # of REITs 26 Industry Market Cap (in thousands) $84,602,036 % of Industry 25.7% Yield 4.63% YTD Total Return 7.19% One-Year Return -17.42% Three-Year Return 10.09% Five-Year Return 19.64% Average Daily Trading Volume (Shares) 520,586 Source: NAREIT data as of May 31, 2008 Moderate Rental Growth Retailers are paying the rent, but they are shopping for bargains. This represents a role reversal compared with the scenario in recent years, Donnelly notes. “In the past two years, retail REITs have benefited from being able to push rents,” he says. “This year, they cannot be as aggressive as leases expire.” On the contrary, retailers are emboldened by current conditions and asking for significant discounts on rent, reports RBC Capital Markets senior analyst Richard Moore. “They always ask, but this year, they are asking for larger reductions. So far, they aren’t getting them. Landlords are holding firm.” At some centers, sales are still healthy. Retailers have much less negotiating leverage at centers with strong sales volumes. Property owners are not going to offer meaningful rent concessions, according to Deutsche Bank senior real estate analyst Louis Taylor. “Retail sales levels today are much higher than they were 10 years ago when most of expiring leases were originally signed. As a result, rents on those locations will increase,” he says. Rents on leases signed in 2008 should be able to grow at an acceptable rate for the rest of the year, although growth will be somewhat stronger for regional mall REITs than for shopping centers. He predicts rents on leases this year will be 15 percent to 20 percent higher than the expiring rents for mall REITs. Strip centers will experience a moderate increase in rental growth for the rest of the year, limited to 8 percent to 10 percent, attributed to the shorter duration of those leases plus the slight uptick in vacancy rates the subsector is enduring. Even so, Donnelly notes, the major retail REITs will enjoy stable rental income because of the diversity of their portfolios in terms of size, geography and tenants. However, some recent studies caution against making overly broad assumptions about rental growth. Submarket differences in rental growth may be exacerbated by current economic conditions. For example, PricewaterhouseCoopers reported in its recent “Emerging Trends in Real Estate 2008” that Baltimore, Boston, Denver, Los Angeles, New York City, San Francisco, San Diego, Seattle and Washington, D.C. are the top retail markets where rental growth may exceed the average. At the other end of the spectrum are areas like Miami and Orange County, Calif. that have been hard hit by foreclosures in residential real estate, so rents may stay flat or even decline. Quality is Key to Occupancy The retail vacancy rate for the first quarter of 2008 was 7.7 percent, with strip centers and regional malls at their highest vacancy levels since 1996 and 2002, respectively, according to Reis, Inc. data. By the second quarter, Marcus & Millichap, a national real estate firm based in Washington, D.C., posted predictions of a 10.2 percent vacancy rate for the year. However, retail REIT analysts aren’t buying these gloomy predictions. “The vacancy forecast is irrelevant,” Moore says. “Retail is not a commodity. There are good assets and bad assets, and they are all figured into those averages. I pay little attention to them.” The bottom line, Moore says, is that “business is very good for existing assets, and retailers will continue to take space at quality locations.” Where retail malls are feeling a bit of a pinch is with lower quality, less productive space in less attractive markets. “That’s where we are starting to see a pullback in demand,” says Christy McElroy, senior analyst and head of REIT equity research with Bank of America Securities. “High productivity space—producing more than $600 a square foot in a desirable mall in a top city—there’s no problem in leasing it.” Shopping centers anchored by grocery stores are holding their own. However, strip centers of smaller shops with local and regional owners are pulling back, pushing up the vacancy rate in some centers, McElroy says. She expects big box chains to close more stores this year but sees continuing good demand in urban and infill shopping centers with higher barriers-to-entry. Retail Snapshot * Sector's total market capitalization is $76,645,168,000, the largest of any REIT sector. * REITs own ¼ of the retail industry, the highest penetration among all REIT sectors. * Kimco Realty Corporation (NYSE: KIM) is the largest retail REIT overall, owning 630 properties with a total market capitalization of $5.6 billion. * Developers Diversified Realty (NYSE: DDR) is the largest grocery-anchored shopping center owner with 205 centers and a total market cap of $2.4 billion. Source: 123jump.com and NAREIT Supply Slowdown The combination of softening demand from retail tenants, stiff credit requirements and the resulting decline in development yields will keep new retail development constrained for the rest of the year. As an alternative to growth by development or acquisition, retailers are pursuing better opportunities to grow internally through strategies such as increasing margins and closing unprofitable stores, Donnelly says. As a result, the demand for new space will continue to be modest at least through the rest of 2008. Retail REITs are responding by postponing opening dates for new shopping centers and scaling back the scope of their projects. Stricter lending rules are the other force affecting development. Bank requirements for pre-sales and pre-leasing levels are so high that even the most experienced developers find them challenging, analysts report. “Instead of 10 percent or 20 percent, banks want 60 percent of a new project leased before a shovel goes into the ground,” McElroy says. That’s not to say that retail REITs are pulling back completely. Retailers will still want to expand in high productivity areas, but at a lower velocity, she says. “We will continue to see a pullback on expansion plans, but not a complete stop. It’s still about asset quality and location.” In the newly restrictive credit market, large loans—more than $150 million—for development have the strictest underwriting requirements. This is more of a restraint on regional mall REITs than shopping center REITs due to the nature of their projects. “However, the big players with lease commitments in major markets can still get financing,” Donnelly says. Taylor agrees that the top retail REITs can readily obtain financing if they are willing to pay the higher cost of capital. “These are companies with strong balance sheets, high quality assets and solid management teams. They still have access to capital if they want it,” he says. Even so, analysts expect that retail REIT construction starts will be down for the rest of 2008 as the sector reaches the peak of the construction cycle that started two years ago. This constrained supply growth, however, will not support strong occupancy and rental growth because of the underlying economic conditions, Moore notes. “This time, the advantage is tipped toward the retailer,” he says. Meanwhile, REITs unwilling to risk development exposure at this time are embracing redevelopment as a growth strategy. “Shopping centers and malls are being redeveloped to add value, particularly as they get space back from department store consolidations,” McElroy says. Simon Property Group (NYSE: SPG), for example, will spend $450 million upgrading its 20 New England malls over the next two years. Even more than renovation, converting shopping centers and older malls to lifestyle centers, such as mixed use, open air shopping centers with plenty of greenery and pedestrian areas, will continue to be a popular trend in retail. Retail REITs are transforming existing properties into lifestyle centers in every region of the country, as they continue to focus on strategies to enhance profitability of existing real estate. At this halfway point in the year, Moore believes retail fundamentals will remain solid for the balance of 2008. “The sector is a little softer than in 2007, but the difference is in growth, not the heart of the fundamentals,” he says. “The general health of the sector is high, and retail REITs will continue to be a good defensive play for investors.” Source: NAREIT

Global Apparel Retailers Set Their Sights on U.S. Market

America's shopping venues are getting an international makeover as moderately priced apparel retailers from Europe, Asia and Canada increasingly set up shop in the U.S.

In coming to America, these retailers are following high-end European designers, who planted their flags in recent decades, expanding first to big cities and then to smaller markets. Now, more foreign retailers are taking advantage of the weak dollar, which reduces the cost of their initial investment, and favorable terms on store leases as landlords look for new tenants to attract shoppers as midpriced U.S. chains like AnnTaylor Stores Corp. and Talbots Inc. contract.

Sweden's Hennes & Mauritz AB, with 156 U.S. stores, calls the U.S. its "largest expansion market." Since the beginning of its fiscal year in December, the "fast-fashion" chain has opened 11 stores in the U.S., including its first store in Seattle on Friday. It plans about 27 more openings this fiscal year, including a store at Westfarms Mall in Farmington, Conn., in August.

Canadian yoga-wear retailer lululemon athletica Inc. plans to open 32 U.S. stores this fiscal year, almost doubling its U.S. presence to 66 stores. South Korea's Who.A.U, which is taking aim at Abercrombie & Fitch Co.'s Hollister chain, hopes to open 450 stores in the U.S. in the next 10 years. And Canadian teen retailer Garage hopes to have 500 stores in U.S. malls in seven to 10 years.

Also expanding in the U.S. are Spain's Zara (owned by Inditex SA) and Mango chains, Germany's luxury sport brand Bogner, Russia's Kira Plastinina, Iceland's Kisan, Japan's Muji and Britain's Topshop chain and Karen Millen brand. "There aren't too many important global apparel retailers that aren't looking at the U.S. market for its potential," says Ken Nisch, chairman of JGA, a Southfield, Mich., retail-strategy and design firm.

Opening shop in the U.S., of course, isn't a slam dunk. There's no guarantee that the economy -- or apparel sales -- will recover from the current slump any time soon. Furthermore, the U.S. is a low-growth market where retailers have long had to fight for market share. But "the U.S. is still the world's largest consumer market," says Christine Day, lululemon's chief executive. "Even if it contracts, it would be a mistake not to be in it."

The retailer, which is opening both urban and suburban locations, has been able to negotiate lease terms that are more favorable across the board than a year ago. The terms, which vary by lease, include fewer built-in rent increases, the option to terminate leases after three years rather than five years and higher sales thresholds before lululemon has to pay a percentage of sales in addition to base rent.

Many international retailers are approaching U.S. expansion cautiously. Muji and Topshop, which is set to open its first U.S. location in New York in October, plan to wait and see how their stores in New York perform before opening stores elsewhere. That's the lesson of Japanese clothing chain Uniqlo, part of Fast Retailing Co., which launched its U.S. operations three years ago with stores at three New Jersey malls. Last summer, Uniqlo closed the stores in favor of building brand awareness via the flagship store it opened in New York's SoHo in late 2006. A spokeswoman says the retailer is looking at further expansion in the U.S.

Foreign midtier retailers still account for only a small percentage of U.S. retail sales overall. Twenty-two foreign chains queried by The Wall Street Journal said they will operate about 475 stores in the U.S. by year's end. The U.S. had roughly 150,000 clothing and accessory stores in 2006, according to the latest government data. But the value of foreign retailers' investments in clothing and accessory stores in the U.S. continues to grow. Between 1997 and 2007, it rose more than 60% to $4.1 billion, according to the U.S. Commerce Department's Bureau of Economic Analysis, which released the most recent data Friday.

Furthermore, foreign retailers have had an outsize impact on the U.S. market. The invasion of fast-fashion chains like H&M and Zara has prompted U.S. retailers from Gap Inc. to J.C. Penney Co. to update their selections faster or more often.

Still, it is unlikely that the influx of foreign chains will offset American store closures that have pushed U.S. mall vacancies to 6.3% in the second quarter, their highest level since 2002, according to market-research firm Reis Inc. For example, over the next few years, AnnTaylor is closing about twice the number of stores lululemon plans to open in the U.S. this year.

International retailers "will provide some incremental demand for the better properties," says Rick Sokolov, president of Simon Property Group Inc., the largest U.S. mall owner by market value and number of properties. He says those most likely to benefit are top-tier malls in high-traffic urban areas generating the highest sales per square foot.

At many malls, developers looking for new concepts to excite shoppers are giving international retailers the deals traditionally reserved for top tenants. "These terms have always been there for the hot retailer, but historically the hot retailer was an American company," says Julie Taylor, senior vice president with real-estate-brokerage firm Cornish & Carey Commercial-Oncor International. "Now, more often than not, those are foreigners."

Source: Wall Street Journal

Linens 'n Things to Close 57 Underperforming Stores

CLIFTON, N.J.--(BUSINESS WIRE)--Linens Holding Co. (“LNT” or the “Company”), today announced that as part of its ongoing financial restructuring, the Company plans to close fewer than the previously disclosed 87 underperforming stores. The actual number of store closings is now 57 (See list below). LNT filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code on May 2, 2008 and announced the closing of 120 stores at that time.

“The reduced number of store closings is the result of improvements in the outlook for these stores throughout the remainder of 2008 into 2009. We are pleased that we are able to keep additional stores open for the benefit of our guests, associates, vendors and the communities we serve,” said Michael F. Gries, Chief Restructuring Officer and Interim CEO. “While a very difficult decision, the stores that are closing are necessary given the current retail and economic climate and the need to drive the cost savings and operational efficiencies that will allow us to position LNT for long-term growth.”

Linens ‘n Things, with 2007 sales of approximately $2.8 billion, is one of the leading, national large format retailers of home textiles, housewares and home accessories. As of December 29, 2007, Linens ‘n Things operated 589 stores in 47 states and seven provinces across the United States and Canada.

Store Closing List
SHOPPING CENTER CITY ST PATTON CREEK HOOVER AL BROADWAY PARC TUSCON AZ SURPRISE SURPRISE AZ PRESCOTT GATEWAY PRESCOTT AZ CHANDLER CROSSING CHANDLER AZ CROSSROADS TOWNE CENTER GILBERT AZ TEMPE MARKETPLACE TEMPE AZ CHICO POWER CTR CHICO CA NEW CENTER STOCKTON CA MISSION VIEJO FREEWAY CENTER MISSION VIEJO CA L'PLAZA DE NORTHRIDGE NORTHRIDGE CA GATEWAY COURTYARD CENTER FAIRFIELD CA METRO POINT RETAIL CENTER COSTA MESA CA JANSS MARKETPLACE THOUSAND OAKS CA CAMARILLO TOWN CENTER CAMARILLO CA GATEWAY PLAZA VALLEJO CA ARDEN FAIR SACRAMENTO CA MARKETPLACE @ PALMDALE PALMDALE CA CREEKSIDE SHOPPING CENTER VISTA CA EASTVALE GATEWAY MIRA LOMA CA NORWALK CT FAIRFIELD CT THE PLAZA AT DELRAY DELRAY BEACH FL TOWER SHOPS DAVIE FL SHOPPS AT LAKE ANDREW VIERA FL THE MALL AT WELLINGTON GREEN WELLINGTON FL OVIEDO CROSSING OVIEDO FL THE MARKETPLACE AT SEMINOLE SANFORD FL ORLANDO SQUARE ORLANDO FL PINEAPPLE COMMONS STUART FL REGENCY COMMONS JACKSONVILLE FL VOLUSIA PLAZA DAYTONA BEACH FL CAMP CREEK MARKETPLACE EAST POINT GA THE PEACH SHOPPING CENTER ATLANTA GA SNELLVILLE PAVILLION SNELLVILLE GA RIVER FOREST TOWN CENTER RIVER FOREST IL HAWTHORNE FASHION SQUARE VERNON HILLS IL AVON AVON IN YOUREE & 70TH STREET SHREVEPORT LA TAUNTON DEPOT TAUNTON MA THE CENTER AT HOBBS BROOK STURBRIDGE MA MIDDLESEX MALL BURLINGTON MA WATERS PLACE ANN ARBOR MI EAST GATE SQUARE MOUNT LAUREL NJ PLAZA SANTA FE SANTA FE NM SHOPS AT BOCA PARK LAS VEGAS NV GALLERIA AT SUNSET MALL HENDERSON NV BLUE DIAMOND CROSSING LAS VEGAS NV PORTCHESTER PORT CHESTER NY NASSAU MALL LEVITTOWN NY AVON COMMONS AVON OH GOVERNOR'S PLAZA CINCINNATI OH VALLEY FAIR PLAZA DEVON PA THE MARKETPLACE AT TOWNE CENTER MESQUITE TX PARK PLACE TUKWILA WA BEAR CREEK PLAZA REDMOND WA SOUTH HILL MALL PUYALLUP WA Source: Yahoo Business

Chipotle Not Cutting Back on Growth

Though it’s opening its first restaurant in Toronto this year, Chipotle Mexican Grill’s expansion will remain focused on existing markets in the United States, executives said at the company’s second quarter conference call. The company continues to expect 130 to 140 new restaurants openings in 2008, said Founder, Chairman and CEO Steve Ells. About two-thirds of the openings will be in well-established markets, with the remainder in newer markets.

“International expansion is not a key driver of our growth strategy,” Ells said.

Chipotle does not expect to cut back growth in 2009, unless space isn’t available.

“We’re still building our pipeline for 2009,” Ells said. "It does seem some developers are slow getting out of the ground. It may be that forces not under our control may force us to slow down."

Sales increased 24.2% from the previous year to $340.8 million, while comp-store sales rose 7.1%. Net income increased 22.5% to $24.5 million. Chipotle opened its first restaurant in 1993 and currently operates over 775 restaurants.

Source: GlobeSt.com

Retailing: New habit of discount shopping hits all economic strata.

Desperate times call for discount measures. It's the new rule of retail, and cash-squeezed consumers are laying down the law.

An astounding number of penny-pinched shoppers are handing the industry some wake-up news this back-to-school season: Because of expensive gas and overall economic woes, consumers plan to scavenge for bargains like hustlers in a cash-flow crunch, according to two surveys out this week.

In vogue: Dollar stores, off-price discounters like Marshall's and T.J. Maxx, and comparison-shopping on the Internet.

Out of vogue: Pretty much anything not on sale. Serious sale.

Most shoppers plan to buy their children's pens, bookbags, clothes and other back-to-school necessities at discount stores - 73 percent, according to the National Retail Federation; 88 percent, according to Deloitte L.L.P.

Almost four in 10 will shop at dollar stores; eight in 10 will look to buy more things on sale than last year, according to Deloitte.

The nation's newfound penchant for discount shopping is cutting across all economic strata, according to Deloitte's mid-July survey. One analyst said the humbler habits may be here to stay, unlike past downturns, when consumers pulled back until the storm passed.

"It's not just affecting those with less in their wallets," said Tara Weiner, managing partner of Deloitte & Touche's Greater Philadelphia office in Center City. "It's affecting just about every wallet. And it's causing a change in behaviors. It's changing how they shop."

Weiner said 61 percent of consumers polled by Deloitte said they believed the nation was in a recession, even though economists and politicians continued to duke this out.

Those consumers are acting like recession shoppers, and a "structural shift" in shopping habits has set in, said Weiner, who has monitored the retail industry for 20 years.

The discount-hunting trend has emerged since last summer's implosion of the subprime-lending market and soaring crude oil prices shocked the economy and began draining consumer wallets and retail profit.

A similar thing happened during the 2001 recession. Then and now, discount-shopper ranks swelled with people "trading down" from marquee stores.

"People didn't go without," Weiner said, "but they were in greater search of value."

Back then, 83 percent of shoppers said they planned to do some of their holiday shopping at discount retailers - including three quarters of households with income of $75,000 or more, according to Deloitte.

In 1993, only 57 percent of all households planned to shop at a discount store, Deloitte said.

While conventional retailers like Macy's and a number of mall stores have struggled in this environment, dollar-store chain Dollar Tree Inc., and off-price retailers such as Marshall's and T.J. Maxx, have benefited.

Dollar Tree, which has 76 stores in the eight-county Philadelphia region, plans to open as many as 245 stores across the country this year, while other retailers have pulled back.

Broker Donna Drew, of Metro Commercial Real Estate Inc., said the expanding chain has kept her busy 13 years as they've pursued store locations to meet growth goals.

"I just think people are really trying to stretch their dollar," said Drew, who also brokers lease deals for TJX Cos. Inc. - the parent company of T.J. Maxx, Marshall's and A.J. Wright.

Dollar Tree reported record sales last quarter, exceeding the $1 billion mark and logging a 14.4-percent profit increase, said spokeswoman Chelle Davis.

"We definitely think we are right for the times," Davis said. "Everyone likes to save money."

Dollar Tree shares closed up $1.76 yesterday to $38.07 on the Nasdaq and have risen steadily in value since January, thanks to shoppers like Sandra Harvey-White of Lansdowne, Delaware County.

Harvey-White, 43, walked into a Lansdowne Dollar Tree yesterday to buy bottled water, but walked out with a shopping cart full of $1 buys - including boxes of Tastykake treats, frozen waffles, frozen pasta and Herr's potato chips.

"I always stop at the dollar store before I go to the supermarket," said the mental-health therapist, who has amped up her bargain shopping this year. "Because of the economy, I find myself making smaller trips - purchasing either what's on sale, what I can use, and not particularly the brands I used to buy."

On the clothing side of shopping, Nadine Phillips is just as devoted to the T.J. Maxx on City Avenue near Overbrook Park, in a strip near the Philadelphia and Montgomery County line.

Phillips, 31, a nursing assistant who often works overtime, sneaked into the store between shifts yesterday in full nursing garb to pick up two bags of merchandise she had put on layaway.

At $198, the buys were a bargain. Gone are the days, she said, of treating herself to designer duds at Macy's, which she would occasionally do before this year. Money is just too tight now.

"At the other stores, I feel as though the stuff is overpriced," Phillips said. "But at T.J. Maxx, you can get the same stuff for less."

Source: Philadelphia Inquirer

Stop & Shop Said to Eye Closing Dunkin’ Donuts

QUINCY, Mass. — Stop & Shop here may be closing some or all of the 132 Dunkin’ Donuts locations in its stores and replacing them with Starbucks, according to local reports last week. A spokesman for Stop & Shop, owned by Amsterdam-based Ahold, confirmed that the chain’s leases with Dunkin’ Donuts expire next year but declined to comment further on the reports. An article in the Meriden Record-Journal in Connecticut said Stop & Shop plans to replace Dunkin’ Donuts locations with Starbucks, although it was not clear how many of the locations would be replaced. Stop & Shop’s website lists 132 in-store Dunkin’ Donuts. In a prepared statement, Stephen J. Caldeira, chief global communications and public affairs officer for Dunkin’ Brands, said, “Any reports about our stores located inside Stop & Shop supermarkets are speculative.” Stop & Shop inked a five-year deal with Starbucks in 2006 to develop an unspecified number of in-store cafes.

Source: Supermarket News

Sears: Finally, a Reason to Brag

The retailer's Lands' End unit has proved a bright spot in dark times. Now it faces a leadership vacuum.

Recently, Sears (SHLD) no longer seems to be where America shops for much of anything. Sales skidded 9.8% in the latest quarter, leading to a $56 million loss as consumers shunned the dreary shopping experience for more focused low-price options such as Wal-Mart (WMT) and Target (TGT). With Chairman Edward S. Lampert warning that bad times could last into 2009—and the search for a CEO still under way—the stock has fallen by more than half in a year. The numbers are the worst since Lampert combined Kmart and Sears in 2005.

But one part of the $50.7 billion company is sparkling: Lands' End (SHLD). The apparel subsidiary is thriving with its reputation for impeccable customer service and sturdy-but-stylish designs. While Sears doesn't break out numbers, retail analyst Anne Brouwer of Chicago's McMillan/Doolittle estimates the unit made $200 million on $2.2 billion in sales last year. The Lands' End Web site, where the brand rings up 80% of sales, is among the retailing industry's top 10 by several measures. And offline sales are rising as Sears has put Lands' End boutiques in more than 200 of its 935 mall stores. Retail consultant Howard Davidowitz calls the business "Sears' shining star."

The challenge is to keep the momentum going. On July 18, after barely three years as Lands' End chief, David W. McCreight left to become president of athletic-apparel maker Under Armour (UA). While McCreight, 45, generated record earnings growth at the unit, some feel he never adjusted to rural life at Lands' End Dodgeville (Wis.) headquarters. Hired as chief merchant in 2003, McCreight came up with the idea of stand-alone boutiques in Sears. As president, he freshened product lines and spurred innovation, including a new packing process. McCreight also moved a half-dozen customer service agents to a space right outside his corner office, so he could pull up a chair and participate in calls.

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Now Lands' End finds itself without a captain at a time when the retail environment and the parent company are both ailing. Hiring a successor is complicated by the fact that Sears itself doesn't have a permanent chief executive: Lampert appointed supply chain executive W. Bruce Johnson as interim CEO last February after Aylwin B. Lewis stepped down (See "Aylwin B. Lewis: Now, to Lunch"). For now, Lands' End veterans Lisa Fitzgerald and Kelly Ritchie are running the unit until a replacement is found. "David took this company to the next level," gushes Ritchie. "He expected greatness."

Lands' End was not such a gem when Sears acquired the company in 2002 for $1.9 billion. At the time, its apparel was available only online or through catalogs, and was generally seen as well-made but staid preppy gear. Seeking a chance to broaden its apparel offerings, Sears quickly began stocking Lands' End shirts and slacks in stores, though it kept the two brands' Web sites separate. But Lands' End got lost in the aisles until Lampert took over Sears and pushed to build the brand. In mid-2005, a month after McCreight became president, Sears opened the first Lands' End boutique in a White Plains (N.Y.) store.

With its own look and branding, McCreight's store-within-a-store worked. He says transforming the brand's catalog image into a physical space was "a once-in-a-lifetime career opportunity." Analyst Brouwer figures the Lands' End boutiques bring in at least $200 in sales per square foot annually. That's just a third what a top retailer such as Nordstrom (JWN) produces, she says, but it's far ahead of the $137 per square foot Sears averages from its goods and apparel.

Lampert also let McCreight run the place without interference from Sears' main office in suburban Chicago. That allowed Lands' End to do things that tight-fisted bosses at Sears might never have O.K.'d. Only manufacturing is outsourced. Design, packaging, and—most important—customer service are kept close by. Call center staff have no time limit with customers. When a woman who had had a double mastectomy phoned to ask for the bathing suit she loved, minus the bra, her suggestion was passed along to designers who created one for her. The company went on to sell thousands more.

Such moves make for satisfied customers. Robin Bourjaily, 34, a stay-at-home mom from LaGrange, Ill., has shopped at LandsEnd.com for years. Now she's been swinging by the Lands' End boutique at a nearby Sears to let her three kids try on the clothes. And if Bourjaily can't find what she wants in stock, she can order at an in-store kiosk, and Lands' End pays for the shipping. It's a winning combination that McCreight's successor will need to build on.

Source: Business Week

Inflation's next front is retailers as costs rise

Coming to a store near you: Even higher prices.

Most inflation this year has come from food and fuel, as retailers resisted passing along to strapped consumers the higher prices manufacturers charged them, but coming increases from companies such as Johnson & Johnson and Hasbro Inc. may leave them with no choice.

"While these increases have not for the most part been passed on at the retail level, it is inevitable that they will be at some point," said Dean Baker, co-director of the Center for Economic and Policy Research. "Car dealers and other retailers cannot continue to absorb rising costs at the wholesale level and not pass some of these increases on to consumers."

Sherwin Williams Co. on July 17 announced its third price increase in eight months. The company has been having "difficult discussions" with retailers, Chris Connor, chairman and CEO, said on its quarterly conference call.

The price increases are "well supported with facts in terms of why the company needs them," he said. "Our customers, to the best of their ability, are passing them on."

Hasbro said the retailers it sells to didn't like price increases the company announced Monday "but they recognize that their own private-label costs are going up and they've accepted it."

The increases leave retailers in a bind: They can keep prices steady and cut profit margins or raise prices and risk losing sales.

Wal-Mart Stores Inc. has been in the lead of aggressively keeping prices down, pressuring its competitors to do the same.

"We have seen inflation and we have passed some of that through," said John Simley, a Wal-Mart spokesman. "We have, wherever possible, worked with our suppliers to reduce the inflationary impact as much as possible."

Costco Wholesale Corp. said Wednesday its fourth-quarter earnings would be "well-below" Wall Street estimates of $1 a share as it delays price increases. Stock in rival BJ's Wholesale Club Inc. fell more than 10 percent as investors feared the competitor would have to match Costco's prices.

Some economists say that once Americans spend their $106.7 billion in tax rebate checks, consumer spending may shrivel, sparking a round of price cuts to entice shoppers. Others think price increases may be postponed, but they're on their way.

Much of this depends on how much money consumers have after buying gas and groceries - and what kind of mood they're in once they've filled their tanks. On Friday, The Reuters/University of Michigan index of consumer sentiment for July came in at 61.2, beating expectations and slightly better than the 28-year low of 56.4 hit in June. Still, the confidence index was at 90.4 a year ago.

Even Costco said it won't swallow price increases from suppliers on key items, but would postpone passing them along to consumers, if only for a few weeks, because it wants to be the last retailer to raise prices.

The company raised its prices for rotisserie chicken from $4.99 to $5.49 about three months ago. Last week, the prices rose to $5.99.

"I think the consumer is just starting to see, not only with us, rising commodity costs and rising general merchandise costs in a much bigger way then they've seen other than with gasoline itself," said Richard Galanti, Costco's chief financial officer, during a conference call Wednesday.

Inflation hit 5 percent for the year in June, the highest it's been since 1991, but the price increases hitting manufacturers have been far worse.

Prices manufacturers paid for crude materials rose 70 percent for the three months ended in June, but companies weren't able to pass all those increases along. Prices for the intermediate goods made from those materials rose much less, about 27 percent. The prices for finished products made from those goods rose 14 percent, according to the Bureau of Labor Statistics Producer Price Index.

Kimberly-Clark Corp., which makes Kleenex, Huggies diapers and Viva paper towels, said Thursday that energy and commodity cost increases this year would total as much as $900 million, double its prediction at the beginning of the year.

Saying the company might raise prices for the second time this year, Chief Executive Thomas Falk added, "The reality is that the rapid run-up in commodity costs has outpaced our ability to offset inflation in the near-term with price increases and other actions."

The increases keep coming.

Dow Chemical Co., the second largest chemical company in the world after Germany's BASF, is raising some prices by as much as 25 percent this month, following June price increases that were as high as 20 percent on all products. The increase is sure to put more pressure on manufacturers, since Dow's chemicals are used in everything from packing peanuts to frozen-food trays to diapers.

Source: Macon.com

Fitchburg , MA: $6M Lands Wallace Plaza Center

FITCHBURG, MA-The Wallace Plaza Center is changing hands again after a 5-year tenure under Kent Realty Fitchburg LLC. The 127,460-sf retail property is being purchased for $6 million by Peace & Grace Realty LLC. The seller was represented by Thomas R. Blakely, CCIM and president of TRB & Associates. The buyer was represented by David Lenger of Keller Williams Realty.

TRB had repped the previous owners in 2003 for the sale to Kent and was brought on exclusively for this transaction by the seller. In a statement, Blakely explains that this deal in the current market is "a very complicated transaction that involved a loan assumption with Wells Fargo." Currently, the center is anchored by Market Basket and Big Lots with 24,260 sf of climate-controlled storage space. The building sold for $6.75 million in 2003 while fully-leased. Under the current deal, 17,000 sf of the total 65,000 sf is empty.

Lenger tells GlobeSt.com, the new owners--a group of four friends who remain undisclosed--will add "new signage" and "significant capital improvements." The building will get a facelift as the group will put "about a quarter-million dollars in, resurface the parking lot" and modernize the façade. Lenger remarks that the building has "tremendous upside potential" for profit in a good buyers market.

Retail centers are a solid value and recently, numerous properties have been changing hands. Two separate Walgreens-anchored retail centers went for $11 million in Danvers. Similarly, the former landmark harness racing track turned retail plaza--Roosevelt Raceway Center--was corralled for just over $103 million down in Westbury, NY.

Source: GlobeSt.

Destination retailers feel gas price pinch

CHICAGO -- Consumer spending is down and gas prices are up. That's bad math for the scores of destination retailers across the country that want customers to fill up the tank for a gas-guzzling day of retail therapy.

So to cajole shoppers into stores, some of the nation's chains are changing marketing strategies, launching in-store classes and drumming up other special events aimed at getting road-tripping shoppers to pump up sales.

Customers at Bass Pro Shops drive an average of 100 miles to reach the company's 50 locations and many are known to drive up to 300 miles each way to spend time at the massive outdoor supercenters.

But with the average price of a gallon of regular gas above $4, getting even the most devoted customer to make the trip is becoming increasingly difficult.

That's why the Springfield, Mo.-based chain is launching a slate of events this weekend, offering outdoor skills workshops, s'mores-making, scavenger hunts and foam shooting competitions for shoppers.

Bass Pro Shops spokesman Larry Whiteley says foot traffic in stores is falling, but the company hopes this weekend's events give customers more than just one reason to make the drive.

"We're teaching them how, for less than $100, they can have their own camping outfit and they can go to a lake or a campground or they can use it in their own backyard," he said.

As gas prices rise and food prices soar, the American shopper is scaling back: driving less, postponing major purchases, putting off vacations, cutting back on their shopping expenses.

That means those shoppers who do make purchases are making them closer to home.

It's a trend George Rosenbaum, co-founder of Leo J. Shapiro and Associates, calls a retailing transformation.

"Any store that has significant dependence on drawing traffic from more than 30 miles is going to have pressure on it," he said.

WSL President Candace Corlett worries about what kind of long-term effect the changing shopping patterns could have on the nation's retailers _ particularly those such as Ikea, Cabela's and far-flung outlet malls _ whose bricks-and-mortar business models requires shoppers to spend hours in a car.

"Not only is it far away, so it's a gas-guzzling trip, they're selling merchandise that's a purchase that can be postponed, and they're the type of retailers where there's too much temptation," she said. "If you go into Ikea with nothing in mind, you come out hundreds of dollars later. This isn't a time when people are proud to be buying lots of stuff."

Just ask John Wallace and his wife Margot.

The Oliviehain, Calif. residents, who visited a Cabela's sporting goods store in Nebraska during a cross-country road trip to see family, say they can still afford the nearly $5-a-gallon gas in their hometown. But they're still bundling shopping trips into fewer stops, sharing rides with friends for longer journeys and scrapping visits to other faraway destinations altogether.

"I think everybody's trying to become a little more wise and savvy," said Margot Wallace, 50.

But not all destination retailers are feeling the squeeze.

American Girl stores _ veritable wonderlands for doll-loving girls and their parents _ are seeing increased traffic this summer. Stephanie Spanos, a spokeswoman for the dollmaker owned by Mattel Inc., attributed the increase to the movie "Kit Kittridge: An American Girl," showing in theaters nationwide.

"Given the timing, we're seeing probably a lift in store traffic," she said.

At the Mall of America in Bloomington, Minn., foot traffic is up, too _ thanks largely to the 1.5 million international shoppers who were lured to the mega-mall in the past year by the weakened U.S. dollar.

But officials say they're still changing their advertising strategy, spending more money in markets a day's drive from the 520-store mall. They hope the targeted campaigns offset any potential decrease in far-flung shoppers deterred by the high price of fuel.

"We're always out there hustling to get the word out," said spokesman Daniel Jasper. "But we've been a little more aggressive this year, to be honest."

The same goes for Cabela's Inc., whose stores routinely draw shoppers from three hours away.

The Sidney, Neb.-based retailer known for its elaborate, one-of-a-kind stores is launching a new display advertising campaign with a gas-saving theme, encouraging shoppers worried about fuel prices to scrap in-store visits for online or catalog orders.

"We can hopefully direct customers to those channels so they don't have to fire up the car," said spokesman Joe Arterburn, who said the company is likely drawing fewer in-store shoppers from great distances. "Everyone is tightening their belt."

Source: Washington Post

Slam dunk for Starbucks?

Stop & Shop ends deal with Dunkin' Donuts, making room for a rival

In the latest twist in New England's coffee wars, Quincy grocery chain Stop & Shop will drop Dunkin' Donuts stores from inside 130 supermarkets next year and likely replace them with rival java giant Starbucks, according to a Dunkin' franchise executive and a supermarket union official.

Mark Dubinsky, president of the Dunkin' Donuts Independent Franchise Owners Association, yesterday said Stop & Shop is not going to renew its master lease with Dunkin' when it expires early next year.

"For some reason, Stop & Shop didn't want to continue. A lot of Dunkin' franchises are sad to see the relationship end," Dubinsky said. "Franchises liked the ability to access supermarket customers that may not frequent traditional stores. It was a good deal while it lasted."

Most of the supermarkets with Dunkin' Donuts shops are in Massachusetts and Connecticut.

Now, Stop & Shop appears poised to expand a relationship with Starbucks it first began two years ago. Starbucks has 93 coffee stands operating inside Stop & Shop and its sister grocery chain Giant Food. Mark Espinosa, president of UFCW Local 919 in Connecticut that represents Stop & Shop employees, yesterday said he had been told by the grocer's labor relations executives that Starbucks would be taking over the Dunkin' sites.

Bridget Baker, spokeswoman for Seattle-based Starbucks, said the company is "pleased to be moving forward" with Stop & Shop but declined to comment further on future store openings.

Stop & Shop spokeswoman Faith Weiner declined to discuss the terms of the company's agreements with Dunkin' Donuts and Starbucks, except to say: "We have agreements in place with Dunkin' Donuts that extend into 2009."

Dunkin' spokesman Stephen J. Caldeira declined to comment and referred questions to Stop & Shop.

In recent years, Starbucks and McDonald's have tried to challenge Dunkin' Donuts, opening more stores and offering new gourmet brews.

Now, while Canton-based Dunkin' has focused on opening stores across the country in a massive expansion, Starbucks is retrenching, saying this month it would shutter approximately 600 stores, including seven in Massachusetts.

The different customers that Starbucks and Dunkin' Donuts attract may have been a factor in Stop & Shop's switch, said Dennis Lombardi, executive vice president of foodservice strategies for WD Partners, a design development firm in Columbus, Ohio. Higher priced menu items at Starbucks could mean higher profits for the grocery chain as well, Lombardi said.

"My guess is it's a Stop & Shop decision to try and maximize revenues per square foot," Lombardi said. "More [is] spent per purchase on Starbucks."

Another factor may have involved workforce issues between Stop & Shop and Dunkin'. Stop & Shop is a union grocery chain, while Dunkin' is nonunion.

Under the terms of its union contract, the workers staffing the Dunkin' stands inside the supermarkets have to be Stop & Shop employees.

"It was a challenging relationship," Dubinsky said. "Dunkin' had to use Stop & Shop employees because of the union and had difficulties managing employees because they technically weren't their own."

Espinosa said the setup led to a lot of confusion. Stop & Shop, he added, had a relatively hands-off approach to the Dunkin' shops, while the union expressed concerns that Dunkin' was staffing the stores only with management positions to avoid complying with staffing levels and other provisions of the union contract.

"With Starbucks, Stop & Shop will have more control over the stores, and this is a positive development," Espinosa predicted.

Starbucks had its own labor issues, including charges last year by the National Labor Relations Board that the chain broke federal laws by illegally firing workers who supported a unionization effort.

Stop & Shop employee Liliana Cabral, 24, found out recently that the Dunkin' Donuts at the South Bay shopping center in Dorchester where she's worked for the last five years would be closing. She said she's disappointed Dunkin' will be gone, but as a Stop & Shop employee she hopes to continue to work at the coffee shop when it becomes a Starbucks.

Dunkin has focused its nationwide expansion on stand-alone stores, although it has tested shops within other grocery chains such as Shaw's Supermarket.

The Stop & Shop deal may also prove to be an exception for Starbucks. The majority of its stores are company-operated, though in cases where it partners with a supermarket, the stores are jointly operated. On its website, Starbucks said it will "enter into licensing arrangements with companies who provide access to real estate which would otherwise be unavailable," listing national grocery chains as an example of this exception.

Hatem Hassan, 45, a drugstore manager, considers himself a customer of both Starbucks and Dunkin' Donuts.

"Starbucks' coffee's nice. It's more expensive," Hassan said, sipping a Dunkin' Donuts coffee inside the Stop & Shop at the South Bay shopping center. "I'll drink it anyway."

Source: Boston Globe

Merrell to Open San Francisco Store

ATLANTA — Merrell is opening its first company-owned U.S. retail store in August in San Francisco’s Union Square district.

The 2,400-square-foot flagship will carry a complete selection of men’s, women’s and children’s merchandise, including the active and casual footwear it’s known for and multi-use technical jackets, fleece, long and short-sleeve shirts, pants and hats, as well as packs and bags.

The store’s interior features a combination of natural and technical materials to help bring the outdoor experience in a retail location. It has a color scheme of Merrell orange and muted neutrals that complement the stone flooring and river rock baseboards and the vertical wood grain surfaces, grass panels and textural, recycled coverings and hardware for the store’s footwear and apparel fixtures.

Seth Cobb, vice-president and general manager of Merrell said Merrell is also “actively pursuing partnerships with city parks, sports organizations and charities in the metro San Francisco area to support our local customers’ passions.”

Merrell said the Union Square store is designed as a cutting edge example of evolved retail by making it a crossroads for its customers, as well as a place to shop. It will include a staff that “live and breathe Merrell’s enthusiasm for outdoor pursuits,” as well as a community bulletin board, sponsored events and seminars. The store will also serve as a model for future Merrell store expansions.

Source: Designing Men's Fashion

What Women Want...From Shopping Centers

In 2000, Hollywood released the film, What Women Want starring Mel Gibson and Helen Hunt. The film features a non-plausible storyline as Gibson suddenly finds himself blessed with the power to read women's minds.

This new ability allows him to relate to women in a whole new way and in the end (sorry if I'm spoiling this for anyone), he gets the girl. In 2008, Fort Worth, Texas-based Trademark Property Co. decided they too would delve into women's minds...and listen.

The development company is starting a new trend--bringing real, live women in to consult on shopping center projects. The company recently hired two female retail consultants and invited more than two dozen women to give feedback on a recent mall project.

The women were given free reign to dish their opinions on the center's layout, landscaping, parking, outdoor art and restaurant options. Because of this, the company went on to create shopping centers that grab the attention of their target market--women.

Many developers are following suit, often taking dozens of women out to lunch to have them sit down and provide feedback for upcoming retail center projects. According to the New York Times, many women want shopping centers to incorporate more items for children, such as nursing stations and open playrooms, especially as women in the 35-to-55 age range become a larger focus for retailers.

Developers soon discovered that women not only knew exactly what they wanted from a shopping center, but also how it should look and feel. How very fabulously female, eh? Drum roll, please (and feel free to take notes). Here's what women want from their shopping centers:

-Less formal building structures
-More green space
-Walking pathways
-Wider parking spaces and sidewalks
-Community centerpieces--like fireplaces
-"Calming" water areas
-Interactive play art for the kids
-Outdoor restaurant seating

Well, developers, you asked. And much like Mel Gibson in the movies (not in real life), you're learning that women just can't hold back when it comes to what they want.

It will probably come as no surprise, but I absolutely love, love, love that developers are consulting women on the design of shopping centers. All retailers and developers need to take heed, especially since women are the chief purchasers in families today. So, be on the watch, as you may find the face of shopping centers shifting to a more feminine look and feel.

Source: Retail Design Diva

Build-A-Bear Cuts Store Openings

After seeing sales decline and posting a loss, Build-A-Bear Workshop will dramatically cut back on store openings next year, executives said at its second-quarter conference call. Four units will open in North America, and two in Europe in 2009, as compared to 20 new North American units and five European stores this year. In addition, the company is reassessing its oldest stores.

"Store-lease renewals begin ramping up in 2009 and 2010," said Maxine Clark, Build-A-Bear Workshop chairman and chief executive bear. "This allows us to take a fresh look and our markets and how the market should be restructured. We are deep into this planning with our teams and landlords.”

At least one new North American store will open in Puerto Rico, the company’s second on the island. Eventually, two or three more units will open there. Despite the slowdown, however, long-term goals remain unchanged.

“We’ve said that our chain can be 350 stores in North America and 70 in the United Kingdom,” Clark said. “That has not changed.”

At quarter’s end, the company owned 330 stores -- 278 in North America and 52 in Europe. International franchisees owned 58 stores. Total revenue was $94.7 million, down 6% from last year. Comp-store sales declined 17.9%, with European comp increase of 2.2% only slightly offsetting a 20.5% decline in North American stores. The chain posted a loss of $4.8 million, vs. earnings of $1.6 million last year. The Easter shift into the first quarter this year also affected earnings, the chain said.

Source: Chain Store Age

Report: TJX Putting Bob’s Stores on Block

TJX Cos. is reportedly in discussions to sell its money-losing Bob's Stores, Bloomberg reported on Friday, citing people with knowledge of the sale process. TJX, whose brands in the United States include T.J. Maxx, Marshalls, HomeGoods and A.J. Wright, has benefited as shoppers look for cheaper alternatives. It posted a nearly 20% profit gain on a 6% increase in sales in its first quarter ended April 26. The bulk of TJX’s sales come from T.J. Maxx and Marshalls. But Bob's Stores, which TJX acquired in bankruptcy in 2003, remains in a slump. According to the report -- which cites anonymous sources -- potential buyers for Bob's include private-equity firm Versa Capital Management Inc. The report said TJX's adviser Peter J. Solomon Co. is seeking a buyer that will keep Bob's 34 stores open.

Source: Chain Store Age

ANOTHER RETAILER'S CLOSE TO COLLAPSE

This year's wave of retail bankruptcies is threatening a new victim on the East Coast.

Boscov's, a Reading, Pa.-based department-store chain, is scrambling to keep itself afloat as a drop in consumer spending across the Mid-Atlantic region has hammered its sales and drained its cash, sources told The Post.

About half of the major suppliers to the 97-year-old, family-owned chain - which operates about 50 midprice stores in six states that sell clothing, appliances, electronics and furniture - have halted merchandise shipments for lack of payment, sources said.

In addition, big commercial lenders including CIT, GMAC and Milberg have stopped guaranteeing deliveries to Boscov's stores, sources said.

A lack of support from these so-called "factoring" companies frequently precedes a bankruptcy, as vendors are unable to get financing to keep shelves stocked.

Sources say Boscov's management is still looking for alternatives to a bankruptcy filing, including the closing of up to 10 money-losing stores.

Boscov's also has sought to obtain financing based on the value of its real estate, but has already been turned down by at least two major lenders, sources said.

To keep operations running, the family that owns the chain, headed by Al Boscov, injected $28 million in equity into the company about three weeks ago, sources said.

Last month, Boscov's pulled the plug on an offer to give customers a 10-percent bonus on redemptions of stimulus checks, citing an "overwhelming response."

Some sources said Boscov's is having trouble digesting 10 stores it bought in 2006 from Federated Department Stores following the Macy's predecessor's merger with rival May Department Stores.

The company did not return phone calls seeking comment.

Source: Plain Vanilla Shell

Back-to-school spending to top $20B this year

Total back-to-school spending this year is estimated to reach $20.1 billion, a $1.7 billion increase over last year’s estimate, according to the National Retail Federation.

The average family with children in school will spend $594.24 on back-to-school purchases, compared to $563.49 last year, according to the D.C.-based organization’s survey of more than 8,300 respondents.

Parents will spend $151.61 on electronics during the back-to-school time frame, up from $129.24 last year. And most consumers (73 percent) will head to discount stores for shopping. . . . more

Too Many Malls, Too Few Tenants

Retailers at Open-Air Shopping Venues Cancel Expansion Plans, Shut Stores As Slow Economy Hurts Sales

The hottest trend this decade in shopping-center development has gone cold.

Known as lifestyle centers, the open-air shopping venues offer small parks, fountains and cafés amid name-brand retailers selling fashion apparel, housewares and other discretionary fare. Developers raced to add new ones as they became popular with shoppers, especially women between 20 and 50 years old, a coveted category. Meantime, construction of traditional enclosed malls all but stopped.

Kris Hudson/WSJ

A Cedar Hill, Texas, lifestyle center is only half occupied. The storefront in back remains vacant.

But now, with the economy slumping and shoppers spending less, retailers that had flocked to the centers -- like Chico's FAS Inc., AnnTaylor Stores Corp. and Talbots Inc. -- have begun canceling expansion plans and even shutting stores. Others, such as Linens 'n Things Inc., have sought bankruptcy protection.

This couldn't happen at a worse time for lifestyle-center developers, which were putting up more of the shopping centers than ever. Last year they built 37 centers totaling some 12 million square feet, or roughly 40% of the total lifestyle-center square footage added this decade, according to market-research firm Portfolio & Property Research Inc. Double the 2007 total is now under construction, and three times as much is in the planning stages.

The economic slowdown, of course, means many of the planned projects won't leave the drawing board. But many centers where constuction has begun will probably have difficulty leasing space when they open. That raises the specter that eventually they may not be able to pay their debt, adding to the strain on the already ravaged finance sector.

Leasing problems have clearly begun. Developer M.G. Herring Group opened its Uptown Village regional lifestyle center in the Dallas suburb of Cedar Hill in March with only half of the space occupied and the rest walled off with wood panels bearing the center's marketing images. President Gar Herring says he has so far signed retailers for 60% to 70% of the 725,000-square-foot project, though it remains only half occupied five months after its opening.

Kris Hudson/WSJ

The small-shop space at Prairie Center shopping center in Brighton, Colo., is mostly empty.

In Brighton, Colo., THF Realty Inc. has filled most of its new Prairie Center retail project with such big-box retailers as Dick's Sporting Goods Inc. and PetSmart Inc. But Prairie Center's small-shop space -- erected in a lifestyle-center format nearby -- is mostly empty. Half-a-dozen tenants, including Heidi's Deli, Verizon Wireless and Elite Nails, are sprinkled among vacant storefronts sporting "for lease" signs.

Herring and THF executives say they anticipate no difficulties paying their debt service on the projects.

Some believe that the lifestyle-center craze was about to run its course in any case. The metropolitan locations that are best suited to the centers are mostly taken. "There were a number of projects proposed in markets that didn't really have the [sales] demand to support the projects," says Stephen Lebovitz, president of mall owner CBL & Associates Properties Inc., which has built two open-air centers.

Certainly the centers being built now show an evolution in the approach to the centers. Recent versions have larger formats and more diverse tenant rosters, including department stores and movie theaters. Few developers now propose the original format, which offers only small shops and spans 200,000 square feet or less. "Those are dead," says Maury Levin, a retail-property broker at commercial real-estate firm KLNB Inc. in Baltimore.

Construction of other retail-property formats is also slowing as consumer spending wanes. Portfolio & Property Research forecasts that in 2009, retail-space construction in the top 54 U.S. markets will drop 48%, to 71 million square feet, from this year. Existing properties are hurting, too. Vacancy rates at U.S. malls and shopping centers have climbed to 7.4% this year, the highest level this decade, according to market-research firm Reis Inc.

Many developers that have the option are canceling or scaling back projects. Citing slow progress in leasing, Opus Corp. opted to proceed in phases at a lifestyle center in the Seattle suburb of Issaquah, Wash., scheduling the opening of 150,000 square feet of shops in 2010. It had planned to open three times as much space in 2009.

In Canonsburg, Pa., developer Cullinan Properties Ltd. has delayed by a year, to 2010, the opening of 200,000 square feet of small shops intended to accompany a 14-screen movie theater as it struggles to lease the space.

What's tripping up many developers is the tendency of lifestyle-center tenants to travel in packs. The centers often don't have big anchor stores, so many retailers insist that several complementary stores agree to open in a given center before they will do so. "You may have 10 tenants you want to get, but eight are waiting until the fall to make a decision and the other two are waiting on those eight," says Frank Natanek, Cullinan's group president of real estate and marketing.

Poag & McEwen Lifestyle Centers LLC, which has developed 10 lifestyle centers, recently scrapped plans for one in Boise, Idaho, after five retailers reneged on signing leases there and then several more did the same. The Memphis, Tenn.-based developer proceeded with construction of a lifestyle center in Plainfield, Ill., only after tenants there waived the requirement that certain fellow retailers such as Chico's join the project. Chico's has pared its expansion markedly to 45 new stores this year from 118 last year.

Despite these stresses, most new lifestyle centers aren't in danger of immediate foreclosure. Developers and lenders typically structure construction loans to carry fledgling projects through lease-up periods, and they're hoping that the economy will rebound by the time those reserves are depleted.

"You're not really going to see these projects get turned over to the lenders until later this year at the earliest," says Ben Yang, an analyst with Green Street Advisors.

Source: Wall Street Journal

School Ties

As high-density development becomes a popular trend, more and more universities are exploring the possibility of building mixed-use projects on their campuses. In the latest example, the University of Maryland in College Park, Md., plans to use a 38-acre site on its East Campus to house the school's administrative facilities plus two million square feet of graduate student and market-rate housing, professional offices and retail space. The university, which still has to work out all the details, has partnered with Rockville, Md.-based developers Foulger-Pratt Cos. and Argo Investment Co. for the project.

Upscale retail chains, including Whole Foods Market, have been dotting college campuses. In addition to grocers, campus-oriented developments provide a good fit for large bookstores, casual apparel chains, fast casual restaurants and various service providers, including wireless phone stores and health-oriented stores, according to Jeff Green, president of Jeff Green Partners, a Mill Valley, Calif.-based consulting firm.

Green cautions that large-scale commercial development won't work on every college campus. The best candidates are prestigious private schools, where students are likely from well-heeled families and have deep pockets with the discretionary income to spend. On the other hand, state-run institutions, where students are more likely to have taken out loans and are working their way through school may not be as financially appealing.

Schools that have been using campus space in creative ways include the University of Pennsylvania in Philadelphia and the College of William & Mary in Williamsburg, Va. Last year, Penn teamed up with Houston-based Hanover RS Limited to complete a $100 million mixed-use complex in its University City. The complex features 295 luxury apartments and 26,000 square feet of retail space. The College of William & Mary is in the midst of building New Town Williamsburg, a 365-acre mixed-use community that will combine 1,000 homes with 500,000 square feet of office space and 300,000 square feet of retail and restaurants. The project, the result of a joint venture between the Endowment Association of the College of William & Mary and developer C.C. Casey Ltd., Co., will be completed sometime in 2018.

In addition, the University of Connecticut, in Storrs, Conn., will break ground this year on Storrs Center, a $165 million, 49-acre mixed-use development across the street from its main campus. When completed, Storrs Center will include 800 residential units, 200,000 square feet of retail and restaurants, up to 75,000 square feet of office space and between 5,000 and 25,000 square feet of community space.

Commercial developments on the sites of college campuses have been gaining in popularity because they allow schools to raise their revenue streams while also providing steady demand for the projects' residential and retail components, according to Roy Higgs, CEO and managing partner with Development Design Group Inc., a Baltimore-based planning, architecture and design firm. One of the projects Development Design Group is currently working on is College Row, a 114,620-square-foot mixed-use redevelopment at Franklin & Marshall College, a four-year private school in Lancaster, Pa.

“Many of these universities are well located, they have a high visitor component because of the students' families, plus you've got the increasingly higher spending power of the student body itself,” Higgs says. “It's a combination of competition for both students and their dollars.” Median household income within a one-mile radius of U. Conn., for example, is $86,348, according to Pitney Bowes Business Insight, a Newport Beach, Calif.-based consulting firm. That puts the market 79 percent above the national average.

Source: Retail Traffic

Brockton, MA Walgreens Trades for $9.4M

UBS Sells Retail Bldg. for $715

PSFNew York-based Splendido Real Estate, Inc. acquired the Walgreens at 880 N. Montello St. in Brockton, MA from institutional investor UBS Real Estate Investments, Inc., for $9.45 million, or $715 per square foot.

The 13,204-square-foot retail building was built in 1925 in the Route 24 submarket.

The property was not on the market at the time of sale. Splendido Real Estate, Inc. approached UBS Real Estate Investments, Inc. directly and exercised its 1031 exchange option in the transaction.

Source: CoStar

U.S. consumer electronics sales to exceed expectations this year

Overall shipment revenue of consumer electronics will top $173 billion in the U.S. this year, which is $2 billion more than January’s prediction by the Consumer Electronics Association.

The Arlington-based association’s semi-annual sales forecast shows that consumer electronic shipment revenues will grow by 7.3 percent this year, reaching more than $183 billion by 2009.

“The consumer electronics industry is a backbone of economic activity in this country,” said Gary Shapiro, president and chief executive officer of the association. “In a tough economy, consumers turn to consumer electronics products for many reasons -- from entertaining in the home to telecommuting to save gas.” . . . more

Best Buy aiming for a bigger share of the wireless market

Best Buy Inc. admits at least one weakness: wireless.

The largest U.S. consumer electronics retailer had been dissatisfied with a 2 percent market share in cellphones, while holding an enviable 20 percent in TVs, digital cameras and DVD players, and selling more laptops than any other chain.

But now the big-box behemoth believes it has the ticket to a larger wireless share, even as Fort Worth-based RadioShack Corp. struggles in the category that represents one-third of its business.

By fall, all 957 Best Buy stores in the U.S. will house expanded wireless departments, branded as Best Buy Mobile, in a joint venture with the U.K.'s Carphone Warehouse, Europe's cellphone leader.

It's also planning to add 35 1,000-square-foot free-standing Best Buy Mobile stores to the 15 locations it's been testing in Manhattan and North Carolina for almost two years. Chicago and Minneapolis are next, and Texas, where all Best Buy stores now contain the new mobile departments, is a year away from getting a free-standing store.

With 60 percent of stores converted, Best Buy says its wireless market share has shot up to 3.6 percent from 2 percent at the end of 2007, even though U.S. handset sales dropped 20 percent in the first four months of this year, according to NPD Group.

Best Buy's 28 million Reward Zone loyalty program customers, who historically bought their phones elsewhere, are some of the new customers, said Shawn Score, president of Best Buy Mobile.

The division operates from the company's Minnesota headquarters and is populated by British cohorts who provide expertise on how to run small stores, supply them with mobile products and bundle services.

The relationship went beyond the joint venture last month when Best Buy closed on its $2.1 billion, 50 percent stake in Carphone Warehouse.

New arrangement

Best Buy Mobile overhauls the way the chain had been selling phones: a couple dozen cellphones displayed alongside other small electronics such as MP3 players and cameras. Service activation took well over 45 minutes.

Now stores stock 80 to 100 phones organized by nine contract and prepaid carriers, and plans and no-contract options can be easily compared. Accessories, including Bluetooth headsets, memory cards for music and photo storage, and broadband cards for laptops, are displayed. So are services that can be added on, such as GPS.

Best Buy sells its Geek Squad assistance as part of the package for smart-phone buyers who need help configuring e-mail and other mobile services.

Staffers dedicated to selling phones have a desk where customers can sit to be served. They have received more than 40 hours of training and receive no incentives to sell one carrier over another.

Converted stores are generating 50 percent more connections per week, and the time it takes newly trained employees to activate services has declined to about 35 minutes, Mr. Score said.

The goal is to get to 15 minutes, he said. The pitch includes a promise that the store will be there to service the buyer for the life of the phone, he said.

And while Wall Street is starting to notice its wireless advances, analysts are more worried about the bigger picture. RBC Capital Markets analyst Scot Ciccarelli noted Best Buy Mobile's sales gains and said in a report that gross margins are double the corporate average. Still, the base is small, he said.

Goldman Sachs analyst Matthew J. Fassler last week reinstated a "sell" rating on Best Buy's stock, saying there are several risks that threaten its long-term earnings outlook. Among those: The price of TVs going down, growing mass-market competition from Wal-Mart and fading tax rebate benefits from the consumer.

Best Buy's timing coincides with AT&T's opening of dozens of stores this year on top of its 2,000 existing stores. AT&T, the No. 1 carrier, also has a lock on Apple's iPhone 3G.

Additionally, Wal-Mart is building bigger and better consumer electronics departments.

And there's no shortage of places to buy mobile devices and wireless service. No. 2 carrier Verizon has 2,400 stores and kiosks, No. 3 Sprint Nextel has 1,300, and No. 4 T-Mobile operates 1,500 stores and kiosks. Costco, Sam's Club and Target also sell wireless phones and service, and prepaid phones are even sold at 7-Eleven, not to mention RadioShack.

RadioShack

For years, wireless was a rich business for RadioShack's 4,400 stores. The chain was the first to negotiate contracts with carriers that gave it a steady stream of royalties from the cellphone customers it signed up.

Now, troubled Sprint is RadioShack's biggest wireless partner, and Sprint is expected to have a tough year.

RadioShack reports its second-quarter results today. Analysts forecast it will post a profit of 26 cents, a penny lower than year-ago earnings. While sales have been helped by $40 digital TV converter boxes, analysts said, earnings benefits from cost-cutting are going to be harder for chief executive Jim Day to find this year.

RadioShack may also disclose a new project today.

Deutsche Bank analyst Mike Baker quoted sources in a report Friday as saying RadioShack is building three test stores that will "replicate the look and feel" of Apple stores and open in October. Ten more stores are planned by year-end, 150 in the next 12 months and 400 in three years. The store name isn't likely to invoke the RadioShack brand, he said, and may include access to some wireless brands not carried by RadioShack such as T-Mobile, Verizon and AT&T.

RadioShack spokesman Charles Hodges said he couldn't comment on the report.

Source: Dallas Morning News

In-store clinic growth slowing

Financial backers pull plug on some

The sputtering economy and impatient private investment firms could be slowing the push into retail medicine, a consulting firm finds.

The number of retail clinics fell by 12 last month, to 969 from 981, according to the latest monthly tally by Merchant Medicine, a Minneapolis-based research and consulting firm that advises medical-care providers and employers on how to work within the retail clinic industry.

"It was the first month we saw a net drop," said Tom Charland, chief executive at Merchant Medicine, which has been tracking the growth of retail clinics for two years.

Although the number could be a blip and Charland said growth will continue based on his early evaluation of this month's growth, it's the latest example of the slowing of clinic expansions. A year ago, they were opening at a rate of about one a day, Merchant Medicine figures show.

Some markets are not making money, but retail giant Walgreen Co., which finances its own expansions, said that can take two years, citing profits in more established markets such as St. Louis and Kansas City, Mo., where it opened its first retail health clinics in 2006. Where clinics have closed, private-financed ventures in some cases did not even wait a year.

In recent years, hundreds of retail clinics have opened across the country. Typically staffed by advanced-degree nurses known as practitioners, the clinics are open seven days a week, with no appointment needed. The clinics treat patients who have routine maladies, such as ear and sinus infections, strep throat and pink eye.

The model has been greeted by health insurers, employers and consumer groups as a way to address the national problem of accessing medical care, particularly with the rising number of uninsured Americans. And consumers continue to flock to them, retailers report.

But their financial backers can be key to success of the retail clinics. "The track record of private investors and venture-capital firms has been abysmal," Charland said.

Earlier this year, for example, a physician-staffed model of retail medicine known as Medical Marts of Las Vegas shuttered its operations in various retail outlets across the country, including clinics it had in Meijer supercenter locations in the Chicago suburbs. An executive at the time of the closure said, "Venture capitalists backing the company had a change of heart and decided to go another direction with their funding.

"Although located in large retailers such as Meijers or Wal-Marts, the clinics that have failed tend to be backed by private backers who partner with large retailers. For example, privately backed SmartCare closed 15 retail clinics inside Wal-Marts last month throughout Colorado.

Wal-Mart Stores Inc. referred calls to SmartCare executives who could not be reached for comment.

It's unclear whether the recent credit crunch has anything to do with private-equity backers pulling the plug, but analysts say that could be a contributing factor.

"The big ones that have closed have been backed by private investors rather than those backed by large retailers," Charland said.

Deerfield-based retail pharmacy giant Walgreens, for example, bought a clinic operator, Take Care Health Systems, last year and is financing its own clinic expansions with plans to double the number of its clinics by the end of the year.

Walgreens has 189 clinics, including 29 in the Chicago area. Walgreens clinics, which operate under the Take Care brand, will number about 400 by the end of the year. The company has not released projections for 2009.

"We're strongly committed to our Take Care Health Clinics and are continuing our expansion of them as planned," said Walgreens spokesman Michael Polzin. "Just like our newly opened drugstores, we anticipate our clinics taking two to three years to become profitable. That's the pace our oldest clinics, which opened in 2006, are on.

"Wal-Mart, too, said it is committed to its expansion plans announced last year that called for opening as many as 400 in U.S. stores in the next three years and possibly 2,000 of them within five to seven years.

"We are still committed to those goals," Wal-Mart spokeswoman Christi Gallagher said. "Some clinics are run by hospitals while others are entrepreneurial start-ups backed by venture capital.

"Lately, Wal-Mart said its relationships with hospitals wanting to lease space for clinics in its stores is strong. "We've had more than 400 hospitals and health systems approach us about leasing opportunities," Gallagher said.

Source: Chicago Tribune

Mall Owners Join Retailers to Drive Back-to-School Sales

As retailers shift into high gear for the all-important back-to-school shopping season, mall owners and operators looking to boost sales at their centers are riding shot-gun.

Next week, Simon Property Group will begin its Teen Spree shopping events at 12 select properties. The Teen Sprees, which run between three and five hours, were tested last year at two of Simon's more than 200 U.S. properties. On a given day in August, shoppers can buy a ticket for $5 and get various discounts on purchases from selected mall stores ranging from specialty apparel to electronics to athletic footwear.

In its inaugural Back-to-School survey, released this month, Deloitte cited 79 percent of U.S. consumers said they will be more focused on buying products on sale this year than they were in 2007. In addition, 53 percent said they will use store coupons more than they have in the past.

“Teens and children are still going back to school,” says Cathi Weiner, senior vice president of development with Simon Brand Ventures, Simon’s Property Group's marketing arm, adding that they will continue to need school supplies even in a troubled economy.

The Deloitte survey reported up to 71 percent of U.S. households will spend less money this year on back-to-school purchases than they did in 2007. American consumers are too worried about falling housing values, job security and shrinking credit to spend as they did two or three years ago.

In addition, with gas prices continuing to hover near $4 a gallon, consumers will limit their shopping trips —69 percent of the Deloitte respondents said they would shop at no more than three stores.

“It’s about trying to limit the number of destinations [consumers] go to," says Stacy Janiak, U.S. retail leader with Deloitte. "Retailers can bundle promotions. . . offering discounts on certain products together will have some appeal.”

As a result, both retailers and mall owners have been aggressive with their promotion campaigns, even kicking them off earlier—in mid July, instead of the last week of the month.
The back-to-school season, typically an eight-week-long period that spans from the last week of July and runs through the third week of September, is not only the second most important season of the year for retailers, accounting for as much as 15 percent of their annual sales, it is a bellwether for the all important holiday sales season.

Aware of how critical this back-to-school season will be, mall owners have been stepping up their marketing efforts.

At several of its malls near Detroit, Taubman Centers, Inc. has been running back-to-school campaigns targeting Canadians, who stepped up their cross-border shopping in recent months. At Great Lakes Crossing in Auburn Hills, Mich., for example, shoppers can take advantage of a (U.S.) $159.99 shop-and-stay package that includes one night at a Holiday Inn hotel, free breakfast, two $25 mall gift cards, a student backpack, a lunch voucher for one child 16 years of age or younger, a Great Lakes Crossing tote bag and a Great Lakes Crossing Visitor Savings Pass.

The other Taubman properties in Michigan taking part in this promotion include the Mall at Partridge Creek in Clinton; the Twelve Oaks Mall in Novi and the Fairland Town Center in Dearborn.

Despite all these efforts, the 2008 back-to-school season will be weak, says C. Britt Beemer, founder of America’s Research Group, a Charleston, S.C.-based consumer behavior research firm. He forecasts back-to-school sales will register a decline of as much as 2 percent.

Beemer estimates, same-store sales between mid-July and mid-September will grow no more than 0.5 percent. By comparison, from July through September of 2007, same-store sales at U.S. chain stores saw an average increase of 2.4 percent.

“Parents are going to be much, much, much more focused on getting good deals,” says Beemer. “I think we will see a back-to-school season that’s going to be very challenged.”

Source: Retail Traffic

Costco warns on profit, stock tumbles

NEW YORK (Reuters) - Costco Wholesale Corp warned on Wednesday that its quarterly profit would miss current Wall Street targets because of soaring energy costs and other inflationary pressures, sending shares of the No. 1 U.S. warehouse club operator down as much as 13.5 percent.

The warning sparked fears that competitors like Wal-Mart Stores Inc and BJ's Wholesale Club, which have been standouts in a struggling U.S. retail sector, could be facing similar woes. Shares of those companies also fell.

Despite inflationary pressures, Costco said it has delayed passing along price increases to shoppers to boost its sales and appeal to cash-strapped consumers.

"It is times like this, painful as it may be, that holding off on price-increasing certain key items, by even a few weeks, we believe helps and strengthens our business for the longer term," Chief Financial Officer Richard Galanti said on a conference call with analysts.

Costco said it expects earnings for the fourth quarter ending August 31 to be "well below" analysts' current forecast of $1 per share due to a higher-than-expected charge for inventory, declining profits in its gasoline business and lower merchandise margins.

"If Costco is not going to raise prices, they're going to go after share even more aggressively," said Telsey Advisory Group retail analyst Joseph Feldman. "I'd be afraid if I was competing with Costco on any product."

TROLLING FOR DISCOUNTS

Customers pay an annual fee to shop in Costco's clubs, which sell everything from discounted computers and fresh foods to bulk-sized packages of paper towels. The company also operates gasoline stations at many of its locations, typically offering prices cheaper than those of local competitors.

Costco and rivals like Wal-Mart's Sam's Club and BJ's have been seen as bright spots in the struggling retail sector, as shoppers, worried about the weakening U.S. economy, increasingly seek out deals in the clubs.

The trend has spurred sales gains. In June, Costco posted a 9 percent rise in sales at stores open a least a year, while BJ's, the third-largest U.S. warehouse club, had a 16.5 percent sales jump on that basis. Comparable-club sales at Sam's Club, which ranks second, rose 8.3 percent.

But some of those gains are being driven by inflation, like higher transportation costs, which is increasing the price of the goods retailers sell.

Rising energy costs are "impacting the direct cost of merchandise frankly at a faster and higher rate of increase in the past six to eight weeks than before," Galanti said.

While Costco is paying more for the items it sells in its stores, Galanti said it is not always immediately marking up prices. "We will always strive to be the last to raise the price of merchandise to our members."

MARGIN PRESSURE

While Costco's margins are being pressured by its decision to delay implementing higher prices, they are also being hit by the recent run-up in gas prices.

Rapid increases in gasoline prices can hurt Costco, which replenishes its supplies of the fuel every day. By contrast, traditional gas stations may turn their inventory weekly, meaning they can be selling supplies they had bought when prices were lower.

So far in Costco's fourth quarter, the national average retail price for gasoline has risen to $4.06 a gallon from roughly $3.10 in mid-May, according to data from the U.S. Energy Information Administration.

Costco said profit in its gasoline operations had fallen from a year earlier.

The company also declared a quarterly cash dividend of 16 cents a share on its common stock and said its board had approved a buyback of common shares worth up to $1 billion.

This stock repurchase is in addition to the aggregate $5.8 billion amount previously authorized by the board, it said.

Costco shares, which had risen almost 18 percent in the past year, were down 11.9 percent at $63.40 in midday trading after falling to $62.31. BJ's shares fell 9.5 percent and Wal-Mart declined by 3.1 percent.

Source: Reuters

Northern NJ: Tight Vacancy Persists in Retail Market

Retail properties in Northern New Jersey continue to perform well, despite the effects of an economic downturn on retailer space demand. Retail sales are growing at a slower rate than a few quarters ago, and a modest pace of spending growth will persist in the months ahead. Reflecting the reduction in retail spending, overall vacancy has inched up in the past few quarters, although the rate remains tight in the mid-4 percent range. Within specific segments of the market, softening demand has lifted vacancy in smaller strip centers and at properties in Hudson County, where the housing market has become sluggish. On the supply side, deliveries of new space will increase to 3.5 million square feet this year. Most of the total is attributable to the Xanadu project, which will have a mix of traditional mall merchants and entertainment-oriented tenants. Although pre-leasing has been slow at Xanadu, other projects such as Center City Paterson and the Promenade Shops at Clifton lifestyle center have enjoyed relatively strong pre-leasing. Recent development announcements in the market include an 89,000-square foot lifestyle center addition at the Paramus Park mall.

By the numbers, a slowing regional economy will hinder job creation, leaving total employment unchanged in 2008. Last year, 11,500 new workers were hired, a 0.5 percent gain. Builders completed 1.1 million square feet of space in 2007 and will increase production to 3.5 million square feet this year. Most of the amount is attributable to the Xanadu project, which is slated to come online in the fourth quarter. Assuming reasonably strong pre-leasing at large projects and softening demand for existing properties, the marketwide vacancy rate is expected to climb 70 basis points this year to 4.9 percent. In 2007, the vacancy rate was unchanged. Rent growth will continue to slow in step with weaker space demand. In 2008, asking rents are forecast to rise 2.4 percent to $28.63 per square foot, while effective rents tack on 2 percent to $26.51 per square foot.

During the past 12 months, velocity in single-tenant assets has declined 58 percent, compared with a gain of 61 percent in the preceding period. Velocity has slowed to a trickle for all single-tenant property types, including drugstores and fast-food restaurants. In a limited number of fast-food deals, prices have ranged from $284 per square foot to $432 per square foot for a regional chain along a heavily traveled stretch of state Route 35. Generally, assets leased to highly rated national tenants can trade with cap rates in the mid- to high-6 percent range, extending to 8 percent or more for lesser tenants and locations. In 2008, lenders will continue to draw distinctions on credit quality, effectively limiting single-tenant activity to assets occupied by tenants with the best credit profiles.

Trades of multi-tenant properties have slackened considerably. In the past year, transaction velocity for these assets has declined 45 percent. Activity has been very limited so far this year, but during the last 12 months, the median price has increased 21 percent to $234 per square foot. Some strip centers and grocery-anchored properties have sold for more than $300 per square foot, but those deals were executed before credit market problems intensified late in 2007. Cap rates for the best properties in established retail corridors in Bergen County, for example, start at about 6.5 percent. Initial returns rise from there to approximately 8 percent for assets in highly urbanized areas of the region. Multi-tenant activity is expected to pick up in 2008 as owners adjust pricing to satisfy buyers’ requirements. High population densities and generally strong demographics in most areas in the region are expected to sustain investor interest during the long term.

In the investment market, transaction velocity for all assets has decelerated. Underwriting criteria have changed during the past several months, and deals are taking longer to execute as buyers scrutinize tenant mix, re-leasing risk and rent growth assumptions more closely. Owners have been slow to respond to changes in the investment climate and are only now beginning to price properties at the higher cap rates buyers require. Cap rates vary widely in the market, though it is not unusual for top multi-tenant centers in high-density areas with solid demographics, such as sections of Bergen and Passaic counties, to price with rates in the mid-6 percent range. Cap rates move higher from there, reflecting property location and potential near-term upside.

Source: Globe St.

Market turnaround 'close,' Home Depot CEO says

Home Depot Chief Executive Frank Blake told investors last month he hoped the housing market had hit bottom.

On Tuesday, he said a turnaround is "close" but added, "I don't see it yet."

"It's still a very tough market," said Blake, who appeared on CNBC's "Squawk Box" morning show in New York. It was Blake's first extended television interview since he became CEO in January 2007.

Home Depot co-founder Bernie Marcus also joined the show's three hosts, interviewing Blake and other guests. Marcus praised Blake for not cutting jobs, upgrading Home Depot stores and reviving a culture that he said had disappeared earlier in this decade.

"People love what they are doing," Marcus said. "The culture [co-founder Arthur Blank] and I created has come back."

Marcus, who stepped down as chairman of Home Depot in 2001, said morale was so low at the stores during the past few years of his tenure that he stopped going into them.

"What, you were going to Lowe's?" asked "Squawk Box" co-host Joe Kernan, referring to the archrival chain.

Marcus continued: It was a disaster. It was cost-cutting. It was getting rid of the most experienced people because they were the highest-paid.

Despite Home Depot's success in helping to create the DIY market segment, Marcus said the founders might not be able to repeat the feat today because of regulatory and economic constraints.

For one thing, Home Depot ran through most of its money within its first year of opening, and it hired on the promise of stock options, he noted.

"Think about going public with $25 million," Marcus said. "Our margins, they looked good, but we had no balance sheet."

Source: Atlanta Journal

More New Jersey Bucks Stop Here

While other retailers are cutting back, dollar stores are expanding in the state

At a time when many retailers are suffering losses and scaling back expansion plans, dollar stores are attracting more customers and are poised to grow in the economic slowdown. Fueled in part by the rising demand for inexpensive goods, such discount retailers are opening new stores and are likely to have an easier time leasing space in the state’s traditionally tight retail market, real estate experts say.

“In today’s economy, people are looking for bargains,” says Donna Drew, a Metro Commercial Real Estate broker who represents Dollar Tree, a Chesapeake, Va.-based dollar-store chain that has 80 locations in New Jersey. “People are looking for the best deal for their money, so they’re shopping at [dollar stores] as opposed to paying higher prices in grocery stores.”

Retailers have largely suffered as the housing slowdown, credit crunch, weak jobs and income growth, and rising food and gas prices have all constrained consumers’ budgets. Dollar stores and other small-format value retailers, however, have been one of the brighter spots in the lackluster retail market, according to a report published last month by TNS Retail Forward, a Columbus, Ohio-based retail consulting and market research firm. Small discount retailers saw a 2.6 percent gain in same-store sales during the first quarter of 2008. While a small increase, the bump was still better than the 1 percent growth for overall retail same-store sales during the same period and the negative growth for industry sectors such as apparel, accessories and home goods.

“Basically, more customers are visiting dollar-store chains,” says John Gabriel, a retail analyst at Morningstar, a Chicago-based investment research firm. “It’s not just your lower-income consumers like in the past.”

Dollar stores are not invulnerable to economic pressures, however, he asserts. “Sales are increasing, but profitability is under pressure because they’re selling less profitable goods,” says Gabriel, noting the average ticket, or the amount each customer spends on a visit, is currently $7 to $10 per person.

“Consumers are just buying what they need, the less profitable consumables,” rather than more profitable discretionary items, says Gabriel. Dollar stores have to be more price-competitive when they’re buying consumables, so their profit margins are smaller, he says. Rising fuel costs are also a concern for these discount retailers, which need to transport goods nationwide and still keep their low price-point, he adds.

Nonetheless, many dollar-store chains have been solid retail performers. “We certainly see some growth this quarter, and that could be attributed to the economic environment,” says Josh Braverman, a spokesman for Family Dollar, a Matthews, N.C.-based dollar-store chain with 78 locations in New Jersey. “There is some opportunity for us in the discount retail sector, and we’ve seen some increases in sales.”

The retailer’s net sales for the third quarter of its fiscal year 2008 were $1.7 billion, up 2.9 percent from the same period a year ago, while its quarterly net income was up 7.1 percent from the third quarter of its fiscal 2007, according to company earnings reports released last month. Food has been a top driver of traffic to Family Dollar stores, which last year expanded its existing food offerings of snacks and candies to include quick-prep and ready-to-eat meals, according to Braverman. Other popular items include household cleaners, seasonal items, home goods and apparel, he says.

Boosted by higher sales volume and traffic, dollar stores are expanding their real estate presence, says Michael Levin, chief operating officer of Fameco Real Estate, LP, a retail real estate brokerage firm with offices in Woodbridge and Plymouth Meeting, Pa.

Dollar stores “are really thriving right now in these economic times,” says Levin, noting some brokers expect such stores to be signing more leases in New Jersey. “They’re going to take more and more advantage of opportunities that are out there,” says Levin. “Real estate comes back to who can do business, and today, they are the ones who are doing business.”

Fameco represents Five Below, a teen-oriented discount chain that sells all of its items for $5 and under. Philadelphia-based Five Below, which has 23 stores in New Jersey, is slated to open 20 new locations in the Northeast this year, with the majority of them in the New Jersey and Philadelphia markets, says Levin.

Family Dollar says it has opened three new stores in the 8,000-square-foot range in New Jersey since the end of 2007, and has signed leases for an additional six to open by 2009. Dollar Tree would not disclose state-specific numbers, but Drew says the retailer plans to open 20 new stores ranging from 10,000 to 15,000 square feet for each of its two divisions: the dollar-only Dollar Tree business and its $5-and-under Deal$ concept.

Other retailers, meanwhile, have either cut back on store openings or closed existing locations, brokers say. The retail vacancy rate in northern and central New Jersey is currently 4.2 percent, up from 3.8 percent during the same period a year ago, according to The Goldstein Group, a retail brokerage based in Glen Rock.

The relative strength of dollar stores versus other types of retailers may make it easier for discount retailers to lease space in New Jersey, which still has one of the lowest retail vacancy rates in the nation, some brokers say. “Historically, New Jersey has been fairly mature with its retail landscape,” says Levin. “For any retailer that grows, it’s been a challenge to find space.” The lack of available space has led to high rents, which many dollar stores have been unable to afford, he says. But increased vacancies may prompt landlords to lower rents, which would make it easier for dollar stores to lease space in the state, Levin notes.

Also, some landlords have traditionally been hesitant to take dollar stores as tenants, because of the low-income image that some discount retailers project, says Chuck Lanyard, president of The Goldstein Group. Now, “landlords are probably taking a second look at dollar stores, where they normally would have turned them down in the past,” he says. “Today, there’s not as many of the national regional tenants looking for new store locations, so they’re more apt to look for these types of uses in their shopping centers.”

Dollar stores are a good draw for shopping centers, adds Lanyard. Aside from offering bargains, they attract primarily female shoppers, which helps to increase traffic to shopping centers during daytime hours, he says.

But dollar stores don’t fit into every retail property, says Matthew Harding, president of Levin Management Corp., a North Brunswick-based retail real estate services firm. A landlord needs to take into consideration the type of property, the location, the demographics in the area and the image that the shopping center is trying to create, he says. Dollar stores simply don’t work for certain retail sites, such as an upscale shopping center in a wealthy area, Harding notes.

Source: NJBiz

Big pitch to uneasy school shoppers

Retailers ready deals amid grim indicators

Anxious merchants are trying to get ahead of the sputtering economy by rolling out penny bargains and promoting price cuts to lure reluctant back-to-school shoppers.

Framingham office supplier Staples Inc. today is unveiling its back-to-school campaign, including television ads called "Gas" and "Grocery" that empathize with consumer concerns over soaring costs and promise to make school shopping more affordable. Last week, rival OfficeMax Inc. launched its "Power to the Penny" campaign, with offers for single-cent glue and protractors, and other deals. Meanwhile, some retailers, including Target and Aeropostale, are promoting free shipping for school purchases, a perk usually reserved for the holidays.

These marketing efforts are the latest example of retailers responding to reduced consumer spending. And there's reason for more concern: 71 percent of shoppers are planning to slash their back-to-school budgets this year, according to a Deloitte LLP retail survey released yesterday. Almost half of those surveyed expect to reduce their household spending by more than $100 and 88 percent plan to do their school shopping at discounters and value department stores.

"Consumers will likely stick to the basics this fall, and parents may be saying 'no' more often as they head to the registers," Stacy Janiak, Deloitte's US retail leader, said in the report.

Consumers are getting hit from all sides. Despite the recent retreat in oil prices, gasoline prices, comfortably above $4 a gallon, are near all-time highs. Overall inflation for the past year, 5 percent as of June, is running at its fastest rate in nearly 20 years. Food prices are rising even faster, up 5.3 percent from a year ago, the fastest climb since 1990. Meanwhile, the job market is weakening: The unemployment rate has climbed nearly a percentage point over the past year, to 5.5 percent.

Although millions of tax rebate checks hit mailboxes in June, consumer spending remained soft last month, making retailers especially nervous for the back-to-school season, which is typically the second largest shopping period after Christmas. Back-to-school spending nationwide, including college students, is projected to grow about 2.5 percent to $51.4 billion compared with last year, the lowest increase in spending since at least 2003, according to the National Retail Federation, a Washington, D.C., trade group. The organization, which is releasing its report today, said college back-to-school spending will drop significantly in the Northeast, to an average of $669.61, compared with $760.05 last year.

Andrea Maffeo, 38, of Billerica, is planning to halve her back-to-school budget to $250 for her two children. "The kids are getting essentials. A new pair of sneakers, a backpack and not as many clothes as they would normally get," she said. "The price of gas, food, oil is crazy. We had to redo our budget."

Maffeo is constantly scouting coupons and sales, and last week scored big with a promotion at children's clothier Limited Too that offered consumers two $25 coupons off their next purchase when they spent $50. She received more than $200 in coupons for her spree.

"Things are tight right now for everyone and I think stores are aware of that," Maffeo said.

In Massachusetts, state legislators also are hoping to jump-start consumer spending. The House took steps yesterday to introduce a bill that would designate the weekend of Aug. 16-17 as a sales tax holiday, despite recent concerns by some officials that the state could not afford the annual tradition.

For its part, Staples, which typically focuses its back-to-school marketing on the chain's wide selection, now is touting deep discounts on school supplies. For example, the retailer featured 5-cent deals in this week's circular, including erasers and paper folders. Staples also advertised several "two-for" deals, including Sharpie highlighters, originally $4.29 each, as two for $5.

But with discounters and warehouse clubs taking an increasing share of back-to-school sales for basic supplies, Staples has also set its eyes on college students, joining forces for the first time with Bed Bath & Beyond to promote a sweepstakes for customers to win gift cards and prizes at the retailers.

At OfficeMax, executives said it became clear this summer that the faltering economy was weighing heavy on consumers. So the Illinois chain honed in on the most compelling offer: the penny.

As part of the campaign, OfficeMax sent an actor with a hidden camera around New York City trying to buy a used car, jewelry, and carriage rides all with pennies. In nearly every case, the "Penny Prank" actor was rejected by unsuspecting shop owners. The clips are posted on YouTube.

"These people won't take your pennies but we will," said Ryan Vero, OfficeMax's chief merchandising officer. "With the difficult economy, what stands more for low price than one cent? You really can't sell something for less than that. You can't even buy a piece of gum for a penny anymore."

Source: The Boston Globe

Best Buy's Vitelli Outlines Five-Point Growth Strategy

NEW YORK — Best Buy has a five-pronged growth strategy for meeting its lofty goal of doubling sales to $80 billion over the next five years.

Mike Vitelli, executive VP of the company's customer operating group, which oversees buying and merchandising, outlined the game plan for achieving 15 percent annual growth during an investor conference held here earlier this month by Oppenheimer & Co.

First, he said, the company believes it will continue to benefit from the CE industry's steady growth of 6 percent over time.

Second, Best Buy will increase its market share by opening new stores and by developing categories where it presently has limited share. These include Apple computers, a relatively recent brand addition; major appliances, which are benefiting from a differentiated assortment and a dedicated sales force with increased training; and mobile phones, which have been reinvigorated by a new business model developed with Carphone Warehouse.

The latter two categories are increasing from single-digit to double-digit growth, Vitelli said.

The third element is the introduction of new categories, such as musical instruments. While all Best Buy stores carry a smattering of keyboards and guitars, he said, the company is experimenting with extensive, "top-shelf" collections in several locations around the country.

A fourth growth engine is the development of completely new business models, such as the planned national rollout of Pacific Sales, the company's West Coast chain of premium appliance stores.

The final element is international growth. Best Buy has already established itself in Canada, China and Europe, and soon plans to open its first stores in Mexico and Turkey.

Separately, Vitelli said the company is working hard to engender more personalized service on the store level in order to combine the scale benefits of a national chain with the hands-on attention of an independent dealer.




Source: TWICE

Small retailers face perfect storm of rising rents, lean consumer spending

Things have changed since Bella Luna Restaurant opened in Jamaica Plain’s Hyde Square in 1993.

“It was a business ghost town,” said co-owner Katherine Mainzer. “Today it is a vibrant, well-lit, well-loved area.”

But as the neighborhood changed, so did the real estate value. With a 15-year lease winding down in August, the landlord wanted an 85 percent increase in rent.

“Even our current rent is really at the top end of what a restaurant should pay in terms of our income,” Mainzer said. “We would have loved to stay there.”

Mainzer said the rent for the 9,800-square-foot space at 403-405 Centre St. in Hyde Square, which also houses Milky Way Lounge and Lanes, could no longer compete against other rising business expenses, such as food, energy and even items like to-go containers.

Rent is part of the cost of doing business, but as rents and other costs rise and customer spending decreases, retailers are feeling the squeeze.

“I think what we are seeing is the perfect storm where costs are up dramatically and sales are low,” said Jon Hurst, president of the Retailers Association of Massachusetts.

As costs are increasing for retailers, the number of vacancies is on the rise at retail spaces, especially for smaller businesses. According to a report released in May by Burlington-based commercial real estate firm KeyPoint Partners, the retail vacancy rate for eastern Massachusetts increased to 6.9 percent for a 17-month period ending March 1. Earlier data released in 2006 showed a vacancy rate of 6.1 percent.

The change was even more dramatic for retailers taking up 2,500 square feet or less. The vacancy rate for these small space users increased to 9.9 percent, from 8.4 percent two years ago.

Jim Gentile, owner of The Pet Shop at 165 Harvard Ave in Allston, said there is very little a business can do to prevent a rent increase except pass the cost on to customers or risk going out of business.

Gentile, whose business has operated on the same block since 1975, said his rent is set to go up by next year, although he does yet know how much.
“Rent increases are a part of life,” he said. “As much as I pay for an increase, it is the cost of doing business.”

Mainzer said the thought of paying $24,000 per month to keep Bella Luna at its current location at 403-405 Centre St. made little sense in the topsy-turvy restaurant business.

Right now, the business pays $13,000 per month, but that figure is closer to $16,000 per month because rights to use a nearby parking lot and a triple net lease on the building — meaning the lessee pays taxes, insurance and maintenance — Mainzer said.

The landlord, Mordechai Levin, could not be reached for comment.

The restaurant and the adjacent Milky Way are downsizing in the process, moving to a 4,000-square-foot location in the Brewery Complex at 284 Amory St. in the spring.

Bowling and billiards will not return, but Mainzer is betting that food, live music and games will prove a draw. Still, she is apprehensive she might lose a chunk of her clientele in the move.

“It’s a big transition in every way, but I really believe small business is a leap of faith,” she said.

Source: Boston Business Journal

Analyst: RadioShack may test concept similar to Apple stores

CHICAGO – RadioShack Corp. may soon test a new concept designed to emulate Apple Inc.'s popular stores, an analyst said.

RadioShack Corp	13.76
9:41:06 AM ET	+0.34
Previous close: 13.42

Deutsche Bank analyst Mike Baker said he believes the company's pilot project will "replicate the look and feel" of Apple stores, and may include access to some wireless brands not carried by the company, such as T-Mobile, Verizon and AT&T.

"Our source indicates that (RadioShack) is building three test stores to open by October, and then will hope to have ten by year end, 150 in the next 12 months and 400 in three years, if successful," Baker told investors in a research note Friday. "We do not know if a name for the new format has been chosen, but we believe it will not invoke the RadioShack brand."

He said the new stores would target higher end, non-mall sites and capitalize on the growing popularity of touch-screen phone technology.

RadioShack spokeswoman Wendy Dominguez said the doesn't comment on "speculation or rumor."

RadioShack has about 4,400 stores and is scheduled to report earnings on July 24.

Source: Dallas News

Is Mervyns on the Brink of Bankruptcy?

Retailer has reportedly stopped returning creditors’ phone calls

A struggling Mervyns LLC (Hayward, Calif.) may be on the brink of a bankruptcy filing.

According to a report in Women’s Wear Daily, “lenders and credit analysts are jittery about the future of . . . the $2.5 billion moderate-price regional department store chain.”

WWD noted that the retailer has been hurt by the housing implosion in California “and its core customers are being squeezed by rising gas and food prices, job cuts and tight credit.”

"We are currently advising all clients to hold orders," Bob Carbonell, chief credit officer for Bernard Sands, a credit-checking firm, told WWD. A Mervyns spokesman declined to comment.

Credit sources told WWD that the factoring arm of GMAC Commercial Finance has stopped approving orders of goods to the chain, which has 177 stores in seven Western states. An executive at GMAC declined comment.

WWD also said Mervyns has apparently stopped returning telephone calls to vendors, factors and credit-checking firms.

Mervyns was started in 1949 and was owned by Target Corp. (Minneapolis) until 2004, when it was sold to a consortium that included Sun Capital Partners Inc., Cerberus Capital Management LP and Lubert-Adler/Klaff for $1.65 billion. WWD said that Sun Capital is said to have agreed to buy the Lubert-Adler/Klaff stake, although the transaction is believed not to have yet taken place.

Source: VMSD.com

Changes at Ann Taylor

Brian Lynch to become president of corporate operations

Ann Taylor Stores Corp. (New York) has announced that Brian Lynch, currently president of the company's factory division, will assume the additional leadership of corporate real estate and construction and e-commerce business under the new title, president of corporate operations.

In addition, Michael Nicholson, executive vp and cfo, will assume leadership responsibility for Information Technology and global procurement at the specialty apparel company. And Anthony Romano, chief supply chain officer, has resigned “to pursue other interests.” The company indicated that a new chief supply chain officer is expected to be announced shortly.

All the changes are effective immediately. "I am very pleased to acknowledge the outstanding leadership that Brian and Mike have demonstrated, as the business evolves and we position the company for future growth,” said president and ceo Kay Krill.

Source: Visual Store

A&P Ramps Up Conversions, Remodels

MONTVALE, NJ–With the integration of Pathmark essentially complete, the Great Atlantic & Pacific Tea Co. will ramp up the conversion of its stores to its Price Impact format, which emphasizes value, and its Fresh format, executives said at the company’s first-quarter conference call.

The price-impact format, which debuted in Irvington, NJ and Edison, NJ ,Pathmark stores, will be rolled out to all Pathmark stores between now and 2009. A&P stores will be continue to be convert to the updated fresh format, which offers boutique-style presentations of produce, chocolates and artisan bread, as well. “We have the potential to grow above the original plan,” said Brenda Galgano, SVP and CFO.

Additional plans for 2008 call for two new “fresh” projects, two fresh enlargements, 10 fresh remodels, two new Food Basics, two Food Basics conversions, several Food Basics remodels, eight Super Fresh conversions to Pathmark, and the addition of Starbucks to a few units. Capital expenditures for 2009 will range from $200 million to $250 million, well above the $180 million to $200 million planned for 2008.

Sales for the quarter were $2.9 billion, up from $1.7 billion last year. Comparable store sales (which exclude Pathmark) increased 3.2%. Pathmark’s comparable-store sales rose 3.1%. Net income from continuing operations was $3.8 million, compared to income of $61.4 million. A&P operates 446 stores in eight states and the District of Columbia under the names A&P, Waldbaum's, Pathmark, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh and Food Basics.

Source: GlobeSt.

Full List of Starbucks U.S. Store Closures

As we announced on July 1, 2008, Starbucks will close approximately 600 company-operated stores in the U.S. beginning this month and continuing through the first half of FY09. Partners in the stores listed below have been personally notified that their store has been slated to close during this timeframe.

In the spirit of transparency with our partners, customers and communities, we have provided the full list of stores below for general information purposes. Store partners will receive advance notice and more details from their leadership team once a specific closure date has been confirmed. After specific closure dates have been communicated to all affected partners, we will continue to update the confirmed store list at

http://www.starbucks.com/aboutus/pressdesc.asp?id=880.

Full List of U.S. Store Closures

http://www.starbucks.com/aboutus/USStoreClosureInfo.pdf.

This list is provided solely for general information purposes, and does not create any obligation or commitment by Starbucks Coffee Company with respect to the closure of any particular store. This list is based on currently available operating, financial and competitive information. Actual store closures may differ depending on a variety of factors including, but not limited to, risks related to finalization of third party agreements, expected costs savings, income tax and other benefits associated with the store closures in the anticipated time frame, if at all. Starbucks undertakes no obligation to notify third parties of such changes.

Source: Starbucks Coffee

Delhaize cuts 2008 profit outlook

AMSTERDAM, July 18 (Reuters) - Belgian supermarket group Delhaize (DELB.BR: Quote, Profile, Research, Stock Buzz) cut its 2008 outlook on Friday due to weakening consumer confidence and spending, saying it saw net profit from continuing operations growing by 15-20 percent instead of 25-30 percent as earlier announced.

Revenues are expected to increase between 3 and 4.5 percent compared to between 4 and 5.5 percent as previously announced, while operating profit growth is expected to be flat to 3 percent compared with 6 to 8 percent previously.

"In the U.S. as well as in our European markets, consumers are changing their spending behaviour as a result of higher oil and food prices and the continued problems in the financial and real estate markets," Delhaize said in a statement.

It will report second-quarter results on Aug. 4.

Source: Reuters

Stride Rite Opens New Children’s Concept

The Stride Rite Corp. (Lexington, Mass.) will launch a new store format, Collections by Stride Rite, which combines separate, dedicated shopping areas for kids seven to ten years of age, with an environment for parents to shop for baby and toddler shoes.

The 1800-square-foot store, from the company’s children’s group, will open today at Third Avenue and 87th Street on Manhattan’s Upper East Side. Stride Rite said it has plans to roll out similar stores later this year in select high-fashion shopping locations.

The retailer said the new store, designed by Bergmeyer Associates (Boston), “redefines children's shoe shopping with special environments well-suited for parents shopping with and for babies, toddlers and younger kids, coupled with a newly designed area for youth offering a fun, inspiring and convenient one-stop shopping for children's footwear.”

The dedicated shopping environment for youth at the front of the store will be colorful and bright and carry the company’s high-profile children’s brand lines from Saucony, Sperry Top-Sider, Tommy Hilfiger and Keds, plus special Airwalk signature lines by Andy Mac and Anastasia Ashley.

Further back in the store, says Stride Rite, the environment transitions to a softer atmosphere for babies and toddlers.

"Collections by Stride Rite recognizes the significant range of branded products we now carry in our stores for children zero to 10 years old," said Pam Salkovitz, president of the Stride Rite children's group. "The new store format is tailored to the different shopping needs of parents with babies and toddlers from that of youth up to 10 years old. We have created a front of store area dedicated to youth and a shopping area tailored to baby shoe- shopping in the back of the store. We believe this offers a fabulous and convenient shopping experience tailored to the needs of growing families."

Source: VMSD.com

Hard times for open-air shopping

The hottest trend this decade in shopping-center development has gone cold.

Known as lifestyle centers, the open-air shopping venues offer small parks, fountains and cafes amid name-brand retailers selling fashion apparel, housewares and other discretionary fare.

Developers raced to add new ones as they became popular with shoppers, especially women between 20 and 50 years old, a coveted category. Meantime, construction of traditional enclosed malls all but stopped.

But now, with the economy slumping and shoppers spending less, retailers that had flocked to the centers — like Chico’s FAS Inc., AnnTaylor Stores Corp. and Talbots Inc. — have begun canceling expansion plans and even shutting stores. Others, such as Linens ’n Things Inc., have sought bankruptcy protection.

This couldn’t happen at a worse time for lifestyle-center developers, which were putting up more of the shopping centers than ever. Last year they built 37 centers totaling some 12 million square feet, or roughly 40 percent of the total lifestyle-center square footage added this decade, according to market-research firm Portfolio & Property Research Inc. Double the 2007 total is now under construction, and three times as much is in the planning stages.

The economic slowdown, of course, means many of the planned projects won’t leave the drawing board. But many centers where constuction has begun will probably have difficulty leasing space when they open. That raises the specter that eventually they may not be able to pay their debt, adding to the strain on the already ravaged finance sector.

Leasing problems have clearly begun. Developer M.G. Herring Group opened its Uptown Village regional lifestyle center in the Dallas suburb of Cedar Hill in March with only half the space occupied and the rest walled off with wood panels bearing the center’s marketing images. President Gar Herring says he has so far signed retailers for 60 percent to 70 percent of the 725,000-square-foot project, though it remains only half occupied five months after its opening.

In Brighton, THF Realty Inc. has filled most of its new Prairie Center retail project with such big-box retailers as Dick’s Sporting Goods Inc. and PetSmart Inc. But Prairie Center’s small-shop space — erected in a lifestyle-center format nearby — is mostly empty. Half a dozen tenants, including Heidi’s Deli, Verizon Wireless and Elite Nails, are sprinkled among vacant storefronts sporting “for lease” signs.

Herring and THF executives say they anticipate no difficulties paying their debt service on the projects.

Some believe that the lifestyle-center craze was about to run its course in any case. The metropolitan locations that are best suited to the centers are mostly taken. “There were a number of projects proposed in markets that didn’t really have the (sales) demand to support the projects,” said Stephen Lebovitz, president of mall owner CBL & Associates Properties Inc., which has built two open-air centers.

Certainly the centers being built now show an evolution in the approach to the centers. Recent versions have larger formats and more diverse tenant rosters, including department stores and movie theaters. Few developers now propose the original format, which offers only small shops and spans 200,000 square feet or less.

“Those are dead,” said Maury Levin, a retail-property broker at commercial real estate firm KLNB Inc. in Baltimore.

Construction of other retail-property formats is also slowing as consumer spending wanes. Portfolio & Property Research forecasts that in 2009, retail-space construction in the top 54 U.S. markets will drop 48 percent, to 71 million square feet, from this year.

Existing properties are hurting, too. Vacancy rates at U.S. malls and shopping centers have climbed to 7.4 percent this year, the highest level this decade, according to market-research firm Reis Inc.

Many developers that have the option are canceling or scaling back projects. Citing slow progress in leasing, Opus Corp. opted to proceed in phases at a lifestyle center in the Seattle suburb of Issaquah, Wash., scheduling the opening of 150,000 square feet of shops in 2010. It had planned to open three times as much space in 2009.

In Canonsburg, Pa., developer Cullinan Properties Ltd. has delayed by a year, to 2010, the opening of 200,000 square feet of small shops intended to accompany a 14-screen movie theater as it struggles to lease the space.

What’s tripping up many developers is the tendency of lifestyle-center tenants to travel in packs. The centers often don’t have big anchor stores, so many retailers insist that several complementary stores agree to open in a given center before they will do so. “You may have 10 tenants you want to get, but eight are waiting until the fall to make a decision and the other two are waiting on those eight,” said Frank Natanek, Cullinan’s group president of real estate and marketing.

Poag & McEwen Lifestyle Centers LLC, which has developed 10 lifestyle centers, recently scrapped plans for one in Boise, Idaho, after five retailers reneged on signing leases there and then several more did the same. The Memphis, Tenn.-based developer proceeded with construction of a lifestyle center in Plainfield, Ill., only after tenants there waived the requirement that certain fellow retailers such as Chico’s join the project. Chico’s has pared its expansion markedly to 45 new stores this year from 118 last year.

Despite these stresses, most new lifestyle centers aren’t in danger of immediate foreclosure. Developers and lenders typically structure construction loans to carry fledgling projects through lease-up periods, and they’re hoping that the economy will rebound by the time those reserves are depleted.

“You’re not really going to see these projects get turned over to the lenders until later this year at the earliest,” said Ben Yang, an analyst with Green Street Advisors.

Source: Rocky Mountain News

Best Buy may rollout new appliances stores

(Jul. 16) A chain of California kitchen and bath showrooms may lead Best Buy into the home-remodeling business, according to comments made at the Oppenheimer & Co. Consumer Growth Conference on July 9. The Minneapolis-based company, known as one of the leading retailers in consumer electronics, told analysts it plans to double its revenues to $80 billion by 2013.

Those plans may involve a nationwide expansion of Pacific Sales, a California subsidiary that sells high-end appliances, plumbing fixtures and home furnishings in a showroom setting.

Mike Vitelli, executive vp-customer operating teams at Best Buy, gave several examples of new business models that will contribute to the $80 billion goal, because they are “completely different or outside of the Best Buy box.” One of them was Pacific Sales. “We believe [it] has opportunity across the country as well,” said Vitelli, whose division is responsible for merchandising and product assortment.

Best Buy purchased Pacific Sales in January 2006 for $410 million. The 14-unit chain, known for luxury brands like Sub-Zero, Miele, Toto and Viking, has since expanded to 22 units that sell to builders, contractors, designers and consumers.

“We have been taking market share [in appliances], and we stepped back and tried to reinvent the business for us,” said Ryan Robinson, Best Buy’s senior vp, CFO and treasurer, speaking to analysts at the Oppenheimer conference.

“We did it through assortment differentiation. A number of key vendors, including LG, Samsung, Siemens and Electrolux all viewed Best Buy as an ideal North American market entry partner and helped us create market differentiating offers for our partners.”

Source: Home Channel News

NRDC Completes Hudson’s Bay Co. Acquisition

SCARBOROUGH, ONTARIO-New York City-based NRDC Equity Partners has completed its acquisition of Canada’s Hudson’s Bay Co., consolidating the ownership of Lord & Taylor, Fortunoff and Creative Design Studios into one company, and paving the way for Lord & Taylor to enter Canada.

Plans call for Lord & Taylor to open 10 to 15 stores throughout Canada, filling a void between the Bay department stores and the upscale Holt Renfrew chain. The overall strategy, according to the announcement, is creating a greater focus on the Bay by offering better brands and service.

“By acquiring Hudson's Bay Co. along with previous acquisitions Lord & Taylor and Fortunoff, we will have an unprecedented opportunity to recreate the retail landscape in North America,” said Richard Baker, president of NRDC and now CEO of Hudson’s Bay in a statement. “Enormous potential exists by upgrading the offerings at both the Bay and Zellers and by bringing Lord & Taylor, Fortunoff & CDS into the mix.” In addition, Fortunoff will open jewelry and home furnishings departments within the Bay, and the Zellers mass merchandise chain will roll out a new, 125,000-square-foot prototype, as well as see a greater focus on branded apparel and customer service.

NRDC acquired Lord & Taylor in 2006, and Fortunoff earlier this year. Previously a minority owner in Hudson’s Bay, NRDC Equity Partners invested $500 million into the new company. The combined company, now called Hudson’s Bay Trading Co., has more than US$8 billion in sales, and 55-million sf of stores in the US and Canada.

Hudson's Bay Co., established in 1670, is North America's oldest continually operating company, operating more than 580 stores under the Bay, Zellers, Home Outfitters and Fields banners. Fortunoff operates 23 jewelry and home furnishing stores in the New York City metro area. Lord & Taylor operates 47 stores in nine states and the District of Columbia. Creative Design Studios was formed in October of 2007 as a stand-alone company to develop and manufacture designer-driven brands for regional department stores and to invest in American design talent.

Source: GlobeSt.com

FMI Report: Supermarket Pharmacy Business Healthy

ARLINGTON, Va. — A new report from the Food Marketing Institute here shows the supermarket pharmacy business to be healthy, and growing in services and tie-in opportunities. Among other findings, “Supermarket Pharmacy Trends 2008” reports that key benchmarks are up significantly from 2002 to 2007, including median number of prescriptions filled per day, median percentage of prescription sales from generic drugs, media percentage of prescription sales to total store sales, and median of the gross margin for the pharmacy department. Additionally, the study said 92.7% of supermarket pharmacies will be ready for e-prescribing by the end of the year, while nearly half offer Medication Therapy Management in either all or some stores, with another third planning to implement it over the next year. “What is most significant [about the report] is that in today’s volatile marketplace, whether it is competition from other retail pharmacy providers, mail-order providers, or competition to keep the overall health care costs down, supermarket pharmacies continue to post strong and steady performance figures,” said Cathy Polley, FMI’s vice president of pharmacy services. “It shows that pharmacy in the grocery industry is healthy and continuing to show uptrends in sales, while also showing some improvements in efficiencies,” said Randy Heiser, vice president, pharmacy, Giant Eagle, Pittsburgh. Heiser is the immediate past chair of the FMI Pharmacy Services Committee.

Verizon Wireless opens flagship New England store in Downtown Crossing

Verizon Wireless this week opened what it said will be its flagship New England store in Boston’s Downtown Crossing.

The mobile phone company’s regional president, Kenneth Dixon, said the store was part of a push in the area.

“We didn’t build this store because we wanted to. We built it because we had to,” he said.

Verizon’s store locale may help the company keep an eye on the competition.

AT&T, formerly Cingular Wireless LCC, has a store located at 290 Washington Street — just down the street. AT&T has 71.4 million subscribers, and still reigns as the nation’s largest mobile phone company. Verizon has 67.2 million subscribers, but maintains the largest revenue, $43.9 billion, for 2007.

The store, located in Downtown Crossing on Washington Street, is part of what Alan Carpenter, Verizon’s New England Director of Retail Sales and Operations, calls an “evolutionary design.” This new store design consists of a hands-on, multimedia consumer experience. The design has been introduced in stores across the country, including locally in Mansfield and Wareham.

A large part of the new design is notebook computers that demonstrate Broadband Access, the company’s high-speed wireless internet service, aimed at professionals and on-the-go students.

“With these computers, if the store is busy, you can listen to music or surf the web while you wait,” said Carpenter.

The store has 55 models of handsets, PC cards and other devices for customers to test for themselves. Another reason for the PCs? Pure amusement.

“People want to play,” said Carpenter.

While AT&T has recently teamed up with Apple’s new IPhone 3G, Verizon’ is also fighting for business in the media market.

“Let’s say you hear a song on the radio, and you want to know who sings it. With the LG Dare model, you can just hold the phone in front of the radio, and it will tell you the song’s name, the artist, the album. Then it will ask you if you would like to buy the song. It’s called music hunting,” said Dixon.

The LG Dare costs $199.99 after mail in rebate and with a two-year plan. Other features turn by turn Global Positioning Devices. Some models even have a Bluetooth charger on the back.

“People don’t come in to buy a phone anymore. They want to text, e-mail, play their music,” said Dixon.

Carpenter said the store is designed to cater to this new kind of consumer. “Fifteen years ago, we had three kinds of phones. Now, every phone in the store is different,” Carpenter said. “And customers know that. Consumers are educated, and this store is a natural evolution that reflects that level of sophistication.”

As for the next step for Verizon, Carpenter says new technologies are on their way.

“Where we’re heading is one device for everything. Now that we have broad-based, high quality wireless in New England as a platform, the applications we can add on top will be exceptional.”

Maureen Feeney, president of the Boston City Council, was among the crowd as the ribbon was cut and a check for $2,500 was presented to Nancy Schneider, cofounder of Dress for Success, a nonprofit organization that provides women who are victims of domestic violence professional attire for work.

Source: Boston Business Journal

Luxury Retail Fights the Downturn

If the saying is true that the rich are always with us, those hoping to be or feel rich are stepping back from shopping at luxury stores right now.

The slowdown in sales seen for some time at mid-priced chains is affecting higher-end retailers as well. Though Tiffany reported sales increases, the gains are from overseas stores and its New York City flagship. In its most recent quarter, Neiman-Marcus reported a 2.5% comp-sales decline.

“For the first time, we’re seeing a slight softening in the luxury market,” said Steven Greenberg, a Hewlett, NY-based leasing consultant who represents a number of luxury chains. “A lot of aspirational people are good luxury shoppers – for $400, you can buy a small handbag at Louis Vuitton. Those are the customers we’re seeing affected right now.”

Yet owners of high-end centers report that their projects remain strong, because of their location, opportunities for expansion, and a healthy tourist business.

“The markets where we do have luxury and better properties are some of the best in the world,” said Anne Singleton, vp-luxury leasing of the Macerich Co., Santa Monica, CA, which owns such high-end properties as Scottsdale Fashion Square near Phoenix and Tysons Corner Center outside Washington, DC. “The San Francisco Bay area is still great, as is Southern California. Phoenix has proven itself as a luxury market, though not as mature.”

“The deBeers and Harry Winstons want stores in the right locations,” added Debra Gunn Downing, executive marketing director of South Coast Plaza in Costa Mesa, CA.

Another critical component is merchandise, one that developers do not control, said William Taubman, COO of Bloomfield Hills, MI-based Taubman Centers. Developers are in the business of leasing and presenting retailers. If retailers are doing their jobs, they can continue to attract the more affluent shopper.

“Where there is newness, people will pay,” Taubman said. “No one is questioning the cost of an iPhone.”

In addition, these retailers also have a “secret weapon” Greenberg says: outlet stores.

“For Coach and Polo, it’s a windfall,” Greenberg said.

In addition, centers with a strong tourism base have something of a cushion, as the weak dollar is encouraging travelers from Europe, Asia, South America and even Mexico and Canada to take advantage of U.S. goods that are instantly on sale. Though the numbers are impossible to track, center managers report anecdotal evidence of increased numbers of affluent shoppers from Canada and Mexico, in particular, taking advantage of a favorable currency exchange.

“Because the hotels are so inexpensive, people are bringing empty suitcases,” said Kate Cavaliere, senior manager of tourism for Macerich.

And property management has been working hard to promote the projects to tour operators and discriminating travelers, expanding on a trend of several years.

“We have always been a strong destination for tourists, and we spend a lot of time cultivating them,” South Coast Plaza’s Downing said. “Right now, we see this as a low-hanging fruit opportunity.”

Developers are creating packages that feature private fashion shows, and extra services – South Coast Plaza will even close a store for a couple of hours for the most elite shoppers to browse privately. The lesson: even the wealthiest shoppers like something extra.

“Everyone likes a special offer. And both Carmel Plaza and Scottsdale Fashion Square have personal shoppers who take care of their every need,” Cavaliere said. “They just loved that.”

The result is that the better centers remain well leased, though rents are becoming more flexible, Greenberg says. Taubman reports strong leasing at his centers and South Coast Plaza boasts a 98% occupancy level, with several high-end tenants, including luxury jewelers including Harry Winston and deBeers, as well as designers Oscar de la Renta and Calvin Klein, opening this year. That continued expansion allows the luxury centers the chance to avoid compromising the integrity of the project by leasing to lesser space, Taubman added. And all emphasize that this is just another retail cycle, that smart companies will take advantage.

“There’s a healthy regeneration going on,” Greenberg said. “I wouldn’t want to be a multi-brand mid-priced retailer right now. But it’s a great time to reinvent your center.”

Source: GlobeSt.

U.S. Office, Retail Building to Drop Through 2009, Study Says

July 16 (Bloomberg) -- Construction of U.S. office and retail buildings is poised to fall for the rest of this year and through 2009 on lower demand from tenants, stricter lending standards and rising building costs, the American Institute of Architects said.

Office-building construction likely will drop 3.7 percent this year and 12.3 percent in 2009, the Washington-based group said today in its semi-annual Consensus Construction Forecast. Construction of shopping centers and other retail buildings is forecast to fall 8.3 percent this year and 9.9 percent next year.

"The more pessimistic forecasts this round stem from the lack of growth in the overall economy, the ripple effect from the faltering housing market and the anxiety in the credit markets leading to a restriction in lending for all types of construction projects," Kermit Baker, the institute's chief economist, said in a statement.

The slowing U.S. economy is cutting demand for space from retail and office tenants, and the cost of construction materials has increased 37 percent since 2004, more than double the rise in the cost of consumer products and services, the American Institute of Architects said. Petroleum-based materials and commodities such as steel and concrete "have experienced sharp price increases in recent years," Baker said.

Hotel construction probably will increase 6.6 percent this year before dropping 9.9 percent in 2009, the institute said. Construction of warehouses and other industrial properties is forecast to rise 4.6 percent this year and decline 5.5 percent next year.

Health Care, Education

Construction of the two largest institutional categories, health-care facilities and educational buildings, likely will rise 0.2 percent and 2.7 percent respectively, this year. Health-care construction likely will rise 1.1 percent in 2009, and construction of educational facilities will probably fall 1.1 percent, the institute said.

The institute twice a year issues its forecast using projections from Global Insight Inc., the Portland Cement Association and management consulting firm FMI Corp. The institute has been producing the forecast for 10 years.

Source: Bloomberg.com

Centro Clears Minor Hurdle With First Asset Sale

As it continues to wrestle with a mountain of debt, Centro Properties Group, a poster-child of the credit crunch, on Tuesday announced the sale of the first piece of its 106.5-million-square-foot U.S. portfolio for $714 million to an unnamed private real estate investment advisor.

Though the deal itself represents just a small portion of the Melbourne-based listed property trust's portfolio--29 of its more than 665 centers in the U.S.--it has broader implications for the company and for the U.S. retail real estate investment market. The assets were all from Centro America Fund--one of Centro Properties Group's many funds under management.

For one, Centro sold the properties--covering 5.1 million square feet in 15 states--to a private real estate advisor rather than to a public or private retail REIT. (Some reports indicate that New York City-based DRA Advisors LLC closed the deal.) Jason Lail, senior real estate analyst with SNL Financial, a Charlottesville, Va.-based research firm, thinks that despite the deal's relatively small size, it is at least reflective of "Centro really pushing hard to get their balance sheet into shape."

The deal also sheds a little light on retail real estate pricing in the current climate. Retail real estate investment sales volume has dropped considerably because of the credit crunch. In May, the most recent month for which statistics are available, investment sales of retail properties totaled $1.3 billion, down 70 percent compared to the same period a year ago, reports Real Capital Analytics. Prices have dropped as well and the bid/ask gap between buyers and sellers means there is little consensus on where property values should be. Some estimates are that prices are down 5 percent to 10 percent for prime assets and up to 20 percent for lower quality assets, according to Bernie Haddigan, national director of the retail group with the brokerage firm Marcus & Millichap Real Estate Investment Service.

In Centro's case, the company estimated the sale price represents a 10 percent discount to what the company had originally paid for the assets, indicating that the properties are probably some of the firm’s best assets, Haddigan says.

The pricing “seems about right,” agrees Merrie Frankel, vice president and senior credit officer with Moody’s Investors Service, a New York City-based credit rating agency. The 10 percent discount is in line with what should be expected from a company in Centro’s position. Frankel added that Centro has direct ownership of just 46.65 percent of the Centro America Fund. Centro’s net proceeds from the sale are projected to bring in approximately $250 million.

However, some real estate watchers caution that too much should not be read into the deal. Suzanne Mulvee, senior real estate economist with Property & Portfolio Research, a Boston-based real estate research and portfolio strategy firm, says there could be deeper discounts on retail properties if credit tightens and real estate fundamentals continue to slip.

“People that are selling today are stressed sellers, not necessarily distressed sellers,” Mulvee says. “More distressed properties may come to market later.”

The deal is expected to close in late September/early October, subject to approval from Centro’s lenders. Centro declined to comment on the transaction. The company has been able to obtain a series of extensions on nearly $4 billion of debt to both U.S. and Australian lenders that it is supposed to pay back by December 15. More on Centro's debt

Overall, Centro's shareholders took the news in stride. The company's shares on the Australian Stock Exchange closed Wednesday at A$0.26 per share, up slightly from A$0.24 per share the day prior.

Source: Retail Traffic

New England Retail Report

Strong fundamentals keep things rolling in New England.

The New England retail marketplace continues to be a steadfast environment for retailers, despite the current market squeeze. Chuck Irving, the director of KGI Properties, which has approximately 5 million square feet of retail property throughout New England, says, “The good thing about New England is that there is less retail space on a per capita basis than any other part of the country, so it has always been a healthy retail market.” He adds, “I don’t expect to see any major vacancy issues, but I do expect to see a slowdown in the development sector of the retail economy.”

This slowdown is being felt in the big-box sector, as developers decrease construction of big-box projects such as Wal-Mart, Lowe’s and Home Depot. “It is a healthy decision in relation to where the economy is right now,” Irving explains. “These companies have not stopped growing, they are just moving forward more cautiously this year.”

On the other hand, supermarket retailers are still charging forward. “From Wegman’s to Fresh Market, there is a new spectrum of players in the supermarket business, which is prompting innovation among those already established in the market such as Stop and Shop,” notes Irving.

There are many projects going forward with smaller supermarkets that are piercing higher end communities that they have not been able to penetrate before. These supermarket retailers are doing that by literally downsizing stores and being more creative with prototypes. “Since these supermarket retailers have already paid for the ad dollars in the market and they have the distribution capacity in place, there is no reason not to expand their stores in the areas even if they have to downsize,” explains Irving.

Aside from supermarkets, lifestyle centers continue to be the premier retail development trend in New England. “Banks are very willing to finance them and tenants are interested in being a part of them,” says Irving. “Tenants just seem to be prefer upscale outdoor centers to upscale malls and the sales volume at the stores in these lifestyle centers demonstrates that.”

The surge of lifestyle centers has also changed the type of projects KGI has historically been known for — big-box projects such as Wal-Mart and regional power centers. However two of their newest projects are quite a departure from that format. According to Irving, the shift in development for KGI was in correlation with the current demand in the marketplace. “KGI’s projects were being driven more by supermarkets than by the big boxes. And since we finance our projects off of them, we go where they want to go,” he says.

In Lyme, Connecticut, KGI, along with joint venture partner Konover Development, is developing Gateway Commons, a 400,000-square-foot lifestyle center. The project will include one large format store of more than 100,000 square feet, a supermarket and approximately 85,000 square feet of small shops and restaurants. The project is currently in the process of permitting, with an anticipated groundbreaking in 2009 and completion most likely in 2010. “Lyme is one of those markets that has a high income demographic market, and despite the economy, retailers are still very interested in becoming part of this project,” remarks Irving.

Wayland Town Center in Wayland, Massachusetts, exemplifies the shift in retail design in New England.

KGI is also set to break ground in August on Wayland Town Center, a high-end, mixed-use project that will feature retail, office and civic space, as well as approximately 100 condominium units. Situated between Wellsley and West End in Wayland, Massachusetts, the project will offer 205,000 square feet of leaseable space. “Upscale projects like Wayland and Lyme are unique for us, but they are simply reflective of the communities we are putting them in,” explains Irving.

Leasing activity has slowed somewhat, depending on the type of project and its location. “In the upper end categories, leasing is still strong, but leasing in some strip centers has become more difficult,” notes Irving. “It is just a slow time right now.”

Over the past 3 years, a great deal of retail development was completed in markets such as Maine and New Hampshire. Southern Maine has been especially busy with about a million square feet of retail development either permitted or under construction, according to Mark Malone, vice president of Malone Commercial Brokers. “It has actually been busy in the past year considering the current economy,” he says. “For a market our size, that is a good addition to the market.”

Much of the new development within Southern Maine has been small lifestyle centers within more suburban areas. “Traditionally in Southern Maine, the Maine Mall, which has drawn from as much as 50 to 75 miles out, has always been the hub of retail. But most of the growth is happening in outlying areas such as Biddeford, Augusta, Lewiston and Auburn, which have started to add more retail,” says Malone. “Developers are now going out to those markets that would have come to the mall for their shopping. They are opening up Target stores and Super Wal-Marts, Lowe’s, Home Depot, and Bed Bath & Beyond.”

KGI is currently developing two power oriented centers in Maine. In Scarborough, just south of the Maine Mall, the development firm is in the process of constructing Scarborough Gallery. A Lowe’s is open at the 650,000-square-foot center and a Wal-Mart is currently under construction. In Sanford, KGI also recently held a groundbreaking for a new Wal-Mart.

In addition, some retail opportunities are popping up north of Portland. Cedarwood Development is currently planning a 319,166-square-foot lifestyle center set on 35 acres 4 miles from the city of Portland. Development is slated to begin spring 2010, with a store openings set for spring 2011.

As construction costs go up and barriers to entry become even tougher, Malone believes that development activity will begin to center more on the reuse of older retail centers. “Developers and some REITs are buying up older centers, putting a new finish on them and bringing them back to life,” notes Malone. “Maine has just passed some new vernal pool laws that are very restrictive on what can be built around wetlands, so there will probably be more and more of this type of retail development. ”

Despite recent growth, Malone believes retail development will begin to slow down. “I think we will mostly see infill development and the absorption of the spaces in projects that are already online or permitted.” Irving concurs, adding, “There are not enough demographics to support building new stores as rapidly as we have been in the past. The retail development in Maine has been mainly large discount stores such as Wal-Mart, Home Depot, Lowe’s, Kohl’s, and those retailers are now focusing on much denser demographic areas in the near-term.”

Leasing activity within Maine and its more popular Southern Maine submarkets has slowed, but, vacancies are still rather healthy. “In the past 10 years, the vacancy rate in this market has not gone over 2.5 percent, but in the past year, the vacancy rate has risen to 5.6 percent, more than doubling,” notes Malone. “Now building owners are offering more incentives such as free rent and discounted rates.” Depending on the location and the type of center, rental rates range from $15 to $25 per square foot. “Many of the new projects are suffering a little bit on infill space. It is just not being leased up as quickly because landlords are holding their prices in the mid $20s and the market is just not there for it,” explains Malone. “It is also a combination of tenants being cautious because of the economy and supply increasing to the point beyond what the population has grown.” For example, retail sales in the Maine Mall area in the past 5 years have gone up about 1 percent per year, but the supply of retail space has gone up more than 20 percent in that same period.

Investors continue to be keen on retail properties within Maine. “The sales that have happened have been very quiet and under the radar. Cap rates on local multi-tenanted properties with varying lease terms from 2 to 10 years are around 7.5 to 8 percent,” says Malone. In the future Malone believes that more large corporations and REITs will continue to come into the market to buy up some of the older centers. “The private money, the local developer and the local investors are having a harder time with banks tightening credit, so more big developers will come in and re-use space,” Malone explains.

Overall, the Maine retail sector will hold fairly steady. “The market is price sensitive and smart developers will fill their spaces at the rates that are going today,” remarks Malone. “Some developers are going to hold onto their mid-$20 prices, but because the infill is coming from local and regional tenants, the competition is just too great to get those kind of higher prices right now.”

The Boston retail market is another integral component to the overall success of the New England retail market. According to Pat Paladino of Colliers Meredith & Grew, retail development has been aggressive in the Boston area. “There is more development being planned, permitted and developed in this market than I have seen in quite some time,” he remarks. “There are several lifestyle centers underway, so in a sense, Boston is just now catching up to other parts of the country in terms of the lifestyle trend. Much of this lag has to do with this market being an older market without much developable land. To get anything done or permitted of any size or scope takes a long time to get approved and constructed.”

There are more than 9 million square feet of retail projects in suburban Boston that are either permitted or are planned to be built in the next 3 years, and although the question of whether they will all be built remains unanswered, Boston is proving to be a popular market for retailers. “As a whole, Boston has been under retailed both from the amount of retail space and the quality,” says Paladino. “Also, Boston is obviously an older area with little available land and the existing product is older, so Boston is just now starting to catch up with the rest of country to have the quality of retail that this highly educated and high-income consumer demographic requires. It is a place that many retailers want to be.”

Like so many of the other markets within New England, a good deal of the planned and current retail development in Boston is taking place in the suburbs, although growth has been more project specific. Developers are scouting for holes within underserved markets that have good demographics and locations.

In Dedham, Massachusetts, W/S Development, and joint venture partner National Amusements, are currently developing Legacy Place. The 675,000-square-foot lifestyle center will feature a 60,000-square-foot Whole Foods Market, and a 16-screen, 91,000-square-foot cinema de LUX. Other tenants include L.L. Bean, Anthropologie, Urban Outfitters, Legal Seafoods, P.F. Chang’s and Ruth’s Chris Steakhouse. The center is slated for a summer 2009 opening.

Along the front of Gillete Stadium in Foxborough, Massachusetts, The Kraft Group is developing Patriot Place, the largest mixed-use retail and entertainment destination in New England. The 1.3-million-square-foot lifestyle center will feature large and boutique retailers, a state-of-the-art movie theatre, restaurants and other nightlife options, a live music venue, a four-star hotel, a medical and wellness center and the New England Patriots Hall of Fame and Museum. The first phase of the project is open and the second phase is nearing completion. The center also features New England’s first Bass Pro Shops. Also a first for New England, the largest Apple Store in the U.S. just opened in the Back Bay area of Boston in May.

Grocery stores are in demand in the Boston retail market as well. Grocery stores such as Whole Foods Market continue to grow in the marketplace, many of which are part of new lifestyle centers. “There are many top retailers that are currently in the market, but they have not had the opportunity to expand, and now these retailers are comfortable going into some of the new, upscale centers,” remarks Paladino. Entertainment components such as high-end, theaters, bowling alleys and themed bars and restaurants are also being incorporated into more mixed-use projects and lifestyle centers throughout the Boston area.

In the future, more development will likely be seen in the more urban areas of Boston. The seaport area just outside downtown Boston has roughly 13 million square feet of development in the permitting process or already permitted, much of which is retail.

Although national tenants continue to expand in the Boston area, Paladino notes that retail leasing is noticeably slower this year. “Retailers are slowing down, pulling back or rethinking what they do. The good thing about Boston is that it is not over-built for retail. If retailers have to choose where they are going to expand, Boston will still be high on the list because of the demographics here,” he explains. “From a pure activity standpoint — the good projects still have plenty of demand, but marginal product and older space are taking longer to fill.”

The future of the Boston retail market is expected to remain solid. “Retailers will continue to scope out quality projects,” says Paladino. “As supply remains tight, activity should not slow down anymore and hopefully there will be stabilization and improvement over the next year.”

Overall, high barriers to entry, fewer product opportunities, and good demographics make New England an ideal place for retailers. As retail vacancies increase in other parts of the country, all of our experts agree that New England should hold steady, insulated from outside circumstances. “The retail market always goes through cycles and New England has historically been the least affected of any area in the country and that is my prediction again,” says Irving.

Sorce: Northeast Real Estate Business

D.C. releases detailed 3-D data on Google Earth

The public can now access detailed views of domes, crevices and corners of every building in D.C.

D.C.’s Office of the Chief Technology Officer spent a year compiling new data from pre-existing photography to release one of the largest collections of three-dimensional building maps on Google Earth.

D.C. had 7.4 square miles of 3-D data prior to the recent 69-mile expansion.

Included are 84,000 3-D buildings and corresponding two-dimensional footprints that provide height information for each building.

The data includes rooftop details of penthouses and spires, differentiating each building from those around it. Google Earth also hosts a large collection of New York City’s structures.

The purpose of compassing the entire mileage of D.C. was so that developers, architects, and planners have data needed to assess possible new structures throughout the city.

Source: Washington Business Journal

JC Penney celebrates latest brand launch in style

NEW YORK (Reuters) - Consumer spending may have slowed and U.S. retail sales are struggling, but the environment has not dampened J.C. Penney Co Inc's efforts to celebrate its latest brand launch in style.

On Tuesday night, the mid-priced department store operator threw a party to introduce Fabulosity, the new fashion sportswear line designed by former runway model Kimora Lee Simmons that will be sold exclusively at Penney for the back-to-school shopping season.

The event, held at a club in Manhattan's trendy Meatpacking district, featured pounding music, free drinks, a rotating disco ball and an appearance by Simmons, as she introduced her new clothing line with a fashion show.

"I really demand that all my divas look fabulous," Simmons told the crowd, but added that shoppers should not have to spend their last dime to look that way.

Fabulosity is one of six new brands Penney is introducing for the back-to-school season -- the largest number it has launched at one go for the start of a new school year.

Back-to-school season marks Penney's second-largest sales season behind Christmas. Penney's sales and profits have been battered this year as middle-income shoppers rein in spending, but the retailer has refused to pull back on plans to introduce new and exclusive brands as it tries to gain market share.

While consumers may be looking to stretch their dollars in the tough climate, Ken Hicks, Penney's president, told Reuters at the event that the retailer has not stepped up its promotions.
"We're not increasing that," he said.

Instead, Penney has increased its advertising and marketing efforts, targeting teenagers in particular, he said.

For instance, this weekend, the retailer is starting its in-theater campaign, in which back-to-school advertising spots will be shown in U.S. movie theaters just before the trailers.

While mall traffic has been falling this year as consumers shop closer to home, Hicks said he is confident teenagers and their moms will head to the mall, where many of its stores are based, to do their back-to-school shopping.

"At appointment times like back to school, the customer is coming to the mall," he said, because it eliminates the need to drive from store to store to finish their shopping.

"The price of gas to go to five different stores is very expensive."

Hicks said he also expects online shopping to play a key role in back-to-school sales, and free shipping offers are crucial to shoppers scouring the web for deals.

The six new brands Penney is launching for the new school season include the denim-inspired Decree brand for girls, the hip-hop feel of Fabulosity and the more preppy American Living for young men.

Hicks said the new brands are catching on with shoppers. "We're already seeing some selling," he added.

Source: Reuters

A&P Reveals Additional Best Cellar Locations

In the wake of the much ballyhooed opening of the first Best Cellars A&P store last week, in Westwood, N.J. The Great Atlantic & Pacific Tea Co. already has its eye on more locations for the recently acquired wine retailer -- and not just in the Garden State.

According to an A&P spokeswoman, additional standalone Best Cellars at A&P stores are planned this year for West Orange, N.J., Riverside/Old Greenwich Conn., and Ridgefield Conn., with a branded grocery aisle slated for an A&P in Ft. Lee N.J. More sites are on tap for 2009. The Connecticut locations would be the first in that state.

The Westwood store, which measures about 8,500 square feet, with 7,400 square feet of selling space, is within a few miles of two A&P supermarkets, one in Park Ridge and the other in Woodcliff Lake.

Source: Progressive Grocer

In contrast to most wine retailers, which group product by region or grape variety, Best Cellars, which A&P purchased in November 2007, arranges its over 150 in-store selections according to taste and style, with such easy-to-understand categories as Big, Luscious, Fizzy, Fresh, Soft, Juicy, Smooth, and Sweet.

G-III Apparel Acquires Wilsons Leather Outlet Stores

New York-based G-III Apparel Group Ltd., a manufacturer and distributor of outerwear and sportswear under licensed brands, private labels and its own brands, announced that it has acquired certain assets of Wilsons The Leather Experts Inc., a Minneapolis-based national retailer of leather outerwear and accessories. The assets acquired included 116 outlet store locations, $18.5 million in inventory, distribution center operations and the Wilsons name and other related trademarks and trade names. G-III noted that the total purchase price for the assets acquired was approximately $22.3 million in cash. "We are excited about this acquisition, which will enable us to have a significant vertical retail operation," said Morris Goldfarb, G-III's chairman and CEO. "We expect to be able to leverage our strong portfolio of brands and our sourcing expertise to re-merchandise the Wilsons stores in order to improve sales and increase margins." Joel Waller, former CEO of Wilsons The Leather Experts, will return as president of G-III's outlet store division.

Source: DDI.com

Jewel Planning ‘Urban Fresh’ Small-Format Store

Jewel-Osco here said Tuesday that it would open a 16,000-square-foot store in Chicago’s Lincoln Park neighborhood under the “Urban Fresh, by Jewel” banner this fall, joining a wave of food retailers testing new smaller formats. The new store will be designed as a specialty grocery store with a focus on fresh and prepared meals for busy shoppers. “The smaller-format store is an exciting complement to our larger, more traditional grocery stores,” Keith Nielsen, president of Jewel-Osco, said in a statement. “We hope to learn as much as possible from the effort, paying close attention to customer feedback, so we can deliver the best experience for our shoppers.” Jewel-Osco is a division of Supervalu, Minneapolis. Safeway, A&P, Sobeys and Wal-Mart, among others, have also recently opened or announced plans to open smaller format stores as well.

Source: Supermarket News

Walgreens Plaza Goes for $11M

DANVERS, MA-Danvers Realty LLC is selling a Walgreens-anchored plaza here for approximately $11.1 million. The property at 107 High St. totals 21,487-sf property of retail space, filled in by Walgreens at 14,937 sf with the remaining 6,550 sf going to a full-service, Beverly National Bank. The buyer of the property could not be disclosed at this time.

"We are pleased to be able to work once again with the seller for whom we originally arranged financing several years ago when it completed a 1031 tax-deferred exchange and purchased this first-class asset," says Casimir Broblewski, managing director of Fantini & Gorga, in a statement. F&G brokered the deal with the help of ICA Realty, which managed the 1031 exchange.

The property is located by the intersection of Route 128 just north of Salem. The suburban Boston location provides a mix of rental and single-family homes in a range of high density areas, ideal for a retail strip mall's client base. Walgreens, located across the US, is a popular brand and has moved in the market well, recently in Florida and nearby Stoughton, MA where Linear Retail Group purchased a Walgreens-anchored plaza for $12.6 million.

Walgreens is a Chicago-based pharmacy that has retail stores throughout the US.

Source: GlobeSt.

$1B in Loans on 6 Retail Properties for Macerich

The unfavorable lending market is not holding everyone back. The Macerich Co. recently closed $895 million in financing on five retail properties and secured a commitment for a $150 million loan on a sixth asset.

The properties, save for one, are all located in California.

Santa Monica, Calif.-based Macerich has been hard at work over the last couple of months. Just last week, the REIT closed a $170 million loan on Fresno Fair, a super regional mall in Fresno, Calif.; completed a $300 million construction/permanent loan on super regional mall The Oaks in Thousand Oaks, Calif.; and entered into an agreement for $150 million in financing for Broadway Plaza in Walnut Creek, Calif. The months of May and June were no less busy. Macerich wrapped up a $100 million loan on Victorville, Calif.-based regional mall The Mall of Victor Valley in May. And last month, the company closed on a $150 million loan on the newly completed SanTan Village regional shopping center in the Phoenix suburb of Gilbert, Ariz., and concluded a $175 million refinancing deal for the prestigious Westside Pavilion regional mall in West Los Angeles.

Macerich is a fully integrated self-managed REIT that engages in the acquisition, development, leasing and management of regional malls across the United States. The company's portfolio encompasses 72 properties totaling 77 million square feet of gross leasable space. Macerich stock opened today at $53.64.

Source: Commercial Property News

Au Bon Pain to add 100 stores in India

Au Bon Pain plans to add a total of 100 units over the next two years in India.

The Boston-based bakery and cafe chain has signed a master franchise agreement with Spencer’s Retail Limited, the retail arm of RPG Enterprises, a $3 billion Indian conglomerate with 20 companies operating in six business sectors, including retail, power, entertainment, technology, transmission and tires.

Spencer’s is a multiformat retailer operating 400 stores in 66 cities across India.

Au Bon Pain’s menu in India will include a line of vegetarian sandwiches as well as other vegetarian items to accommodate cultural traditions and religious dietary needs.

Au Bon Pain operates more than 200 locations in the United States and abroad.

The announcement comes at a time when Au Bon Pain, earlier this year, announced a recapitalization by LNK Partners in March, the introduction of smaller portions and store openings in Kuwait and Dubai next month.

Source: Boston Business Journal

Teen Retailers' Back-to-School Blues

If Steve & Barry's financial woes are any indication, the back-to-school season will be a difficult one for teen-focused retailers.

The Port Washington, N.Y.-based company filed for Chapter 11 bankruptcy last week, citing $693.5 million in assets and $638 million in debt. Best known for celebrity fashion lines, including Bitten by Sex and the City star Sarah Jessica Parker and Starbury by New York Knicks star Stephon Marbury, Steve & Barry's sells super-cheap clothing for teens and college students. Prices rarely exceed $20.

In an economic downturn in which the Wal-Marts of the world are succeeding (see "Consumers Save Money, Discounters Live Better"), one would presume that a teen retailer like Steve and Barry's, which is also a discounter, would be somewhat immune to hardship.

Instead, the outlook for specialty retailers that rely on high school and college students with disposable income to cushion sales, particularly in the back-to-school season, is dismal.

In 2007, retailers made an estimated $18 billion on back-to-school purchases, according to the National Retail Federation, a Washington, D.C.-based trade group. A whopping 95% was spent on clothing and accessories, with the majority of shoppers heading out to stores two to three weeks before school started.

But this year, these purchases are expected to be made online and at discounters like T.J. Maxx and Ross, says Dr. Robert Passikoff, founder and president of New York-based customer loyalty research company Brand Keys. These alternative outlets are expected to lure customers away from traditional brick-and-mortar hot spots like Abercrombie & Fitch, American Eagle Outfitters and Gap.

On Web aggregators like Shopstyle.com or Shopwiki.com, for example, teens can look at items from hundreds of e-commerce shops. And at discount retailers like TJ Maxx or Marshalls, famous brand names are available for a fraction of the original price.

"There's been a kind of paradigm shift in terms of which retail distribution outlets teens finds acceptable," says Passikoff, who believes that, in general, the teen has ultimate say in where he or she wants to shop, regardless of whether he's spending his own money or his parent's money. "Not only is it a matter of changes in tastes, but it's also the fact that at online and discount retailers, there's more of a choice," says Passikoff.

Growing Pains
Retailers set to face the most challenges include JCPenney, which recently announced the launch of six young adult-focused brands for Fall 2008, including Dorm Life--a home goods range for college students--and Fabulosity, a hip hop-inspired girl's line designed by Baby Phat director Kimora Lee Simmons. Brian Sozzi, a retail analyst at Wall Street Strategies, a New York-based independent stock market research company, believes JCPenney "will have a tough time gaining that teen customer." Younger generations still associate the retailer with fuddy-duddy, dated garb of older generations.

Sozzi also sees dark skies ahead for the already-struggling American Eagle. For years, the brand seemed to be an invincible force in the specialty retail sector. However, Sozzi says that the brand's sales numbers in recent months continue to plummet because it's missed key trends in the denim department, kept prices higher than competitors and expanded too quickly, with 135 store openings planned this year for a total of 1,000 since 1977.

Gap's prospects don't look good either. Despite restructuring that includes expense reductions and inventory control, sales have been sluggish for more than a year. Not even designer collaborations--including a line of covetable shoes by high-end cobbler Pierre Hardy and a second installment of the Vogue/Council of Fashion Designers of America line of white shirts, created by up-and-comers like Phillip Lim and Michael Bastian--could offer a boost. (Many of those shirts are now available for less than $30 in stores, down from $78.)

Who might fare well next month? Aeropostale. Once considered the nerdy cousin of Abercrombie & Fitch's star quarterback and American Eagle's head cheerleader, Aeropostale has done remarkably well during the downturn. Same-store sales increased by 12% for June 2008, almost double what was estimated by analysts. Sozzi says that within the last year, the company has improved on its designs and quality while keeping its price points lower than competitors.

Looking beyond Fall 2008, Passikoff believes some specialty retailers simply won't make it through. "It's like you're on a crest of a wave and it's moving--it's a tsunami," he says.

However, those that do survive will have something in common with every successful retailer, whether it be specialty, discount or luxury: brand loyalty. "The ones that are going to survive are the ones that recognize customer loyalty means an emotional association with a brand," says Passikoff. "They have to be willing to create a value-added experience around that."

Source: Forbes

For Back-To-School, Family Values Make A Comeback

From Staples to JC Penney to Wal-Mart, retailers are already hyping the heck out of their back-to-school offers. But experts expect that nervous parents will rein in their spending.

TNS Retail Forward, which tracks consumer spending plans, says that only one-third of shoppers are planning to do any back-to-school shopping this year--down 5 percentage points from last year. And families who will be shopping say they plan to spend about $506, down from the $668 in school-related expenses they predicted a year ago at this time. Perhaps more tellingly, 26% of those shoppers say they are planning to spend either somewhat or much less than they did last year, compared with 13% who expressed that sentiment a year ago.

And a consumer survey from Staples finds that 79% of moms say that current economic factors, including fuel prices, will influence the way they shop for school supplies.

"'Shopping down' is going to continue to be the big trend, not just for back-to-school, but through the holiday season and into next year," says Tim Henderson, senior director and consumer strategist at Iconoculture, a Minneapolis-based trend-spotting firm.

What's more, he says, the new frugality is a sentiment cutting a wide swath through American shoppers--not just those who are directly under pressure because of the weaker economy. "Even for people who aren't affected, there's the growing perception that conspicuous consumption is gauche right now, given all the negative economic headlines. And for years, we've known that consumers have a low level of anxiety about the amount of debt they carry. All this talk about a weaker economy makes them that much more uncomfortable."

That doesn't mean parents won't go shopping, he says. "We think there's a real analogy between back-to-school and gift giving," he says. "There will still be spending, but it will be more restrained--fewer outfits, and more parents saying to teenagers, 'Are you sure you can't live with the sheet set we bought for your dorm room last year?'"

Another trend he expects to see intensify is the wait-and-see teen, as younger shoppers develop their own spin on economic uncertainty. "Because these kids are very influenced by the economy--directly, in that it's been much harder for them to find jobs and indirectly, hearing their parents talk about their own financial concerns--these kids are much more likely to hold back spending their own money until school starts. They want to make sure they know which jeans and handbags are hot before buying. Many of them are adapting that 'It's cool to be thrifty' sentiment."

"Shopping down is a big deal for people, because they know they can get the same value--a No. 2 pencil from Wal-Mart is as good as a No. 2 pencil from anywhere else, and consumers know it-for a better price," Henderson says. "So they're paying less, but not making a quality sacrifice."

Last week, teen retailers Abercrombie & Fitch and American Eagle both posted a decline in same-store sales for the month of June. The more affordable Aeropostale, however, saw its same-store sales jump 12%.

The National Retail Federation is scheduled to make its predictions for both back-to-college and back-to-school spending in the next few weeks.

Source: Media Post

Pension Funds Scale Back Outside Real Estate Advisors

In a world of daily cutbacks on everything but the price of oil, perhaps it was inevitable that the nation’s leading pension funds would find themselves in the same dilemma when it comes to their real estate investments.

As the investment markets in general have become more bearish — particularly stocks, which have hammered fund returns this year — internal fund managers are closely inspecting their real estate strategies, and for good reason.

According to a recent study of 50 of the nation’s top pension funds by Chicago-based financial services firm Northern Trust, U.S. and foreign stock performance produced negative 7% returns over the 11 months ended June 30. During the same period pension funds saw their real estate assets produce an 11% return.

Real estate stocks have been another drag. The Dow Jones Equity All REIT Total Return index, which tracks 118 equity real estate investment trusts, fell 4.9% in the second quarter compared with a 1.4% gain in the first quarter. That second-quarter performance lagged behind the broader S&P 500 index, which saw a 2.7% decline.

At the nation’s largest pension fund, the California Public Employees’ Retirement System, or CalPERS, some 80 outside managers oversee the fund’s $19.6 billion real estate portfolio. But last year San Francisco-based PCA Real Estate Advisors Inc. pitched CalPERS’ board of directors on the idea of investing more money with fewer advisors, an approach that was ratified in the plan’s 2008 budgeting.

The Oregon Investment Council, which manages $77 billion in assets for various entities of the State of Oregon, recently increased its real estate allocation from 8% to 11%. The council employs 39 real estate managers, up from 30 last year. Now with guidance from PCA, the council is looking to take an approach similar to CalPERS and use fewer outside real estate investment managers in the future.

The council’s $5 billion real estate portfolio has returned a paltry 2.95% through May of this year, but has yielded 21.76% over the past five years.

Given the lower returns of late, every manager’s performance is under closer scrutiny, and top performers will likely rise to the top of the funds’ short lists. Still, finding investments suitable for the funds’ money is a tougher task than ever. Certainly the office markets, which account for the bulk of institutional buying, have remained moribund in 2008. Sales of significant office buildings totaled just $2.6 billion in May, about half the volume posted in April and 87% lower than in May 2007, according to New York-based researcher Real Capital Analytics.

There are a few signs of life. Monthly office sales volume reported in contract doubled in May to $15 billion, a sum that compares favorably to the $23 billion of office sales reported closed so far this year.

“The spike in deal making, rumors of 100 bidders for Pool 1 of the former EOP/Macklowe assets and even a slight improvement in pricing on a national level are certainly positive news,” says Robert White, president of Real Capital Analytics. “A recent spate of acquisitions by foreign investors has also contributed to the positive momentum. However, it is still unclear if this really is the start of a recovery or just a dead cat bounce.”

Mark Vitner, senior economist with Wachovia, expects commercial property prices to fall 15% to 20% nationwide by year’s end. “Higher borrowing costs have led to a modest increase in cap rates and vacancy levels have edged up,” says Vitner. “Moreover, transaction volumes are falling as investors become more risk averse and lending becomes more restrictive. Both the NCREIF and Moody’s/Real Commercial Property Price Indexes have declined recently, indicating some softening in the deal pipeline. There is no question that deal flow and property values will slow further this year, the only question is the pace of change.”

Source: National Real Estate Investor

Target, Best Buy Debut at $400M Center

Stafford Park

STAFFORD TWP., NJ-Two major tenants at the $400 million Stafford Park here are scheduled to open their doors by the end of the month. Target will debut a 137,000-sf space and Best Buy will operate out of 30,162 sf. It is the first store in the Stafford Township market for both retailers.

The two stores join Costco, which opened last month. Costco and Target will anchor the 650,000-sf retail portion of the mixed-use development, which will consist of retail, residential and office space. Fellow retail tenants include Dick’s and PetSmart. According to Ed Walters, founder and partner of the Walters Group--the company developing the site--leases are also being negotiated with Vitamin Shoppe, Longhorn Steakhouse and T-Mobile.

Source: GlobeSt.

Construction of the Target building began in September 2007, and ground was broken on the 100,000 sf building that will house Best Buy, Dick’s and PetSmart in January of this year. Construction was preceded by a $31 million cleanup of the 370-acre site, where two landfills once stood.

"What we’re doing here is we’re bringing Target, Costco, Dick’s and Petsmart to o

Best Buy’s Vitelli Outlines Five-Point Growth Strategy

New York — Best Buy has a five-pronged growth strategy for meeting its lofty goal of