It was a good quarter for retail and Macy’s, the nation’s largest department store chain has posted impressive results. Not only were same store sales up 5.5% according to an article about Macy’s in the new York Times, but gross margins were up and costs were lower. Men’s and Home categories showed the strongest gains.
With luxury department stores like Nordstrom, Neiman-Marcus and Sak’s as well as discount retailers all posting strong sales and profitability gains as of late, Macy’s mid-level appeal seems to indicate that all segments of the retail landscape are improving.
But the entrepreneurial retailer still seems to be suffering. Just take a stroll down any Main Street and you’ll see store after store that have been shuttered. And it’s not just the local guys, national chains still continue to cull their stable of stores by closing underperforming locations. Those combined closures can leave a Main Street seem more like a burned out hulk of its former glory, with store after store filled with nothing more than a giant “for lease” sign in its window.
THE REAL WORLD RETAILING TAKEAWAY
Emptiness creates opportunity.
I’ve been talking to a lot of retailers as of late who feel like they’re stuck. Stuck in a lease in a space where traffic has fallen off dramatically with no signs of it improving, even as the economy picks up steam. They’re hanging on by their fingernails, having slashed their expenses to the bare minimum including their own salary. So it becomes a game of goosing sales without giving away the store, as that’s a death spiral that ultimately results in zero profits and simple cash flow.
However, I’m also meeting more retailers that have been able to move their location, and are trumpeting their conquest of the new landlord, who is so desperate to get the space leased again that they are willing to do just about anything. Retailers have gotten significantly increased Tenant Improvement allowances or the landlord has completely paid for the buildout. Retailers have received free rent for 6 months or a year, or a percentage rent deal. And one retailer has received both a free buildout and free rent for six months.
Now’s the time to be thinking about your retail future. Maybe your lease isn’t up for a year. Maybe the Main Street you’re on, or the center you’re in isn’t going to recover because another street or center has become more popular. Start planning today for how you’re going to take advantage of this new retail landscape in one year’s time. The only retailer that doesn’t win is the one that sits waiting for the sales to happen and for life to change. You have to intitiate the change.
How are you taking advantage of the changing retail landscape?
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