We read about Walmart stepping up its game to compete more effectively with Amazon by acquiring online/omnichannel retailers Moosejaw, ModCloth, and Bonobos, and getting explosive online sales results in return. There were stories about pop-up shops coming to enclosed regional shopping centers, hoping to develop increased traffic and fill vacant units. Casper, Just Cozy, and Spirit Halloween are just a few of the growing list of short-term retailers that have been able to drive additional traffic at malls. There are numerous others that we could go on and on about, but what I really want to talk about is what may or may not happen as we move into 2018. In no particular order, here is a list of topics that could make 2018 headlines:
Sears is running out of money, customers and time. Is it possible that 2018 is finally the year that the company files for bankruptcy? More store closings are scheduled for January - 45 Kmart units and 18 Sears stores, Suppliers will become less patient, and even more store closings will likely be announced. Could this be the year…?
With the Walgreens acquisition coming to fruition this year, by the spring 600 stores will close. Most will be within one mile of a sister store and most are expected to be existing Rite Aid locations. Which stores will be on the list?
Mall REITs have been recent acquisition targets, Westfield becoming the first to accept an offer from the Paris-based real estate investment firm Unibail Rodamco. Brookfield Asset Management is optimistic that it can complete a deal to acquire GGP, even though its first offer was rejected. And there is buzz that others could be in play. Who will be next - and is this a display of long-term confidence that tales of the retail apocalypse have been exaggerated?
Besides Sears, other retailers will be under pressure to avoid bankruptcy in the coming year. Some of the names bantered about as potential candidates include J Crew, Nine West, Charlotte Russe, Bon-Ton, Bi-Lo, and GNC. Others will be added to the list, perhaps futilely hoping that a better than expected holiday season will throw them a lifeline. It’s inevitable that some will not survive: who will be the first to make the news?
There was a lot of commotion the day Amazon acquired Whole Foods Market this year. Following the announcements that the former would be selling 365 products online, and that prices at Whole Foods customers would soon experience significant price drops, there hasn’t been much for the grocery industry to be alarmed about. In fact several new surveys find that the price rollbacks have been very limited so far, in both the number of products affected and the discounts offered. Was this just an Amazon scare tactic - or are grocers really in the eye of the hurricane?
It is expected that the new tax plan, if enacted, will benefit retail landlords by lowering taxes on companies that rent space and leaving consumers with more discretionary income to spend. Revathi Greenwood, head of Americas research for Cushman & Wakefield, recently indicated that “mall operators are looking at restructuring anyway,” and are remaking their properties to give shoppers the kind of experiences they can’t get online. We think some of the money saved in taxes will be reinvested back into business.” It would be welcomed news for landlords heading into the New Year. Will it really happen?
Stay tuned next year to see our answers to these and other questions. This brings us to the close of another action-packed retail year! We thank you for your readership and your support, and we wish you Happy Holidays and a peaceful, profitable New Year!
Bob Sheehan, VP of Research
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