In spite of a stronger economy, U.S. consumers spent less money at restaurants, apparel stores and online shopping sites in March. Americans are making fewer visits to departments stores and big-box chains, but they have demonstrated a spending preference for new retail concepts. And so both international retailers and new U.S.-based concepts with unique appeal continue to pursue expansion plans here.
International retailers see the value in entering the U.S. right now. Retail property landlords know that with the current state of malls in America (only the crème de la crème properties are doing well), it’s more of a tenants’ market. "It is a great time for retailers to be looking at mall expansion. Someone new coming in can have a real opportunity to grow their real estate portfolio. Department store and mall traffic is down, so landlords have to be more creative in creating deals for new to market retail tenants. There is very good opportunity in gateway markets to negotiate better rents, with the possible exception of parts of San Francisco,” says Michael N. Hirschfeld, executive vice president for national retail tenant service with real estate services firm JLL.
Home country: Ireland
Target demographic: Customers looking for fast-fashion apparel at very affordable prices. Primark touts itself as “the destination store for keeping up with the latest looks without breaking the bank.”
Average store size: Somewhere between 75,000 and 80,000 sq. ft.
Current locations: At Downtown Crossing in Boston and at King of Prussia Mall in King of Prussia, Penn.
Opening plans: Approximately five to six U.S. stores by the end of the year, according to industry sources.
What people say: “Primark is most potentially disruptive” concept to land on U.S. shores, and is “pretty aggressive store” its expansion plans, says Neil Stern, senior partner with the retail consulting firm McMillan Doolittle. Mark Burlton, global executive of CBRE’s retail representation team in Europe, the Middle East and Africa, forecasts approximately five to six Primark stores opening in the U.S. by the end of 2016, but cautions this does not represent a fixed figure. Markets Primark has expressed an interest in include Connecticut, Pennsylvania and New Jersey. The chain plans to lease two Massachusetts locations from Sears Holdings, according to the latter. New Jersey will see a Primark at the American Dream mall in East Rutherford next year, according to Women’s Wear Daily.
Home country: Japan
Target demographic: Shoppers who enjoys shopping at stores that advertise themselves by word of mouth
Average store size: Anywhere from 4,500 to 11,000 sq. ft.
Current locations: 10, including stores in New York City and Palo Alto, Calif.
Opening plans: Unknown, although Muji executives recently indicated a desire to expand in the U.S. market.
What people say: You may not have heard much about this Japanese lifestyle goods chain, as the company follows a no-brand model that forgoes traditional advertising in favor of word of mouth. Nevertheless, Muji has quietly opened stores in New York City and California, including some secondary cities. It opened its 10th U.S. store, measuring 4,500 sq. ft. in Palo Alto last summer, and also has a Fifth Avenue flagship measuring more than 11,000 sq. ft. "Our next target is the U.S. market,” the global operator of Muji stores was quoted as saying last month.
Home country: South Africa
Target demographic: Casual dining patrons with a taste for grilled chicken
Average store size: 2,500 sq. ft. to 3,500 sq. ft.
Current locations: Approximately 29, concentrated around Washington, D.C., Virginia and Maryland, as well as in the Chicagoland area.
Opening plans: Unknown, but the chain operates hundreds of restaurants worldwide.
What people say: The South African chain, specializing in Portuguese grilled chicken, first opened in Washington DC in 2008, and has since opened 13 stores in DC, Virginia and Maryland. It set its sights on Chicago last year and opened three locations between summer and fall 2015. The casual dining restaurant concept followed a strategy of “inside-out market penetration,” piggybacking off its urban cool factor to open in the suburbs and regional and sub-regional shopping districts, says Steve Frishman, principal at MidAmerica Real Estate Corp., a retail real estate services firm. The restaurant has an established 3,500-sq.-ft. stand-alone format, but its 2,500-sq.-ft. endcaps are producing a whopping $1-1.3 million in sales per year, Frishman says. In homage to its legacy, the restaurants walls are lined with art by independent South African artists.
Home country: Germany
Target demographic: The same kind of price-conscious shopper that frequents Aldi and Trader Joe’s
Average store size: At least 36,000 sq. ft.
Current locations: None
Opening plans: The grocery is planning to start opening U.S. stores by 2018, with as many as 100 U.S. locations possible in the initial expansion phase.
What people say: A hit in Europe, Lidl is known for its service efficiency, bright and airy layouts, quality products and low prices. The chain should be a major threat to Aldi, according to industry sources. (This reporter’s personal opinion is Trader Joe’s should also be wary.) Lidl is currently looking at strip centers for its stores, according to Stern, since the chain is a big-box grocer. Site plans call for at least 36,000 sq. ft. of space in markets along the Eastern seaboard. As many as 100 stores could be in the initial U.S. expansion phase, according to Supermarket News.
Home country: Italy
Target demographic: Shoppers with lots of disposable income who enjoy getting an authentic Italian dining and shopping experience—without getting on a transatlantic flight
Average store size: The original U.S. location in New York City contains 58,000 sq. ft. of space
Current locations: Two in the U.S., including in New York City and Chicago; 30 worldwide
Opening plans: A second New York location, at 4 World Trade Center, is scheduled to open later this year, with a Los Angeles store set to open in 2017. A potential Washington, D.C. location is currently on hold.
What people say: Eataly, a unique and wildly popular concept for its melding of specialty grocery and multiple eateries into one space, was rumored to be adding a second New York City location, one in Los Angeles and one in Washington DC. The first U.S. location in New York’s Flatiron district spans a whopping 58,000 sq. ft. The eatery first opened in Turino, Italy in 2007 and has since grown to 30 locations around the world. Further expansion into U.S. markets has been whispered about since 2013, when its Chicago location opened. The second New York City location, at 4 World Trade Center, is due to open in the coming months. A Los Angeles store will open in 2017. Washington DC is reportedly on hold, according to Washington Business Journal. Superfans can visit the chain’s theme park, Eataly World, opening in 2017 in Bologna, Italy.
Home country: The United Kingdom
Target demographic: Kids and parents who enjoy shopping at storied British toy shops
Average store size: Hamley’s Top Shop has locations as large as 54,000 sq. ft. (in London) and 75,000 sq. ft. in Moscow
Current locations: None in the United States
Opening plans: At least 20, according to published reports, including airport locations and stores in New York, Chicago and Los Angeles.
What people say: The 255-year-old British toy shop is in planning mode for its U.S. expansion, enlisting JLL to scout locations. Details on specific U.S. opening plans are few and far between, but markets and property types that can accommodate significant size and traffic requirements would be a good fit, considering the chain’s London flagship on Regent Street is a six-floor, 54,000-sq.-ft. behemoth… and the space it opened in April 2015 in Moscow measures 75,000 sq. ft. The spaces will also have to accommodate the brand’s trademark interactive toy displays. One report by The Guardian said New York, Los Angeles and Chicago were under consideration and there were plans to open stores in 20 airports.
Home country: The U.S., specifically Detroit
Target demographic: Shoppers looking for watches, bicycles and leather goods of craftsmanship quality
Average store size: Standalone stores range from 1,200 sq. ft. to 5,000 sq. ft.
Current locations: There are now Shinola locations in Detroit, New York, Los Angeles, Minneapolis, Washington D.C. and the San Francisco Bay area.
Opening plans: Unknown, though the chain is definitely expanding, both in the U.S. and Europe.
What people say: Detroit is still home to a skilled manufacturing base, thanks to Shinola. The company opened in 2011 and has been immensely successful due to its high-quality watches, bicycles and leather goods such as wallets, bags and pet products. Its Detroit-based manufacturing facilities comprise a 30,000-sq.-ft space for watches and a 12,000- sq.-ft. space for leather. In the past five years, Shinola has added stores in New York City, Los Angeles, Minneapolis and Washington DC. In February, it opened in the San Francisco Bay Area. Its standalone stores range from 1,200 sq. ft. to 5,000 sq. ft.
Home country: United States
Target demographic: BBQ lovers
Average store size: 4,000 sq. ft.
Current locations: About 23, in Maryland, North Carolina, Pennsylvania, Tennesee, Florida and Virginia. A new location is currently planned for New Jersey.
Opening plans: 40 new restaurants by 2018.
What people say: “BBQ overall has been a tough food item to roll out nationally because BBQ means different things in different parts of the country,” says Mid-America’s Steve Frishman. Baltimore-based Mission Barbeque has used this to its advantage. Its take on BBQ is unique—founders Steve Newton and Bill Kraus crafted a menu spanning the different types of bbq across the country. The restaurant also stands out for its emphasis on patriotism—the chain actively participates in Wounded Warriors events and hosts community fundraisers. The Star Spangled Banner plays every day at noon. There is an American flag outside each location, and inside there is artwork of old law enforcement vehicles and fire trucks, invoking a nostalgic feel. The chain opens primarily in 4,000-sq.-ft. end cap locations. The first restaurant opened in 2011 in Glen Burnie, Md. There are currently 23 locations throughout Maryland, North Carolina, Pennsylvania, Tennessee, Florida and Virginia, with one restaurant planned for New Jersey and an additional one in the works for Florida. After conquering the East Coast, the Midwest is the chain’s next region of entry. An Evansville, Indian, location opened in March 2016. Expansion plans call for 40 stores by 2018.
Home Country: United States
Target demographics: Meat lovers? The chain began as a hot dog stand.
Average store size: About 9,000 sq. ft.
Current locations: About 40, including 36 in Illinois, as well as in Arizona, Indiana, Florida and California.
Opening plans: Unknown, though additional locations are currently in the works for Florida and Wisconsin. The company’s new CEO also announced last year that the company would be expanding.
What people say: Chicago-based Portillo’s serves an array of meat dishes, burgers and pasta, but it began as a hot dog stand. The chain currently has 36 locations in Illinois and has expanded to Indiana, Arizona and California. Additional stores are planned for Florida and Wisconsin. “Average sales over $7 million per store for a 9,000-sq.-ft. store is unheard of. There is something very unique about this chain,” Frishman says. The chain opened its first Florida location, in Brandon, this month and is planning additional locations in the Tampa Bay Area.
Target demographic: Millennials who put an emphasis on eating healthy, organic food, but whose student debts and stagnant wages prevent them from shopping at the chain’s original Whole Paycheck locations; busy professionals looking for prepackaged meals.
Average store size: Approximately 26,000 sq. ft.
Opening plans: The first store, in Los Angeles, is scheduled to open in May. The second will be in Lake Oswego, Ore., followed by at least 13 additional locations in the near future.
What people say: Organic grocer Whole Foods is entering the market with a new concept called 365 that will emphasize prepackaged foods, use space more efficiently and offer lower price points. The first locations are set to open in Los Angeles in May and in Lake Oswego, Ore. in July. Whole Foods is also working on launching 13 more Whole Foods 365 stores, according to Supermarket News, which has provided a first look at the Lake Oswego floor plan. The Lake Oswego location could have gross buildable space of 26,000 sq. ft., based upon the plan, note Supermarket News writers. Industry experts consider the new concept a move to compete with other grocers on pricing. “They do need to address pricing against conventional [grocers] like Kroger who have moved aggressively into natural and organics and the growth of formats like Sprouts,” says Sterns. According to Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York City-based retail consulting and investment banking firm, “Whole Foods is a marketing Goliath. Its success has produced all kinds of competition looking to grab a share of the market that Whole Foods defined [Trader Joe’s, Sprouts, Kroger]. All of these entities offer lower price points than Whole Foods and 365 is the vehicle for Whole Foods to meet the competition head-on.”
Target demographic: Coffee lovers looking for higher-end and higher-priced brew than that served at the regular Starbucks locations.
Average store size: About 20,000 sq. ft.
Current locations: One, in Seattle
Opening plans: A second location will open in New York City in 2018.
What people say: Starbucks plans to bring its high-end Roastery to New York in 2018. At 20,000 sq. ft., the New York location will be bigger than its Seattle predecessor, which opened in December 2014. New York City currently has a Starbucks Reserve Roastery ‘café’ store, which is a little larger than a conventional Starbucks store, is better appointed in terms of decor, has a more sophisticated brewing system and a line of high-end coffees. Starbucks has announced plans to build several hundred Reserve Roastery ‘café’ stores,” says Davidowitz. “These are flagship stores designed to elevate the Starbucks brand. I think they are trying to blunt the perceived expertise of Intelligentsia, Blue Bottle, Stumptown and the many smaller more specialized brands,” Stern says. The larger Roastery locations will create media and tourist buzz and support the development of smaller Reserve stores as roll-out vehicles of a more upscale concept, according to Davidowitz, as well as enabling Starbucks to test new products.
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