retail news in context, analysis with attitude

by Kevin Coupe

Interesting piece in the Wall Street Journal this morning that illustrates how the retail landscape is changing, and how traditional assumptions now need to be reconsidered.

The story notes how, at most malls around the country, major department stores traditionally have served as anchor tenants, getting preferred lease rates because they were seen as driving customer traffic.

These days, however, that isn't so much the case. At many malls, the store that generates the most traffic and serves as a magnet for consumers is The Apple Store.

The Journal writes, “Apple stores have overtaken many traditional anchors by revenue. In Apple's fiscal year through September, it had sales of $34.1 million per retail store. Macy's much larger stores generated $29 million on average in sales last year, and J.C. Penney, just $16.1 million, estimates Michael Exstein of Credit Suisse.

“And yet, Apple isn't getting anchor privileges.

“Steve Sakwa of ISI Group estimates Apple pays $50 to $80 a square foot in annual retail rent. For a store with 6,000 square feet, Apple would pay as much as $480,000 annually. That compares with the $439,000 per leased store that J.C. Penney paid last year, Mr. Exstein estimates. Department stores are often 20 times larger than an Apple location.”

Which raises the following question: If you owned a mall, what is the one store you’d like to have in the mix - Macy’s, JC Penney, or Apple?

Then, take the question from another direction. In your store, is there a product or category that you are giving too much attention to, that no longer merits the benefit of the doubt? What is it ... and what are you doing to face reality?

Think about it. Eyes-open.
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