According to a few reports, lifestyle centers, which have dominated retail development in recent years, appear to be losing some steam. With the slowdown in overall shopping center building, lifestyle centers have not gained enough "critical mass" with consumers, claim some critics. Also, some projects have just underperformed.
"A lot of better retailers went into a lot of lifestyle centers, and not all lifestyle centers are created equal," Steiner + Associates president Barry Rosenberg told Commercial Property News back in June. "A lot of lifestyle centers probably should not have been built."
At the time, the article noted that developers were putting lifestyle center projects on hold as many retailers weren't committing to leases due to the consumer spending slowdown. But the article also mentioned a number of "strategic misfires" in lifestyle center development. According to the article, "the new centers that have run into trouble lack the critical mass - and the right combination - of tenants that are necessary for the center to thrive."
Aiming at well-heeled customers, lifestyle centers are large mostly-outdoor shopping centers that include fashion-oriented specialty stores and may also include upscale department stores, restaurants and entertainment.
The sober view from CNS was backed by a survey conducted by TNS Retail Forward that showed only about 20 percent of primarily household shoppers visited lifestyle centers in June 2008, down from 21 percent in 2007 and 24 percent in 2006. Among those buying clothing, 11 percent shopped lifestyle centers in June 2008, down from 13 percent in June 2007.
"Lifestyle centers still haven't gained traction," said Kelly Tackett, senior consultant at TNS Retail Forward, in the report. "Despite the acceleration of lifestyle center development in 2006 and 2007, only a fifth of primary household shoppers shop the format monthly. And although specialty apparel retailers are a cornerstone of the format, even fewer shoppers frequent lifestyle centers monthly for clothing."
Finally, last week at Thomas Weisel Partners' investor conference, Robert Dennis, president and CEO of Genesco Inc., said his company was slowing down its expansion partly because the open-air lifestyle center strategy "doesn't work for us and doesn't work for a lot of other concepts as well." The slowdown for the owner of the Journeys, Hat World and Johnston & Murphy chains also reflected the overall reduction in retail developments. But Mr. Dennis implied that any retail developments would likely come from lifestyle or strip centers that don't support Genesco's concepts as well as regional malls.
"We think this is a multiyear problem," said Mr. Dennis. "We don't see the developers coming up with the next new mousetrap in terms of the kind of developments that are going to support us."
Discussion Question: Are you hearing or seeing any signs of problems at lifestyle centers? Are they still the 'wave of the future' in retail development? What should lifestyle center developers be focusing on in order to thrive in the future?