Location remains retail’s MVP
You’ve heard the argument that location is less critical to retail success today since consumers are going online to buy the goods they need and want. Perhaps there is some truth to that, but on the whole, location remains a critical factor when it comes to store traffic and revenues for both established and emerging retail brands.
Recently, Credit Suisse published a list of MVP (most value properties) shopping malls. MVPs were determined by high traffic counts and sales-per-square-foot. Credit Suisse analysts began with 2,101 malls to come up with a list of 95 MVPs. Some of the facilities making the list were Town Center at Boca Raton (FL), The Mall at Short Hills (NJ), and The Galleria (TX).
The research found that some retailers are particularly adept at locating in MVP malls. Six businesses — Apple, Cheesecake Factory, Louis Vuitton, Lululemon, Nordstrom and Tiffany & Co. — were identified as having a high percentage of their overall store bases in these locations.
Nordstrom, in particular, stood out, with 62 percent of its stores in MVP malls. Of the chain’s 120 total, 75 serve as anchors in MVPs.
Interestingly, Credit Suisse’s research found that the growth of e-commerce has brought about some diminishing returns for well-established softline brands in MVP malls. On the other hand, it appears to be a boon to emerging labels such as Baublebar and Bonobos — which brings us back to Nordstrom.
“Nordstrom is already a leader in offering emerging brands; it distributes six of the key 33 ‘online-born’ brands identified by the softlines team, including Bonobos and Baublebar,” Michael Exstein, Credit Suisse analyst, wrote in the report (via MarketWatch). “The only other mall anchor retailer to distribute any of the brands identified is Bloomingdale’s, which distributes three.”
While some predict the continuing decline of malls, others see MVPs growing in value because of omnichannel initiatives. A 2015 report by the International Council of Shopping Centers predicted rents will likely increase in the future as a result. This could benefit Nordstrom as other emerging brands look for partners in prime locations at rents they can afford.
- The six stores you’re almost guaranteed to find in America’s ‘most valuable’ shopping malls – MarketWatch
- Nordstrom: Credit Suisse’s Department Store MVP? – Benzinga
- Why Online Rretailers Are Flocking to Nordstrom – Fortune
- Will omnichannel success drive up retail store rents? – RetailWire
Galleria Dallas – Photo: Simon Property Group
DISCUSSION QUESTIONS: How important is location to retail success today? What do you take away from observations of the role that location plays for emerging brands versus those that are already established?