The next big things for retailers

The recession cured retailers’ rush to open as many stores as possible in as many markets as possible. So all’s quiet on the retail front, at least for now. Some companies, however, are poised to take advantage of such an economy. They are …

GROCERY STORES

Everyone’s gotta eat, right?
The lack of financing has put the kibosh on most new construction and development; banks no longer want to lend money to risky ventures. But banks are still agreeing to back tried-and-true retail shopping centers: the ones on high-traffic corners in good neighborhoods, the ones with credit tenants (such as McDonald’s, Starbucks and other mega-companies good for the money), and the ones with grocery stores.

“Grocery is doing well because people are eating out less,” Jean Smith says.

It also makes sense that a national grocer is more likely to move into our neighborhood than a large national retailer.

“Think about the number of Dillard’s [stores] — maybe 15 in Dallas-Fort Worth, and there are 120 Tom Thumbs,” David Shelton says. “If you’re a heavy Dillard’s user, you shop maybe once a week, and if you’re a typical user, maybe once a month. You don’t have to have fashion. You don’t have to have a pair of jeans.

“Grocery stores, you’re going twice a week. If a grocery store draws from a mile- or mile-and-a-half radius, a department store draws from a 15-mile radius, depending on densities.”

The major barrier to grocery store expansion or entrance into the Dallas market is competition. Three of the top five grocers in the country — Walmart, Kroger and Safeway — all have a strong presence here,” Mike Geisler says, “and then you’ve got a whole other layer of stores underneath that.”

So for newcomers to the Dallas grocery market, “there’s a reason why they’re not here right now, and there’s a reason you don’t see grocery store expansion as a whole like it was,” Kent Arnold says. “Everyone is trying to retool and refigure.”

FRO-YO

Frozen goodness by the ounce
Frozen yogurt — what the kids (and marketing gurus) are calling “fro-yo” — is all the rage.

“Look at all of these self-serve yogurt places opening up,” Young says. “On the one hand, you can argue that we absolutely don’t need any more retail. However, just because of this retail girth, this total market size, there’s a lot of room for a lot of players.”

Many companies entering the Dallas market have been around for years, even decades. So why the sudden explosion? It likely stems from West Hollywood, Calif.-based Pinkberry.

“Cupcakes are the same way,” says Shelton, referring to the recent cupcake craze. “Sprinkles got lots of celebrity attention in LA, and Pinkberry did the same. People latch on to what the celebrities endorse by using the product.”

So does Dallas have enough room for all of the new players in the frozen yogurt market?

“Anytime you see that on the real estate side, you just wait for the fallout because somebody’s not going to make it,” Shelton says. “There’s only so much demand for that product, and not everyone can succeed.”

BURGERS & TACOS

Concept food to go
“The hottest thing in food in Dallas is anything tacos,” Robert Young says. Restaurants with full menus of almost nothing but taco concoctions are popping up left and right, taking over former Blockbuster spaces and old automotive garages.

“All of these are built and engineered to go in at a relatively manageable cost to meet the needs of an area,” Young says.

Burgers — and more specifically, sliders — are another hot commodity. Everyone from homegrown companies such as Jakes and Burger House to national chains such as Five Guys and Smashburger are expanding to our local market.

“If the concept is cool, if the price point is kind of in the middle of the fairway, and if the food is good, local neighborhoods love it,” Young says.
“As long as you put a drive-through on one side and a patio on the other, food is going to continue to be big in Texas.”

DISCOUNT RETAIL

Everybody loves a bargain
Neighbors love the idea of a boutique store opening nearby, or even a boutique-ish national retailer, such as a Trader Joe’s grocery store. But in this economy, people are more likely to see “coming soon” advertisements from Trader Joe’s discount parent company, Aldi.

“What the market is demanding now is completely opposite” of the boutique trend, Arnold says. “Three of the top 20 expanding retailers are dollar stores — that kind of shows you the direction.”

Aldi, the largest grocery store in the world, opened 20-plus new stores in the Dallas-Fort Worth market over the last two years with a completely different product approach than a gourmet grocer like Central Market.

“Central Market looks at it as, ‘How do I get a quality product here?’ ” Arnold says. “Aldi looks at it as, ‘How do I get the cost down?’ ”
Companies with the latter mentality are growing in the current market.

“Any and everyone who’s a discounter today is hot, from the dollar stores to the Saks Off Fifth,” Young says. “They’re going into markets that sometimes are underserved, but also finding themselves in markets that they can penetrate because the value of real estate is competitive.”

Discounters can now afford the second-generation space that was unavailable to them a few years ago, and also are reaching new customers because of the recession.

“Consumers today are looking to go shorter distances, and they’re looking for deals,” Arnold says. “Everything is based around consumer confidence in the economy — not even that we’re doing good, but that we’re going to do good,” Arnold says.


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