Wednesday, August 29, 2012

Is Safeway eyeing Larkspur?

It passed under the radar earlier this year, but the ownership of the property currently occupied by Lucky's Market in downtown Larkspur changed hands in March. The new owner, who picked up the property for just $4.0 million, is Vons, otherwise known as Safeway. 

Friday, August 10, 2012

What's holding back Marin's retail recovery?

Growth, or the lack of it, in retail sales, and what it says about the economy, is in the news again, with strong growth in sales reported in some sectors and weak performance in others. During the recession, total US retail sales fell from $340bn in 2008 to $295bn in 2009, then recovered back to pre-recession levels in early 2011, growing further to $360bn in April 2012. However, total sales have fallen in the last three months as the economy slows and consumers cut back on spending.

In Marin County, the recovery has not fully materialized. Based on retail sales tax data from the State Board of Equalization (see chart at right), retail sales in 2012 are tracking above 2011, but are still below 2008.

In this respect, Marin is out of line with most of the Bay Area.

Looking at retail sales tax growth since March 2010, which was when retail sales started to recover, Marin, and to some extent Sonoma, are lagging behind the major Bay Area counties and California as a whole.

What is holding back the recovery in Marin? Below are some possible reasons:

1. On the demand side, consumer spending has not recovered. Marin took a big hit from the recession. Total personal income in Marin County fell by over 13% in 2009, a much steeper drop than elsewhere in the Bay Area. Data beyond 2010 is not yet available, but it's very possible that income growth in Marin has yet to fully recover, which would help explain continued retail weakness.

2. On the supply side, tight market conditions have restricted the ability of new and innovative retail formats to start up and grow in Marin. In a recovery, consumers often need to be tempted to open their pocketbooks and start spending again, and that temptation is best provided by new and fresh retail formats. Marin County has one of the lowest retail vacancy rates in California, and also higher than average rents, which means it's tough for retailers to find high quality and affordable space.

3. Internet shopping. The growth of electronic commerce continues to impact traditional retailers, almost killing off whole categories, such as books and music, and cutting into the margins of others. In the US, online retailing is growing at an average annual rate of over 15%. It is very possible that Marin's combination of high average incomes and limited retail supply make online shopping a significantly attractive option.

Friday, August 3, 2012

Nordstrom and Splendid preparing new space at The Village Corte Madera

While I was checking out the upcoming Microsoft store at The Village yesterday I took a look at the remodeling of Nordstrom, which appears to be quite a significant piece of work.

As you can see from the photo, two sides of the building have been torn off. Amazingly, the store remains open, with approximately 75% of the internal area open and trading. As approved, the remodeled store will be slightly larger than the previous version, with two levels of approx. 64,000 sq.ft. each.

Another new store being fitted out is Splendid, a J Crew-ish style apparel retailer with a small chain of outlets - this will be its first Northern California location. Splendid will fit in with the Michael Stars / Madewell / Tommy Bahama vibe at this end of the mall, and is taking the space previously home to Lacoste. The Puma / Lacoste experiment with sports apparel never really worked at this mall, so no surprise to see the managers revert to more conservative upper-mid market brands.

Thursday, August 2, 2012

Will the Microsoft Store be a hit at The Village

Microsoft is pulling out all the stops to make a big impression with its new store at The Village Corte Madera.

Currently under construction and surrounded by an enormous billboard, the store will occupy the space formerly leased to Pottery Barn Kids, and will be almost twice as large as the center's Apple store, comparisons to which we can expect to see in abundance.

Electronics retailing is facing huge changes these days. At one end we have the unparalleled success of the Apple Store, while at the other, the once unbeatable Best Buy is struggling in the face of competition from online retailing. Microsoft is of course aiming to position itself alongside Apple, and is making every effort to mimic the Apple store in terms of appearance, location and store layout. The one area Microsoft can't mimic Apple is merchandising, and many observers believe this may be its downfall.The Apple Store's success is tied to its brand, and the popularity of the Apple brand has allowed the Apple store network to grow with massive profitability, much in the same way other retail brands, such as GAP and Starbucks have done. 

We go to the Apple store because the iMac, the iPhone and the iPad are hugely popular and desirable items. What equivalent products does Microsoft have to offer? I had to go on their website to find out. The key products appear to be a Windows Phone, the Xbox game console, and a collection of laptops from various manufactures featuring Windows software. There's also a tablet called Microsoft Surface that's due to be released next month. Will die-hard Microsoft junkies be lining up at the store at midnight the day before it's release? I somehow doubt it. But I'll be curious to see how well the store does.