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U.S. retail chains spending billions in bet on growth

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For all the concern that the U.S. economy may be slowing, retailers from Express Inc. to Indianapolis-based Finish Line Inc. are poised to spend the most on capital improvements since the recession.

Having focused on growing online and internationally in recent years, U.S. retailers are accentuating the shopping experience in an effort to boost sales amid increasing online competition. With consumer spending on the rise, the industry will boost capital spending to $35 billion this year, compared with $29 billion in 2009, according to Fitch Ratings.

“We think the consumer is getting more confidence, and with that, the stores are getting more confident to expand,” said Laura Pomerantz, founder of commercial real estate advisory firm PBS Real Estate LLC in New York. “Stores have to be entertainment, they have to be service-oriented, which has clearly become very, very important to the consumer.”

Now that they are opening fewer stores in the U.S., retailers are trying to extract more dollars from each one. Store designers are striking a balance: making stores more Web-like, with mobile check-outs and kiosks, while turning them into hangouts, where shoppers can experience a retailer’s brand in ways they can’t online. They are also finding ways to add merchandise without making stores seem cluttered.

The splurge on stores is helping some design and architecture firms, as well as the suppliers of lighting fixtures, flooring and signage, which lost business after the worst recession since the Great Depression stifled consumer spending. Retailers spent at least $13.4 billion on interiors last year, according to the not-for-profit Association for Retail Environments.

U.S. stocks suffered their worst month since last September in May and gauges of consumer confidence showed mixed results, but more than 20 chains tracked by researcher Retail Metrics LLC have reported average same-store sales increases every month starting in September 2009. And though Express shares slid 6.4 percent this year, the Columbus, Ohio- based chain is refurbishing 100 of its more than 600 shops in the next three years.

Before the recession, retailers typically asked for “tweaks” to their store prototype, and now they’re asking for advice on how to create the “store of the future,” said Lee Peterson, executive vice president of creative services for WD Partners in Columbus, Ohio, a design and architecture company that has worked with the likes of New Balance Athletic Shoe Inc. and Abercrombie & Fitch Co.

“There’s definitely more capital in the marketplace,” he said. “I think everybody is fairly cautious, but less cautious so far this year than last year, and I’m knocking on wood, a hell of a lot more aggressive than two years ago.”

Express, hired Wonderwall, the Japanese design firm that planned the interior of Fast Retailing Co.’s Uniqlo flagship in Manhattan, to create a new prototype last year. Wonderwall understood how to add more merchandise to the floor without crowding the space and the need to organize by style, adding sophisticated lighting and attractive shelving, said Michael Weiss, CEO of the apparel company.

“We really believe it gives the consumer a more elegant shopping experience, a more upscale shopping experience, much more aspirational,” he said. By organizing the merchandise by lifestyle—wear-to-work, going out, jeans-wear and casual—customers often buy whole outfits versus a single item, driving a measurable increase in sales, Weiss said.

“We have received more requests recently to participate in projects where we are not only redesigning a retail space, but rebranding or redefining the brand image itself to create a more complete message for the consumer,” Masamichi Katayama, principal of Japan’s Wonderwall said in an e-mail.

Opening new stores and renovating existing locations will help drive a jump in capital expenditures to as much as $108 million this year, from $77.2 million in the similar period ended Jan. 28, the company said in its May earnings call.

“People are understanding that you’ve got to entice the customer with the experience, and the experience is a whole lot of things,” Weiss said.

Athletic-wear retailer Finish Line is testing a prototype that boosts collaboration with such brands as Adidas and Nike, and plans to have mobile registers in all its stores this year.

The Indianapolis-based retailer may boost capital expenditures to $85 million from $29 million in its most recent fiscal year, as it refreshes and remodels stores, opens 25 new stores, tests its new store prototype and adds point-of-sale technology, according to a March 30 earnings call. The company announced May that it planned to add 327 local jobs by 2016 as part of a multimillion-dollar expansion to upgrade its e-commerce offerings.

Aeropostale Inc., the New York-based teen retailer, is in the early stages of redesigning its more than 1,000 stores.

“Our key focus is designing a store that is innovative, fun and inviting, while providing an environment that the kids want to hang out in and stay a while,” Kenneth Ohashi, a company spokesman, said in an e-mail.

With higher expectations and capital expenditures still measured compared to before the recession, retailers want more statistical evidence on what works and what doesn’t in terms of prototypes, said Irwin Miller, a Los Angeles-based director at design and architecture firm Gensler.

They’re also better informed about what their consumer wants based on sharing across social networks like Pinterest, Facebook and Instagram, he said.

“What really good retailers around the world are now looking at is how do they create a unique experience in the physical store that gets people come in and want to participate in that,” said Wendy Liebmann, chief executive officer of WSL Strategic Retail in New York. “There are so many reasons for people not to come or not to come as often. It becomes really important to create more compelling and easier to shop environments that people feel is theirs, their store.”

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  • US Retail Sector
    Good article. Readers may also be interested in this Informative Retail White Paper ( http://bit.ly/JDHmUU ) with information on current developments in the US retail sector.

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  1. liek the rest of America

  2. These quaint,obsessed musings by the stalkers are certainly entertaining, but I'm trying to figure out what, if anything, all the yelping below has to do with Zak Brown.

  3. It's evident that Moffett was pushing the right buttons and corporate America is now trying to squash him. He just wanted to withdraw the free pilot services provided to the company by the pilots to try and put some pressure on a company that has not been interested in negotiating a contract in over 5 years. The company does not provide a contract because not having one has saved them a bundle of money. Shame on any Republic pilots not standing behind their union leader just because things are getting tough, can you not see such strategic moves by the company as putting the last union president in a corporate position and into THEIR pocket. Do you really believe the last union president is so appalled at the attempts by Moffett, do you not remember his oppositions to the company? We stood behind him. It has been proven over and over again for thousands of years without fail, a man cannot serve two masters. Anyone that believes people vote contrary to their paycheck and livelihood deserve to be taken advantage of, the recent statements by the former union president are laughable as he denounces the current union president from his new corporate position. Have you ever seen a drafted sports player score points for his previous team, it cannot be done, he is not on the pilots side anymore, he gets his money a different way now than you and I do, and he should not be allowed to remain on the seniority list. A drafted player brings strength, credibility, tactical knowledge, and a strategic advantage to his NEW team, he would not be drafted or paid were it otherwise. We are all forced to choose only one side to play for and support, not doing so has many references in life such as insider trading and shaving points, all illegal for good reason. This basic fact is why corporate moguls, scientist, and engineers all sign non-discloser agreements and non-compete clauses, as protection in case they are lured into switching sides as our former union president has done. No NFL coach ever drafted a player so that both teams could benefit and better understand each other, they are recruited to win the game against that former team, period. Likewise the company does not recruit the former union president by accident or mutual understanding, its strategy. Don't confuse playing the game with good sportsman-like conduct in support of common business and prosperity goals, with the requirement to only play for one side. Good men we all love and favor fall subject to this manipulation, often without their knowledge, and it is not a betrayal of their friendship to oppose them when they switch sides. If we did not love and trust them, they would not have been chosen and lured to the other side in the first place. The deception by the drafted player is not made at a conscious level, it's just human nature and it's all about money and power which corrupts our ability to be objective and loyal to two masters. This is why our court system created the defense attorney, and why our military created counter intelligence. Its strategy and its propaganda, and it works, and that's why the "powers to be" manipulate the chess pieces by sometimes changing their colors. Some players know they are being manipulated when their color is changed, but it brings them more money and power so they do not care. The rest have good intentions but do not even realize they are being manipulated. This tactic is also known by another name, Divide and Conquer. In battle sending an imperfect message with an imperfect team is obviously not ideal, but it's still being sent by YOUR team, your union leader, a leader that has common goals and common rewards with you, they are the best, because we have elected them to do a job for us. If you are not backing Moffett but believing the spin by those that have recently switched sides, you are taking food out of your own mouth. Showing unity and backing an imperfect situation still results in taking just as much ground, it's about unity and bargaining power. It's not necessary to wait around for that perfect attack because it will never come, the company will spin and attempt to destroy anyone that gets in their way. Ultimately it's not about any specific attack anyway, ASAP or whatever it makes no difference, it is and always has been only about power. If this company cared about safety it would not build pairings with 8 hour overnights, come on, are you that naive? Besides, do you really think Hoffa cares, no, he got a call from corporate America and was squeezed into denouncing Moffett. If he didn't they would spin the safety card against him and the Teamsters National with implication for truckers, future contracts, insurance rates etc...saying something like the Teamsters use safety as a bargaining chip, blah blah blah... Do you really think any pilot is going to do something unsafe for the contract, absolutely not, the only ones threatening safety here is the company with reduced rest, fatigue, and poverty. Do you not find it odd that Hoffa and the Teamsters are opposing a Teamster president publicly? Would the Teamsters National not normally support and work with one of their own? Why did they not sit down and help him strategize, correct any mistakes, and charge ahead? Would the Teamsters National not normally support and leverage a contract for all those pilots that have been paying Teamster dues, isn't that why we have all been paying Teamster dues in the first place? I sure haven't been paying dues so that the Teamsters National could come along and write this kind of an article undercutting our union leader and our unity. Whose side is the Teamsters National really on, it's obviously not the Republic pilots side.

  4. No matter what Moffatt does the company is going to spin it like he is the terrorist and brainwash people like you into believing it, wake up, back your players that are trying to change things for you and your livelihood. Where has Hoffa been for the last 6 years, except collecting our dues. Seriously, do you really think an FO going for upgrade, signed off by a checkairman ready for the upgrade, who then fails, is not even capable of returning as a First Officer.

  5. whoa!

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