Mall Madness: Crucial Retail Sales Data this Morning
Unless you’ve been living under a rock, you know retail is going through some headwinds as Amazon and other e-tailers are transforming the way consumers shop. But there are some bright spots for stores. We get the lowdown on retail as the government reports its latest numbers this morning (8:30 ET).
“The traditional retailers are coming to market with truly new store concepts to try to adapt to consumer preferences in the face of e-commerce,” says Situs RERC Director Dane Anderson. “Retail property owners are also adapting, pivoting toward a stronger fusion of leisure with traditional retail space. It is worth noting this is not just an e-commerce-driven change; there is a socioeconomic factor as well. The millennial generation is more interested in paying for an experience than consuming a good.”
The stories below take a look at how merchants are trying to turn things around in a very tough environment:
Apple Stores Will Have Lines Around the Block
Apple stores will shortly have long waiting lines after the company on Tuesday introduced its new line of iPhones and other products.
Smart merchants will be able to prosper off the slew of potential customers flocking to the mall to buy the latest Apple gizmo.
The high-end iPhone X model, which starts at $999, has an edge-to-edge screen and dual cameras and Face ID facial recognition. Orders begin Oct. 27 and ship Nov. 3.
iPhone 8 (starting at $699) and iPhone 8 Plus feature a faster chip, improved camera and speakers and a new glass front and back casing for wireless charging. The iPhone 8 will be available to order today and in stores on Sept. 22.
Apple TV 4K (starting at $179), an update to the company’s set top box, will be available Sept. 22.
An updated Apple Watch ($399), known as Series 3, has a built-in cellular connection.
Nordstrom’s New Look — No Merchandise in Stores
Nordstrom is opening a new store next month that is a fraction of the size of its typical locations, where shoppers will be able to enjoy services such as manicures and on-site tailoring.
Something it won’t carry: clothes.
Called Nordstrom Local, the new concept comes as retailers across the U.S. are wrestling with how to best to use their physical spaces and attract customers who are migrating to the web. For department-store chains like Macy’s Inc., J.C. Penney Co., Kohl’s Corp. and Sears Holdings Corp., one answer has been to shrink their footprint by closing stores or experimenting with smaller ones.
“There aren’t store customers or online customers — there are just customers who are more empowered than ever to shop on their terms,” said Erik Nordstrom, co-president of the retailer.
Nordstrom Local, scheduled to open Oct. 3 in West Hollywood, Calif., will span 3,000 square feet, far less than the 140,000 square feet of one of Nordstrom’s standard department stores.
It will contain eight dressing rooms, where shoppers can try on clothes and accessories, though the store won’t stock them. Instead, personal stylists will retrieve goods from nine Nordstrom locations in Los Angeles, or through its website. The stylists can also pull together looks for shoppers through a “style board” app.
“Shopping today may not always mean going to a store and looking at a vast amount of inventory,” said Shea Jensen, Nordstrom’s senior vice president of customer experience. “It can mean trusting an expert to pick out a selection of items.”
In addition to manicures, Nordstrom Local shoppers will be able to order wine, beer, coffee or juice from an in-store bar, and those who place orders on Nordstrom.com by 2 p.m. can pick them up there that day. They will also be able to return items at the store that they bought online or from other Nordstrom locations. Tailors will be available for alterations or to help members of Trunk Club, an online clothing service that Nordstrom acquired in 2014, select fabrics for custom garments.
read more: Wall St Journal
Situs RERC Hires Jamie Molloy as Managing Director
Situs RERC has hired Jamie Molloy as Managing Director.
Mr. Molloy will be responsible for further developing our suite of solutions to address the evolving needs of the industry, while expanding the effective reach of Situs RERC, and will report to Ken Riggs, Situs RERC’s President.
Mr. Molloy joins Situs from Deutsche Bank where he has spent the past 10 years as Global Head of Real Estate Valuation, directing a team of real property valuation professionals in New York, London, Frankfurt, Mumbai, Hong Kong and Tokyo. Prior to that, Jamie spent five years as International Head of Real Estate Valuation overseeing all non-US valuation activities and offices.
To read the full press release, click here.
Getting Them Back to the Mall: Cinema Seduction Using Food and Booze
All the Raisinets in the world aren’t enough to sugarcoat this fact: In recent months, the Hollywood box office has been a disaster. In terms of attendance, Tinseltown just wrapped up its worst summer at the box office in nearly a quarter century.
That means theaters now have to fight harder than ever to get butts in seats. “For a very long time, movie theaters were not overly focused on pleasing the consumer,” says Eric Handler, a media analyst at MKM Partners.
But in recent years, he says, theater owners have wised up to a novel idea: making the theater experience enjoyable beyond the screen.
First it was comfier seats, and now it’s all about tossing aside the stale popcorn for mouth-watering gourmet options. “Movie theaters are really stepping up to distinguish themselves from each other,” says Daniel Loria, editorial director of BoxOffice Media. “Every theater is building its identity.”
New boutique-style venues are offering everything from dine-in table service to full bars. That competition’s a good thing, says Loria, and it hints at a sustainable future. “So many theaters wouldn’t be opening if there were heavy clouds in the forecast,” he says.
read more: NY Post
More Stores Will Open Than Close This Year
You read the headline right, there are more retail stores opening this year than there are stores closing.
You may say, but when I walk down almost any shopping street, I see so many vacancies where there were previously tenants, so … how can there be more openings than closings?
A new report out by IHL Group answers the question.
Source: IHL Group, Company Reports
One of the things you’ll see on the chart above is that the list of stores opening this year is dominated by discount and convenience stores.
You might not recognize some of the names. Couche-Tard is the corporate owner of Circle K stores, and Aldi and Lidl are large European grocery chains that are expanding in the US.
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Millennials Would Rather Fly than Buy Homes
Millennials aren’t buying homes at the same rate as previous generations, and the homeownership rate for those under 35 has steadily declined since the early 2000s.
One reason for this shift: Young people today have different priorities.
According to a recent survey by Realty Mogul, 47 percent of people between the ages of 18 and 34 would rather spend their money on traveling than buying a house, compared to only 26 percent of those ages 45 and older who said the same.
An earlier survey by The Collingwood Group found millennials were willing to sacrifice Starbucks visits and cable television to finance home purchases.
“It’s fascinating that millennials want to live in the city while they’re single but want the American dream of white picket fences and yards when they are ready to buy, according to our exclusive poll,” says The Collingwood Group Chairman Tim Rood. “That is so critical given the ambiguity and fear that millennials will get hooked on urban conveniences and abandon the suburbs, leaving baby boomers and other downsizing households in the lurch.”
A 2014 Eventbrite poll found that 78 percent of millennials would choose to spend money on a desirable event over a desirable purchase and 55 percent said that they’re spending more on experiences than they ever have, CNBC reports.
Millennials “aren’t spending our money on cars, TVs and watches,” Taylor Smith, CEO and co-founder of Blueboard, tells CNBC. “We’re renting scooters and touring Vietnam, rocking out at music festivals, or hiking Machu Picchu.”
Young people also prioritize small luxuries, such as restaurant meals, daily Starbucks runs and, of course, avocado toast. Forty-seven percent of respondents ages 18 to 34 told Realty Mogul they’d prefer to rent over buy if it meant they could still afford such indulgences.
Collingwood Group Chairman Tim Rood talks with FBN’s Cavuto at 1 p.m. ET today about all things housing. We invite you to tune in.
Equifax in Very Hot Water
As the lawsuits against Equifax Inc. begin to mount, and as lawmakers such as Senate Finance Committee Chairman Orrin Hatch, R-Utah, call for a public accounting of what went wrong, the regulatory implications of the data breach become clearer.
The exposure of personal information tied to so many people could lead to new legislation and rules. In that way, it could reshape the rules of the market.
“The Federal Bureau of Investigation is examining the breach, and the Federal Trade Commission could examine the company’s cybersecurity efforts and response to the breach, including its notification to the public,” CIO Journal’s Steven Norton and Kim S. Nash report. “Regulators and law-enforcement officials have struggled to respond to hackers, who keep adjusting their methods and are going after larger targets. … In an interview with Bloomberg on Monday, Senate Democrat Dick Durbin said the data breach is ‘exhibit A’ on the need for strong U.S. regulation, including fines against companies that mishandle consumers’ personal information.”
If calls for greater regulation gain traction, the Equifax breach has the potential to do for cybersecurity regulation something along the lines of what the financial crisis did for banking regulation, channeling public outrage into tighter controls on corporate prerogatives.
read more: Wall St Journal
Florida is Still Without Power to Run Air Conditioners
The state may have been spared the most horrible loss of life and destruction of property so many had predicted, but it’s hard to overstate the scale of devastation Irma’s fury brought to the power grid and those who depend on it.
The challenge: turning the power back on in a place whose explosive growth was built on air conditioning.
“It’s a magnitude we just haven’t seen before,” Eric Silagy, CEO of NextEra Energy Inc.’s Florida Power & Light, the state’s biggest utility, told reporters Monday. “This is the largest restoration in the company’s history.”
Because the transmission network held up better than expected, the utility moved up its forecast for restoring service. Eastern Florida should have power back by Sept. 17, FP&L spokesman Rob Gould told reporters Tuesday, while more heavily damaged regions along the west coast will have to wait until Sept. 22. On Monday, FP&L said it could take weeks to restore power.
“This is going to be a very uncomfortable time,” Gould said. “All of us realize how tough it is.”
There’s a lot of human misery behind the numbers, with hospitals, nursing homes, schools and more out of juice. Guerra, a software technician, works from home – not a possibility at the moment.
It’s the heat, though, that compounds the other problems. Guerra has thrown open his windows and doors, and all that seems to do is let more mosquitoes in. Temperatures are forecast to remain in the high 80s in Miami over the next five days.
read more: Bloomberg
… And Don’t Forget Houston
Harvey’s floodwaters have left this sprawling metropolis partially ruined and eager to return to something like normalcy.
But the storm has also forced many thousands of people out of their homes. As a result, the city is engaged in one giant collective improvisation. Its defining creative endeavor is where to find a place to sleep.
Greater Houston is big enough, with enough dry and intact neighborhoods, to absorb many of the people whose own homes are now moldy and wrecked. But absorption is not always easy. The cleanup will take years, and many Houston residents are heading into autumn under unfamiliar roofs. They will be packing school lunches over hotel minibars, and packing themselves into the guest rooms of neighbors and relatives and friends. Some remain stranded in shelters, and others have returned, in desperation, to the stench of unrepaired homes.
Ricky Gentle burns incense at night, vanilla or lavender, to hide the smell of his moldy apartment. He knows this is no place to stay, that it cannot be healthy to breathe in here, but he and his brother and his brother’s wife have no other place to go. The one night they spent in a shelter — “people half-crazy going around” — seemed even more dangerous.
The night the flood came, Mr. Gentle, 54, lay in bed and heard the pots and pans clanging in the kitchen cabinets, a signal that waters were rising fast in the apartment. He and his brother helped float the elderly and sick out of the flooding one-story apartment complex on mattresses, breaking into a nearby church for immediate shelter. They came back to the apartment the next day, finding the complex empty but the water mostly gone, other than the raw sewage still sitting in his bathtub. They spent days scrubbing the walls.
“We got to breathe in that stuff and it ain’t no good. But ain’t nothing we can do,” he said.
read more: NY Times
Harvey’s Hit to Mortgages Could Be Four Times Worse Than Predicted
As homeowners in Houston struggle to dry out and rebuild, they may also struggle to make payments on their mortgages.
New estimates suggest as many as 300,000 borrowers could become delinquent on their loans and 160,000 could become seriously delinquent, that is, more than 90 days past due, when banks initiate foreclosure proceedings. This from Black Knight Financial Service, which compared mortgaged properties in the FEMA-designated disaster areas in Houston to those in Hurricane Katrina, and the resulting delinquencies in the four months following Katrina.
That is four times the original prediction because new disaster zones were designated and more homes flooded when officials released water from reservoirs to protect dams. The total number of mortgaged properties in disaster zones is 1.18 million. Houston disaster zones contain twice as many mortgaged properties than Katrina zones, with four times the unpaid principal balance.
After Hurricane Katrina, mortgage delinquencies in Louisiana and Mississippi disaster areas spiked 25 percentage points. The same could happen in Houston, as borrowers without flood insurance weigh their options. They will get some federal relief, but if rebuilding would cost more than the principal in their homes, they could decide to walk away.
In Florida, the sheer volume of homes hit by Hurricane Irma will likely cause an increase in mortgage delinquencies, but the comparison with Katrina does not work because of the different natures of the storms. Florida did not see sustained flooding, although there was considerable wind damage, especially in the Keys.
There are 2.08 million mortgaged properties in Irma-related FEMA disaster areas, more than four times that of Katrina and twice as many as Harvey. Total unpaid mortgage balances for Irma areas are $370 billion. If the correlation worked, there could have been half a million mortgage delinquencies in Florida, but, again, the storms were different. This is not to say, however, that Florida will not see a hit to mortgages in the coming months. It is just harder to quantify how many.
read more: CNBC
Look, Mom, No Security Deposit
A startup aims to eliminate security deposits paid by millions of New York City renters.
Instead, Rhino wants to replace the process with a monthly fee starting at $19.
The firm has received nearly $2 million in venture capital money, and has already locked down a major property manager as its first client. FirstService Residential manages around 10,000 units in the metro area, and Rhino hopes to roll out its service to the entire portfolio by the end of October.
Security deposits are problematic both for tenants — who often must come up with thousands of dollars that will be locked away for at least a year — and landlords, many of whom must keep each tenant’s money in separate, interest-bearing escrow accounts. Yet for all the hassle, Rhino chief executive Paraag Sarva said that most security deposit money is returned at the end of a lease.
“There is this whole racket that unnecessarily ties up huge amounts of cash for renters,” said Sarva, a Queens native who co-founded the company nearly two years ago. “We feel like this is a real opportunity to put a portion of that money back into renters’ pockets and put better protection into landlords’ pockets.”
Because of the relatively low risk, Sarva and two co-founders were able to find a global insurance firm willing to back individual insurance policies unique to each tenant that would be hashed out by an algorithm the trio developed. When a renter is accepted for an apartment, the landlord gives them the option of plunking down a standard deposit, or paying a fee to Rhino. The algorithm takes information from the renter, such as income and credit history, and calculates a monthly payment. Rhino takes a cut, and the rest goes to Canopius US Insurance, part of a global insurance company. Landlords wouldn’t pay for the service, but in the event of damage or nonpayment, could file a claim for up to two months’ rent. Tenants would still be on the hook for damage they caused, or rent they didn’t pay.
Have a prosperous day and great weekend!