Shopping Centers Today

APR 2015

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

Issue link:

Contents of this Issue


Page 41 of 83

[online] competitors from entering the space." Burlington, ross Stores and TJX are the giants. last year these three opened 230 stores in the aggregate, amounting to some 7 million square feet of store space, equivalent to the size of the entire Victoria's Secret chain, Tuhy says. Moody's is predicting that the sector will continue to gain market share as it boosts sales from an esti- mated 6 percent to about 8 percent over the next five years in the U.S., outpacing the overall apparel sector by some 4 percent. TJX, the largest of the group, is ramping up expansion both in the U.S. and overseas. It is the largest off-price chain in canada and operates about 400 stores in Ger- many, Ireland, poland and the U.K. It entered austria in March and will enter the Netherlands this fall. "To- day we are raising our estimates for our long-term store growth potential to 5,475 stores, 325 more stores than our prior target," said carol Mey- rowitz, TJX chief executive officer, during a fourth-quarter earnings call in February, citing "enormous brick- and-mortar global growth potential." In the U.S., T.J.Maxx and sister off- price chain Marshalls (the so-called Marmaxx division) boast 2,021 stores. This year 181 new stores are on tap at these chains. "at Marmaxx, we see the long-term potential to grow our store base by over 40 percent to about 3,000 stores," Meyrowitz said. The company also plans to double the size of its homeGoods home-furnishings chain to 1,000 stores. The retailer's breadth of suppliers mirrors that growth. "They are now sourcing product from over 17,000 vendors; as recently as five years ago it was just over 10,000," Tuhy said. The secret sauce of T.J.Maxx is hy- perlocalized product that reflects the preferences and tastes of shoppers in micromarkets, says Bridget Weishaar, a Morningstar equity analyst. "If you go to T.J.Maxx stores in Boston and chicago, they'll look entirely differ- ent," she said. "They know what sells in each market [in terms of] product assortment, price and style." particularly notable is the fact that the chain is gaining appeal with younger shoppers. This is key, as Millennials will displace baby boom- ers as the nation's biggest consumer group by 2020, according to ac- centure research. "We target a very wide demographic base and like the growth we're seeing in the Millenni- als shopping across our divisions," Meyrowitz said. Meanwhile, ross Stores, which operates 1,210 ross Dress for less stores, has set out to double its store count in the U.S., where it currently operates in about 33 states. and Nor- dstrom rack, the 167-store spinoff of Nordstrom, will exceed 300 stores by 2020. It not only boasts more stores than the full-line department store now but is also outperforming it, ex- ecutives said during a fourth-quarter earnings call in February. Nordstrom will open 27 rack stores this year and about 25 next year. "In 2014 we reached an important milestone with the rack, representing our biggest source of new customers, attracting nearly 4 million," said Blake Nord- strom, the company's president, on the call. like T.J.Maxx, the rack has "spe- cifically been able to attract a younger customer," Weishaar said. The rack posted plans to expand into canada in 2017. Stateside, off-pricers benefit from a flexible real estate strategy as they can set up shop in strip malls, power centers, and even enclosed malls. They have become increasingly attractive to mall owners, particularly with so many other retail chains closing stores. Shopping center owners are eyeing the sector to fill vacancies, says andrew Graiser, co-president of commercial real estate firm a&G realty partners. The office Depot and officeMax merger, for one, will result in about 135 store closures this year and 100 in 2016. "We're doing work with com- panies like office Depot–officeMax and Kmart, and some of the off-price retailers have shown interest in some of their space," Graiser said. In addition, enclosed malls will turn to off-price chains like T.J.Maxx and ross to fill Jcpenney, Macy's and Sears anchor boxes, according to real estate analysis firm Green Street advisors. That may be unsurprising: T.J.Maxx and Marshalls pump out roughly $304 in sales per foot, on average; ross generates about $288 in sales per square foot, according to eMarketer. This far exceeds penney, which averages about $101 in sales per square foot, while Macy's averages about $158, according to eMarketer. perhaps it is no wonder that Macy's set up a team this year to pilot an off-price concept of its own. Shopping center owners are well aware that the off-price chains' robust sales-per-square-foot figures have a halo effect on other tenants. Said Graiser: "They know that other stores near a T.J.Maxx will do well." S C T 42 S C T / a p r i l 2 0 1 5 TJX is ramping up expansion both in the U.S. and overseas. The chain says it has "enormous global brick-and-mortar growth potential."

Articles in this issue

Archives of this issue

view archives of Shopping Centers Today - APR 2015