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Shopping Centers Today -> January 2003
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NEW YORK SHOW ATTRACTS RECORD ATTENDANCE
By Debra Hazel and Donna Mitchell
Better-than-expected post-Thanksgiving Day sales and a record attendance quickened the pulse at December’s ICSC New York Conference & Deal Making. The three-day meeting drew 4,404 attendees to Manhattan.
Among the speakers was Robert L. Tillman, chairman, president and CEO of home improvement chain Lowe’s Cos. Lowe’s plans to expand its store base by 50 percent over the next 30 months, adding 300 new units to meet the demand created by the growing number of baby boomers who are buying second homes. The company will open new stores in markets of 30,000 households, which it once considered too small for 100,000-square-foot-plus facilities.
Wal-Mart Stores, too, received much attention by analysts at the show. Wal-Mart racked up $1.5 billion in sales the day after Thanksgiving, up more than 10 percent from the same day last year. Yet for all its might, strong retailers need not feel threatened, said Aram Rubinson, a senior research analyst at New York City-based Banc of America Securities, explaining that the chain helps keep them on their toes.
It’s a different story, though, for Wal-Mart’s supermarket competitors, according to some speakers. Wal-Mart’s expansion into grocery sales will dramatically remake that industry and have an impact on grocery-anchored shopping centers, they said.
“History is loaded with people on the wrong side of Wal-Mart,” said David Shulman, a managing director at Lehman Bros. That, Shulman noted, has created problems for such food retailers as Kroger and Safeway, which have suffered share price declines, and it could have an impact on grocery-anchored retail real estate if supermarkets begin closing stores.
Nor are the food operations of other discounters immune, said New York City-based retail consultant Howard Davidowitz. Target’s supercenters are not as successful as Wal-Mart’s, largely because they deal with middlemen, which cuts into profits.
Wal-Mart itself faces a challenge. Speakers said expensive real estate and labor union entanglements in the New York City area may stop its opening stores there.
But Wal-Mart didn’t entirely dominate the discussions; attendees also pumped analysts for likely successes and failures among other retailers. The analysts were gloomy about Kmart’s future. George Strachan, a managing director at Goldman Sachs, observed that no discount retailer yet that has emerged from Chapter 11 has continued to survive.
Analysts also focused on Sears’ troubles. “Sears is a cadaver,” said Davidowitz. “You know it, I know it. Every time there’s an obituary, Sears loses a customer.”
He also went on to criticize specialty stores, many of which he said do not appeal to mall customers. Neither Gap nor Limited Brands has had an easy time of it, and Davidowitz said he is pessimistic also about regional malls. Other than the top 400 or 500 malls, enclosed centers face the problem of relevance to a time-pressed consumer, Davidowitz said. There are about 1,200 malls in the United States, according to ICSC’s Research Department.
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