Strong financials, landlord support required for new concepts to survive, panel says

Publish Date: August 14, 2014


From cupcakes to juice bars to frozen yogurt to yogawear, hot new concepts often quickly spawn a series of imitators that eventually dilute consumer interest in the overall category. It takes financial muscle and landlord support for bold new concepts to survive and thrive after carving out a niche, panelists said at an SCTLive event at The Grove, in Los Angeles, on Tuesday. “If there’s too much, it starts to lose its appeal,” said Frederick Collings, CRX, CSM, CLS, senior vice president of leasing for Irvine, Calif.–based Irvine Co.

“For new concepts the bar should be set as high as possible,” said Garry Adams, president of Sherman Oaks, Calif.–based Capital Realty, which is representing several new concepts including Drybar (hair blowouts) and Healthy Spot (pet foods), as they expand. “It takes $250 per square foot in tenant improvements to set the bar high enough so that competitors can’t knock you off cheaply.” Adams said if a concept can’t be duplicated cheaply, it will discourage others from trying to compete and will keep the brand ahead of any that do. At Drybar, for example, high-end touches such as iPod charging stations at each chair help separate the brand from otherwise similar blow-dry salons that are cropping up.

The trick for retailers is to keep evolving and going in new directions, says Monica Corcoran Harel, a Los Angeles–based fashion writer and creative consultant who tracks consumer trends. Lululemon, for example, has been faced with a hoist of competitors ranging from Athleta to lucy, but managed to maintain its market leadership by introducing activewear that women can also wear to the office or to a party, she said. “It’s all about creating a new need,” she added.

Sprinkles similarly avoided the troubles that hit its rival cupcake chain Crumbs this year, said Jackie Levy, executive vice president of operations at Caruso Affiliated Holdings. “Sprinkles did the smart thing and expanded its offering to include ice cream and cookies,” he said. The landlords on the panel agreed that the Sprinkles stores in their properties are doing gangbuster sales.

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