CREJ - Retail Properties Quarterly - November 2017
As the debate rages on regarding the future of brick and mortar in the face of e-commerce, an alternative discussion is gaining momentum. This is the phenomenon of online retailers moving into physical stores. Lisa Macneir’s article on Page 16 highlights the success three online-only retailers – Warby Parker, Bonobos and Indochino – are enjoying after establishing physical stores. The most discussed online retailer making a splash in the real estate community is Amazon, through its purchase of Whole Foods, which gives the company more than 450 storefronts across the nation. While researching for this issue, I came across a fascinating article in The Atlantic, written by Derek Thompson, titled, “The history of Sear predicts nearly everything Amazon is doing.” The article drew many parallels between the two retailers, and offered insights that can transcend the brand and be applied to the larger pool of online retailers moving to brick and mortar. A 100 years ago, Sears, Roebuck & Co. was the No. 1 mail-order retailer in the nation, with a famous catalog-ordering system that saw its revenue grow from about $750,000 to about $38 million from 1895 to 1905, according to the article. After firmly cementing itself as the mailto-consumer behemoth, the company branched out to brick-and-mortar stores. According to the article, the company strategically expanded and built stores based on data from the U.S. Census, following national migration from farms to cities and then to suburbs. Between 1925 and 1929, 300 Sears stores cropped up across the nation. As it expanded, the company began to branch out into adjacent businesses. “It’s remarkable how Sears’s rise anticipates Amazon’s,” the article states. “The growth of both companies was the result of a focus on operations efficiency, low prices and a keen eye on the future of American demographics.” While there were growing pains in the process of this expansion, Sears, Roebuck & Co. managed to not cannibalize its catalog business with a physical presence for years to come. It’s ironic now that the latest iteration of retail trends – the move away from big-box retailers selling everything – is causing the once-giant retailer to scramble and try to stop six years of diminishing sales and profit loses. While its staff has been cut by more than 200,000 employees, the company reports it is executing a turnaround plan. Time will tell if the company can reinvent itself once more – just as time will tell how today’s online-only retailers signing leases will do. If they learn from history, they should recognize the inevitable growing pains that accompany this change, while finding ways to gain loyalty by bringing more convenience to their customers. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104