Closures do not signal ‘doom and gloom’ for retail, says one local developer

Rebecca Rast: 'Omnichannel' is the word to know for the future of retail.

Tom Rankin: Discount retailers seem to be doing very well.

• 
• 

Liquidation sales this month signal the exit of two stores that are part of Springfield’s retail landscape.

Bed Bath & Beyond, occupying 30,050 square feet in Primrose Marketplace, and Tuesday Morning, with 13,000 square feet in Brentwood Center South, are in the process of closing down shop, as is the case for all their stores nationally, as both companies filed for bankruptcy this year.

Springfield has seen a series of departures in recent years. Near the center of the city, a 46,000-square-foot retail building that briefly held a Gordmans store after the closure of Toys R Us stands empty at the corner of Battlefield Road and Fremont Avenue. Behind it, a 210,000-square-foot former Sears building that once anchored Battlefield Mall also stands empty since 2020. Mall officials declined to comment on whether there was any movement on the space.

The previous Gordmans location, beside a Walmart Supercenter in the 3300 block of South Campbell Avenue, stands empty and for sale – all 84,000 square feet of it – and five blocks south, the 63,000-square-foot Weekends Only is having its own liquidation sale.

The future of retail has long been under a microscope, with talk of COVID-19 triggering a retail apocalypse predated by predictions of the death of retail at the hands of e-commerce titan Amazon.

But it’s possible the vacancies signal a new look to come.

Jared Enterprises Inc. owns Brentwood Center South, and President and CEO Curtis Jared laughs at the notion of the death of retail. Not only does it have a pulse, by Jared’s reckoning; it’s fully upright and dancing a jig.

“If you look at historical data, the gloom and doom of retail is always never-ending,” he said. “The reality is there’s more retail locations opening up than there are closing.”

Statistics bear out his claim. Nationally, retailers opened 5,103 stores in 2022 and closed 2,603, according to retail research firm Coresight Research. Discount stores led openings with 1,858 stores, and apparel retailers led closings with 750. Similar figures for store openings and closures are predicted this year.

Store closings declined by just over 50% in 2022 compared with 2021, bringing closures to near pre-pandemic levels, according to Coresight.

Jared said he is experiencing high demand for existing retail locations, like the one he’s anticipating to open in the Tuesday Morning location.

“Second- and third-generation sites are in high demand right now,” he said, citing high inflation, costs of labor and materials, and ongoing supply chain issues. “That has actually made a lot of these other locations a lot more desirable. Building has gotten too costly for them to open new stores.”

Added Jared, “Lots of businesses are growing. New concepts are constantly emerging.”

Discount outlets like Dollar Tree and Five Below look for established spaces, and Aldi, T.J. Maxx and Big Lots are also on the hunt for locations where backfilling is possible, Jared said.

After a long struggle for some businesses, Jared figures it’s time to make way for what’s to follow.

“The reality is, on some of these brands like Tuesday Morning or Bed Bath & Beyond, you can keep tugging at the Band-Aid, or you can rip it off. But it keeps retail healthy,” he said.

Closings were predictable
The bankruptcy of Bed Bath & Beyond was no surprise to Rebecca Rast, an assistant professor who researches retail trends in the Department of Marketing at Missouri State University.

Rast said consumer confidence has decreased with inflation and concerns about a recession, and spending is slightly down.

“Consumers are turning to private-label brands for their product needs,” she said.

She noted companies like Target and Walmart are successfully creating private-label and exclusive brands that are attracting many customers. Target has more than 45 private labels, which it calls owned brands, including A New Day women’s apparel, All in Motion activewear and Made by Design housewares. At Walmart, examples of private-label options include Equate personal products, Pen & Gear office products and Ol’ Roy dog food.

“While Bed Bath & Beyond has made steps to join the private-label brand arena, consumers have not received these attempts as well,” Rast said.

Jared said the closure of Tuesday Morning also was predictable.

“It wasn’t a shocker that they had their second bankruptcy in three years,” he said. “As soon as we saw the signs, we had already reached out.”

Jared said he has a letter of intent in hand for the property that he received even before the announcement of its closure April 29, and he is reaching out to other tenants that may have an interest. He would not disclose the names of potential tenants.

“We’re proactive, not reactive,” he said. “If you’re in this industry and you’re just now finding out about this – especially Bed Bath & Beyond – I don’t know what to tell you. You’re probably not very good at what you do.”

He said Tuesday Morning did very well in Springfield. “A good store here doesn’t help 20 bad stores somewhere else,” he said.

A newly released study by global financial firm UBS made headlines as it forecast the closure of 50,000 retails stores in the next five years as the result of increasing operating costs and more e-commerce sales. This represents 5% of the nation’s current store count of about 940,000, according to UBS.

Both UBS and Coresight see apparel firms as most vulnerable. E-commerce sales, now estimated to be 20% of total retail sales, are projected by UBS to rise to 26% by 2028.

Jared remains skeptical.

“Retail’s not dead by any means; we’re hot and heavy in the middle of it, not just in Springfield but in the surrounding states,” he said.

Consumer spending grew by 1.1% month over month in January, and spending on durable goods rose 5.2%, according to data from the U.S. Department of Commerce and the U.S. Bureau of Labor Statistics.

Reading consumers
It’s notable that customers like the boutique appeal of private-label offerings from big-box stores, as Rast indicated, but they seem to stop short of shopping at actual boutiques.

“I do think people would like to shop the boutiques, but due to budget constraints and time, stores like Target and Walmart can offer the private or exclusive brands for the right price points and convenience,” Rast said.

She added that the big-box stores are also omnichannel, which means they can be accessed seamlessly through all channels, including in store, online, curbside or delivery.

Other retailers should follow this cue, according to Rast. “I believe a key moving forward is to establish yourself in an omnichannel presence that makes shopping convenient and affordable,” she said.

At Battlefield Mall, General Manager Amanda Estes said shoppers are back in full force.

“They’re enjoying both the opportunity to discover what’s new at our retailers and the ability to touch, feel and try on the latest trends,” she said.

Though she did not share the mall’s occupancy rate, she said it is high, with a mix of local businesses and established national brands, and she added that more retailers are expected to be added in the coming weeks.

Tom Rankin, owner of Rankin Development LLC, works mainly in the industrial space but has his hand in retail through Springfield Plaza on the city’s west side.

Rankin said from his perspective, the retailers that are doing well are discounters like T.J. Maxx, Marshall’s and Burlington – ones that don’t rely on online sales.

“To see their product, you have to go in the store to see what they have,” he said.

Discount retailers continue to do well nationally in brick-and-mortar stores despite the incursion of e-commerce, he said. Dollar Tree announced plans to open 650 stores this year, up nearly 200 from the 455 stores it opened in 2022.

“Shopping is still an experience, and people enjoy it,” he said. “There’s always going to be a demand for that.”

Rankin said his company targeted discounters for Springfield Plaza.

“Once you’ve got some discounters, that draws other shopping experiences,” he said. “You don’t have to have a lineup of all discounters as long as you have major players.”

Rast said companies like Tuesday Morning and Bed Bath & Beyond were impacted by high distribution costs and the lack of successful infrastructure to sell to customers during the pandemic. She noted other companies seeing success in the current market are Wayfair, Overstock and HomeGoods.

“The focus on home improvement during the pandemic time of COVID-19 has slowed. Consumers that are spending are doing so in other product areas beyond just the home,” she said.