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U.S. Retail on a Tempered Rebound
Written by Betsy
Monday, 31 January 2011 23:39

Lest online retailing steal the entire focus heading into 2011, reports coming out of major urban areas in the U.S. - including third-largest retail market Chicago - suggest that bricks and mortar has staged a tempered comeback of sorts.

 The outlook is far from sunny and the impact may not actually surface until 2012. The game has changed, with "de-boxing"  a reality. This is not to say that Wal-Mart and Target can expect a dismal future; rather, the rampant big box expansion seen in the early part of the decade has passed and future expansion will be more strategic. In not only the U.S. but also in Canada and Western European markets, hypermarkets and discounters with diverse offerings ranging from groceries to electronics will increasingly create a formidable challenge to more niche big box retailers (such as large electronics retailers). As such, Wal-Mart Supercenters and Costco should continue to find opportunities in not only the U.S. market but abroad.

What about the other "winners"? Andy Bulson, a senior vice-president with a leading Chicago-based commercial real estate brokerage group, Mid-America Real Estate Corp, expects that retail groups with several formats and brands stand to benefit. This type of grouping has a few iterations in U.S. retail, ranging from the Bed Bath & Beyond/Buy Buy Baby portfolio (home furnishings and baby supplies) to Roundy's, a Milwaukee-based supermarket group that includes not only Roundy's stores but also outlets branded as Rainbow Pharmacy, Copp's, Pick n' Save, Metro Market and now Mariano's Fresh Market. These types of retail approaches take diverse consumer preferences into account and allow for economies of scale within the supply chain while catering to the expectations of different target audiences. Another bright spot, according to Mr. Bulson: luxury retailers. The in-store experience of Chanel and Tiffany and Co. cannot be replicated least, not yet. Moreover, sales abroad remain strong, with the association of luxury and social status holding strong in developing markets including China.

Last Updated on Wednesday, 02 February 2011 12:33