Sell for More Trivia is a weekly blog series that playfully presents a trivia question about commercial real estate.
The 7 F’s of retail are the 7 sectors that are best weathering the retail storm. They are:
Fitness centers are expanding and finding opportunity in big box locations once held by now-defunct businesses. Consumers are becoming more health conscious so expect this sector to continue to grow.
Food and beverage establishments are growing at the fastest pace since 1992. Additionally, spending on meals prepped outside of the home grew more than 20% from 2013 to 2016, compared to just 2% growth in meals prepped at home. From meal kits to takeout to fast casual, there are more dining options today than ever before.
Consumers are opting to pay for experiences over goods. This is a shift we’ve seen over the past 10 to 15 years. We’re already seeing retail centers move away from a focus on department store anchors toward more diverse mix. Look for trampoline parks, arcades, movie theaters and beauty stores like Ulta and Sephora.
For dollar stores, business is booming. For example, Dollar Tree and Dollar General combined have more stores than the six biggest U.S. retailers – Walmart, Kroger, Costco, Home Depot, CVS and Walgreens – combined. And they continue to expand.
With the rebound of the housing market, home improvement stores are seeing the benefits. And it’s hard to buy these items on Amazon.
The same applies to auto repair stores as well. Companies like O’Reilly Auto Parts and AutoZone have benefited from a mostly Amazon-proof business model and from consumers opting to repair their own cars.
The nature of the products these retailers sell lends itself to human interaction. Buyers still want to ask a person how things work or get real-time professional recommendations.
Furniture stores have the advantage of offering a stellar in-person experience. Or, they may also provide consumers the opportunity to bargain hunt from large swaths of products at stores like Homegoods or At Home, both of which have posted impressive profits and plans to grow to 1,000 stores and 600 stores respectively.
Factor in consumer desire to know the scale, size, and comfort of a product, and there will always be a place for furniture stores in the physical retail sector, despite the threat from brands like Wayfair and Amazon.
Roughly two-thirds of consumers who shop for clothes do so at off-price retailers. With the allure of a “treasure hunt” for a great deal, retailers like TJ Maxx, Ross, Burlington Stores, and Gabe’s are growing at more than 10 percent. Similar trends can be noted for off-price department stores like Nordstrom Rack and Macy’s Backstage.
In conclusion, as retail continues to evolve look for these 7 F’s to lead the way.
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About Beau Beach, CCIM
Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.
Beau leads Prowess IRES which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.
He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.
Beau can be reached at 414.324.4938, 615.603.9770, click to schedule a call or Beau@ProwessIRES.com