Male apparel chain Jos. A. Bank Clothiers is surprisingly increasing its number of new store openings next year, while most chains are pulling the brakes on their expansion plans. Not only that, but the Hampstead, Md.-based chain and other retailers, which only considered opening stores in new shopping centers, are taking advantage of low lease rates and empty spaces in existing shopping centers where outfits like Circuit City vacated.
The 467-unit Jos. A. Bank originally planned to open 10 to 15 new locations in 2010, but executives now forecast to reach from 30 to 40 stores on its way to a total of 600 U.S. storefronts. "Quality real estate opportunities are beginning to open up in the marketplace, and we are ready to expand our store base at a more rapid rate," said R. Neal Black, president and chief executive officer, said in a press release.
In a Baltimore Sun article about the upped expansion, retail analyst Ricard E. Jaffe of Stifel Nicolaus said: "You never can be sure you'll find the values and locations that you want. But there is no question that this is a better time than 12 months ago."
Jos. A. Bank isn't the only retailer taking advantage of this climate. Nordstrom is opening is Rack stores in well-located vacant spaces. Though Kohl's isn't reporting its best sales, that chain is taking up a lot of vacated space, especially spots that used to house former West Coast retailer Mervyn's. And Raymour & Flanigan, a regional furniture chain in the Northeast, is going into former Circuit City and Linens 'n Things locations in its markets.
Even Simon Property Group, the country's largest mall owner, and one that's not dealing with diving occupancy rates due to store closures, acknowledged the trend of retailers looking at vacated space instead of new product, which one executive said is at its lowest construction rate in 20 years "There's still demand for our proven assets and proven markets," said Richard Sokolov, Simon's president and chief operating officer, during the company's second-quarter conference call. "And I think that the retailers' attitude is reflected by the fact that when you look at the new development pipeline, it's nonexistent."
Aggressive expansion plans by some of these chains could help correct the carnage of closures on the retail real estate landscape. But if some predictions are correct, and we will truly see 10,000 stores shutting their doors this year alone, the industry is going to need more than a few aggressive chains like Jos. A. Bank pushing into those vacancies.