Hello, and welcome to Episode 034 of the Corporate Real Estate Podcast, brought to you by LeaseSmart.com. Your host is Craig Melby, the founder of LeaseSmart, whose objective is to find companies the best facilities and get them the best terms, making their business more profitable and less vulnerable to future, unpredictable circumstances.
Today Craig welcomes special guest Nick Egelanian with SiteWorks Retail. He is a Strategic Real Estate Consultant with offices in Annapolis, Maryland and London. This is a fascinating interview covering the history and future department stores. He looks at the big picture of what’s going on in the world today.
There is a new model of outlet center leading us away from typical malls. It has been successful in Boston and other locations and it is due to this Post Department Store Era we find ourselves in. Why is this happening? Well, if we look back to the 50s and 60s, the Department Store Era was born out of people needing to buy things daily at the general store. It affected our culture so much that even the roads were laid out for such purposes and that all worked very well. Building the foundation for malls and big box stores where low prices are king.
Fast forward to 2016 and today the department store industry does 72 billion in sales.
Target alone is a 75 billion dollar company. And, Walmart is 500 billion dollar company. The Retail delivery portion of Amazon is 85 billion. Each of these companies is exceeding the total volume done by all department stores. Nordstrom has not been adding net stores for 5 years now. In the last 2 years Nordstrom has closed 2 stores including in San Diego and Orlando. In the Wall Street Journal on July 11th, there was an article about this very mall.
Do department stores have any hope to evolve and survive? Nick Egelanian believes their future is dependent on them repurposing. He predicts that we’ll go from 3000 to only about 200 malls left in the end. Department stores will have little to do with malls’ sticking around. In the 90s, a mall’s ability to get a Nordstrom was the key factor to their success, but not any more. What matters now is experience. People want the experience of eating good food, buying clothes and finding entertainment. Malls are going to have to refocus around “Experience Stores.” Thanks for tuning in!
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Nick Egelanian may be reached at:
siteworksretail (DOT) com