Lord & Taylor disclosed plans Tuesday to close 20% of its stores, heaving 10 showcase locations atop a soaring scrap heap of no-longer-viable retail outlets. The casualties already include 102 Sears and Kmart branches, 735 Toys R Us outlets and 256 department stores run by Bon-Ton, the 160-year-old parent of Carson’s. The latter shutdown alone will put 23,000 people out of work.
But the downfall of brick-and-mortar retailing is proving a boon of sorts for the restaurant business. Though mall-based operations may feel the same traffic downturn stinging their merchandise-packed neighbors, opportunistic outsiders are seeing a sudden surge in available sites, rent-sapping vacancies and potential choice hires.
Here’s a look at three parties that may drop a thank you note to Amazon and the other digital giants transforming the retail scene.
Starbucks bets on lower rents
“Trust me, rents are coming down,” outgoing Starbucks Chairman Howard Schultz declared in a memo written to his senior leadership team and intercepted by Yahoo Finance. “This is not going to be a cyclical change in our occupancy expenses, but a permanent lowering of the cost of our real estate.”
With vacancies mounting, landlords will face a clear choice of either “significantly” dropping their rates or getting accustomed to "for rent" signs, Schultz suggested.
He stopped short of suggesting a redraft of Starbucks’ development strategy to exploit the opportunity more fully. But the benefits of having premium sites available at a lower cost are obvious to any observer of the coffee chain. Its expansion calls for opening Reserve Roasteries, or cathedrals large enough to take up a retail expanse like the former Crate & Barrel on Michigan Avenue in Chicago. A conversion of the multifloor housewares outlet into a 4,300-square-foot Starbucks is expected to be completed next year.
Main Event courts Toys R Us staff
Main Event, a 40-unit competitor of Dave & Buster’s, figured it’d line up workers for new stores by throwing a lifeline to the 31,000 people who will lose their jobs when Toys R Us and Babies R Us complete their chainwide shutdowns this year.
Last month, Main Event issued an open invitation to the retailers’ workforce, urging them to visit one of the big-box food and games outlets to get a feel for the operation and the culture. Visitors who agreed to be interviewed were rewarded with a card entitling them to try some of the arcade restaurant’s games for free.
The chain would not say how many employees it recruited during the five-day open house.
A restaurant reinvention for Sears and Kmart
Restaurants with a connection to Simon Property Group, one of the nation’s largest mall operators, may soon get a shot at prime real estate packed with inviting neighbors. Simon announced last week that it intends to convert an undisclosed number of 102 unprofitable Sears and Kmart stores into mixed-use recreation complexes, complete with destination-type restaurants.
"A combination of innovative retail, restaurant, and entertainment concepts are in play for each center,” said Michael McCarty, CEO of Simon Malls. “Mixed-use elements such as hotel, residential, office, and fitness are also being incorporated.”
Simon has been mum on the particulars, declining to say even how many Sears or Kmarts are currently its tenants. But the landlord has already filed for a go-ahead to convert a Sears Auto store in Tacoma, Wash., into a mixed-use space sporting a Krispy Kreme, among other attractions.