Monday, March 31, 2014

Separate the ersatz and collect up all the cream.

While the interplay between the built and natural environments occupies the bulk of my ruminations, every now and then I can’t help but indulge myself.  And I step fully into the world of pure imagination.  The aisles of a Meijer discount hypermarket store might not be exactly what Roald Dahl had in mind through his chocolate factory (or Leslie Bricusse), but it’s just about as fabricated as a movie set... 

…and that’s not necessarily a bad thing.  For those who live in Michigan, Ohio, Indiana, Illinois or Kentucky, Meijer is as much a part of the shopping landscape as Walmart.  It’s a fierce competitor in these five states, and I have no doubt it continues to frustrate the executives in Bentonville, Arkansas—my suspicion is that Walmart’s market share in this part of the country is lower than it otherwise would be, thanks to this modest chain that germinated just outside of Grand Rapids, Michigan exactly 80 years ago, making it nearly 30 years older than the world’s largest retailer.  But how did Meijer remain confidently ensconced in its Midwestern niche when Walmart dethroned so many others?  (Ames, Pharmor, and Venture went the way of passenger pigeon well over a decade ago, even if some telltale labelscars remain.)

I could expound on how Meijer has effectively cramped Walmart’s style for a few decades now, all while refusing ever to go public.  It avoids far-flung locations like its home state’s Upper Peninsula, no doubt saving it a fortune in logistical costs.  It expands its territory slowly, preferring to densify within its five signature states for the time being; rumors of an inaugural location in Wisconsin have yet to materialize.  It has attempted to broaden its scope through standalone discount department stores (without the groceries), pharmacies, warehouse clubs (like Sam’s Club), and specialty clothing.  None of these concepts proved fruitful, so the home office closed them within a few years.  Yet it continues to flourish in that cluster of great lakes states (and Kentucky).  Last year, Meijer opted to open a store in the Detroit city limits, seen in the photo above--a breakthrough of sorts, since many other major retailers (including the goliath from Arkansas) have shunned the Motor City.  These conservative strategies may have helped Meijer survive the competition that Walmart decimated, but I’d like to think another tactic has helped give the regional chain its edge.

Virtually every Meijer that I’ve seen has an entire row in its well-maintained grocery devoted to ethnic foods.  The specific location often dictates exactly what options it sells, but regardless of the offerings, most evidence suggests that the company has done its research.  Rarely will you see Walmart accommodate an ethnic group (such as Amish buggy parking in Northern Indiana). But online forums like British Expats routinely refer to Meijer—not Walmart—as the go-to for hard-to-find European goodies, and most locations have at least a small but well-stocked British shelves, including the one in the Detroit suburb of Allen Park featured above.  This particular location, with a trade area that includes sizable Mexican, Polish, and Arab populations, not surprisingly offers generous Latino, Eastern European and Middle Eastern sections.  It also distinguishes the Indian subcontinent from the rest of Asia.

But what really caught my attention was the adjective before these regional references.
We see “authentic Italian” followed by “pasta”.  Does this imply that the pasta section, for whatever reason, is otherwise inauthentic?  Or is it pasta from other countries?  Meijer also splits hairs on the other side of the aisle, providing its customers with “authentic Mexican”—
and “Mexican” without the authenticity.
Tex-Mex.  Or American Mexican.  A taqueria versus Taco Bell.  Various studies have shown three ethnic cuisines in the United States consistently vie for the title of most popular—and, not surprisingly, the most ubiquitous.  While the US has more Chinese restaurants than McDonald’s, Italian cuisine has long rated most highly.  But the surge of Mexicans and the cultural influence have elicited a concomitant increase in the popularity of cuisine from south of the border.  Virtually all ethnicities, however, can claim a rise in the popularity of their cuisines.  Thirty years ago, Thai and Indian restaurants were relatively rare outside of the biggest metro areas; now they are fairly easy to find in a small city of 50,000.

The inevitable result of this?  We see more Americanized knock-offs, as well as Meijer’s need to distinguish between the “authentic” (often imported) and the bastardized.  No doubt in another decade, with the ascendancy of falafel, hummus, and shawarma, Middle Eastern cuisine will approach mainstream status, just as it already has in Metro Detroit, home of one of the largest Arab populations outside of ethnically Arab countries.  We already have hummus flavors that would constitute blasphemy in many parts of the world, adulterated to meet mainstream American tastes.  The “authentic” partition in the grocery aisle will soon envelop new nations, impelling greater need to distinguish idiosyncratic, ethnically precise merchandise from its vanilla counterparts…and another opportunity for Meijer to capitalize on something it already does well.

Monday, March 24, 2014

Retrograde retail: there’s weakness in numbers.

Some businesses just fail to quit, though it’s not necessarily from lack of trying.

And if all the negatives in that sentence dilute the denotation, that might be the whole point…at least when the businesses in question are former retail leviathans like Kmart and Sears.

I’ve written about both chains many times in the past on this blog, but little to nothing since 2010 or so.  Truthfully, neither has changed much.  The two brand names, formerly separate companies but merged since 2005, continue to hobble along, shedding a few of the most underperforming stores each quarter, while even the ones that linger still leave onlookers scratching their heads.  How do these retailers—now essentially one company called Sears Holdings Corporation—manage to stay in business?

To a certain extent, they employ the Star Trek mantra: going where no man has gone before…or, to be frank, where no one else is willing to go anymore.  So they aren’t exactly doing it boldly.  Kmart’s approach (which I blogged about four years ago) frequently involves lingering in early automobile-oriented suburban areas that peaked in the late 1950s—the point in time when Kmart was still a juggernaut for discount shopping.  However, these aging suburbs, which typically offered the coveted homeownership ideal to an emergent middle class within a car-dependent milieu, are no longer so savory.  Check out the surviving few Kmarts in Indianapolis, from the blog post above.  Generally speaking, these areas have declined enough economically that the robust Walmart won’t touch them.  In Kansas City, the formerly thriving Bannister Mall area began to tank in the 1990s; today, it represents one of the largest expanses of blighted suburban retail I have ever seen anywhere, featured in this prominent post.  But, as of the fall of 2012, the Kmart at Bannister survives…pretty much the only well-known sign amid the retail wreckage.  (Well, that and the notorious Burlington Coat Factory, but that’s another story.)

Then there’s Sears, whose brand image isn’t quite as weak these days as Kmart, mainly because it still clings to its aggressively middlebrow origins, a contrast from the always low-budget offerings at Kmart.  (Though Kmart has managed the more effective viral commercials in recent years.)  The department store remains a staple at most middle-class malls.  But enclosed shopping malls ain’t what they used to be, for the most part, and if a mall is starting to show weakness in the form of diminishing occupancy levels, it’s often safe to guess which area will get hit the hardest.  That’s right—the Sears wing.  I blogged about it awhile ago, at the primarily successful Castleton Square Mall in Indianapolis, where vacancy was low throughout this super-regional shopping hub…except for the hallway leading to the Sears.

Meanwhile, Cortana Mall in Baton Rouge took the ailing Sears corridor to a whole new level.  My first trip to Cortana in December 2005 confronted me generally busy shopping center, even though locals had longed viewed Cortana as the “other mall” in Baton Rouge, at least since Mall of Louisiana opened in 1997 in a more affluent part of town.  In 2005, most of Cortana flourished (perhaps due to the holidays), except for the hallway leading to Sears, which was overwhelmingly populated with local, mom-and-pop tenants…the type that pervade a struggling mall.  Jump ahead to April 2010—the time of my blog article—and Cortana was peppered with vacancies throughout the structure, while the Sears corridor was dead as a doornail.  Pretty much no inline tenants left, except for Sears.  Even in the most vibrant of malls, the Sears wing tends to host the highest concentration of off-name retailers, clearly suggesting that 1) national brand names don’t want to lease space close to Sears, and 2) mall management, desperate to maintain good occupancy rates, must lower the cost of leasing space, consequently attracting retailers who cannot afford the higher costs in the corridors leading to Macy’s or Dillard’s.  Thus, Sears gets the off brands…when it’s lucky.

A recent trip to suburban Detroit revealed another example of an anemic shopping hub anchored by Sears, but this time within a different typology.

Sure, it doesn’t really look that different from your typical Sears in a mega-mall.

But it’s a freestanding Sears—formerly a mainstay of American retail but now relatively uncommon.  It is untethered to any larger mall; no other department stores are nearby.  While the standalone Sears might still occasionally splay out along the highway in the purlieus of a small city (under 25,000 people, for example) the one in the photos below is anything but rural.  It’s in Lincoln Park, a blue-collar inner-ring suburb belonging to Detroit’s “Downriver” communities, which is the local term for the extensive concatenation of municipalities that band along the Detroit River as it eventually distends into Lake Erie.  A fully built-out suburb that exploded after World War II, Lincoln Park is also surrounded in almost all directions by other tightly packed suburbs from more or less the same time period.

Freestanding Sears operations made sense in large towns or small cities surrounded by farmland, since those settlements didn’t necessarily have the trade area to support a regional mall.  But Lincoln Park can claim hundreds of thousands of people within a 10-mile radius.  Perhaps, because of this, one could speculate that this particular Sears serves as a more effective anchor than others: not only does it serve a huge trade area, but it isn’t competing with other, more robust department stores like Macy’s.

Such a guess would be wrong.

This is the remaining strip mall attached to the Lincoln Park Sears.  In the first photo, the edge of the Sears portion is partly visible on the far left.

It’s almost completely vacant, with the exception of a Dollar Tree and an outparcel Big Boy restaurant.

Predictably, a shopping plaza such vacancy levels won’t shell out the cost for basic common area maintenance; drivers have to proceed with caution to avoid huge potholes or neglected debris.

Does Sears Holding Company, parent of Sears and Kmart, know something the rest of us don’t?  Both chains are born from major Midwestern urban centers—Sears from the Chicago area, and Kmart from metro Detroit (in Troy, MI, just 25 miles northeast of Lincoln Park) but customers in their home states aren’t showing any greater loyalty to their brands than they are anywhere else.  The business expansion practices that impelled these brands to stretch from coast to coast may very well be doing them in; most Midwesterners don’t even know the brands came from their part of the country.  Compare this to southern department stores Dillard’s and Belk, which are still mainstays south of the Mason-Dixon and have ever so slightly begun to expand, though never to the ubiquity of the two former titans above.

I will be amazed if this Lincoln Park Sears is still operating two years from now.  Beyond that, I see only two other plausible courses of action: the company sheds virtually all of its locations outside the Midwest and concentrates its energy by reinvigorating loyalty in its region of origin (which happens a lot with restaurant chains); or, it folds altogether as a brick-and-mortar entity and becomes an online wraith, akin to the formerly pre-eminent but now essentially defunct Montgomery Wards (as and Service Merchandise.  It’s not exactly boldly going anywhere, but the cybermarket offers the best chance scoping fertile pastures when finicky customers reject all but the choicest grapes on the vineyard.