Tag Archives: Wal-Mart

Target coming to Carson’s building on State Street

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State Street is a venerated shopping street in Chicago. Prior to the construction of the retail stores on Michigan Avenue north of the Chicago River, State Street was the home to department stores with familiar names like Marshall Fields and Carson’s. And now there is news that Target is planning to open a store in Carson’s iconic building:

Target will lease 124,000 square feet over two floors, but only 54,000-square feet will be selling space, the company said.

The retailer, known for its cheap chic, has been in talks for more than a year to lease space at the landmark Sullivan Center at State and Madison Streets. Carson’s closed its store there 2007…

The city has poured $24.4 million in tax-increment-financing to help restore the Louis Sullivan building, which also houses offices. Chicago-based developer Joseph Freed & Associates, the building’s owner, has invested another $190 million in the national and Chicago historic landmark in the last decade.

“I applaud Target for bringing this urban store concept to Chicago, as well as the new jobs and economic opportunity this store will create,” Daley said. “Target will be an important addition to State Street, one of Chicago’s most important retail centers, and will be located in one of city’s most architecturally significant buildings.”

The State Street store would be in keeping with the discount chain’s recent strategy to push into urban cores with smaller stores. Target recently signed deals to open a 70,000-square-foot store in the heart of Seattle and a 100,000-square foot store in a shuttered Macy’s in downtown Los Angeles. Those stores are slated to open in 2012.

“We look forward to preserving this Chicago treasure and blending in with the building’s aesthetic, said John Griffith, executive vice president, property development at Target. “A hallmark of Target is our flexibility in store design.”

As for Target’s iconic red bull’s eye, the retailer is still working out the details of incorporating its logo while still respecting the building’s historic status.

This announcement comes as both Target and Wal-Mart have announced plans recently to move into more urban markets. A few thoughts about this:

1. It is somewhat ironic that the stores like Carson’s and Macy’s (purchaser of Marshall Field’s) are mainly about sales from suburban malls while stores like Target and Wal-Mart, symbol of big-box suburbia, now want to be part of the city.

2. Is there anyone who is going to complain about Target moving into this iconic building? When Macy’s bought Marshall Field’s several years ago and moved into the flagship store on State Street, a lot of Chicago residents were mad that one of their iconic businesses had been replaced. Will there be similar concern about Target or are people just happy that they can get to the trendy Target in the middle of the city? (Imagine if Wal-Mart was planning to move into this location.)

3. It will be interesting to see how Target blends their image and layout with this historic building.

4. What does this move say about State Street compared to other shopping areas in the city? State Street seems to be an odd mix of suburban stores on a historic street. Couple this move with the ongoing saga of Block 37 and one has to wonder if there is any long-term plan for State Street.

How Wal-Mart plans to regain its edge

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Here is an interesting summary of Wal-Mart’s corporate plans for the near future. The headline of the article says it all: “Wal-Mart, humbled king of retail, plots comeback.”

Three years ago, Wal-Mart ruled for convenience, selection and price. But today it is losing customers and revenue, and smarting from decisions that backfired.

Wal-Mart is not in danger of ceding its place atop the retail world. But competitors have begun to chip away at its dominance.

Over the last year, revenue at Wal-Mart stores open at least a year has fallen by an average 0.75 percent each quarter, according to the International Council of Shopping Centers. Revenue rose by an average of nearly 1.7 percent at Target, 8 percent at Costco and 5.9 percent at Family Dollar.

To fight back, Wal-Mart is again emphasizing low prices and adding back thousands of products it had culled in an overzealous bid to clean up stores. It’s also plotting an expansion into cities, even neighborhoods where others dare not go.

Even as the article talks about stagnant or slightly declining sales at existing stores plus some questionable decisions (like reducing the number of products on the shelves), the main issue seems to be perceptions. On the business side, Wal-Mart has been challenged, particularly on the lower end by dollar stores. But business has not tanked and Wal-Mart still thinks it has new markets to tap in the United States, particularly in urban areas. What do investors and shareholders think – is it just about stronger growth right now? On the public image side, stores like Target have offered an enticing alternative. And yet Wal-Mart has changed the layout and design of its stores to look more like Target and this seems to have helped. Ultimately, the article says Target’s revenues are still one-sixth of that of Wal-Mart.

It sounds like Wal-Mart thinks they need to make some changes. There is no guarantee that any business, even a behemoth like Wal-Mart, will continue to expand or even be profitable. And just by virtue of its size, Wal-Mart’s actions will continue to be scrutinized.

More Americans eating at home

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One of the questions to emerge out of this recent recession is which pre-recession patterns will return once the economic climate improves. One report suggests that although spending levels have increased again, eating at home might be a more permanent pattern:

Restaurants traditionally have led other types of businesses out of a recession. This time, they’re at least a year and a half behind retailers. Sales of clothing grew 5 percent last year and autos rose 11 percent, as Americans started feeling better about their finances. At casual sit-down restaurants like Outback Steakhouse, the increase was just 1 percent. Some analysts say that could be the new norm…

Americans lead the world in restaurant spending. About 44 percent of food dollars are spent outside the home — a figure that started rising sharply in the 1970s, as more women joined the work force. Full-service restaurant revenue rose 5 to 7 percent a year in the decade leading up to the Great Recession, which halted growth. Over the next decade, visits to restaurants are forecast to increase less than 1 percent a year, according to the NPD Group. That’s less than the population will grow.

Instead of handing their money over to mediocre eateries during the week, people are saving up for the occasional nice meal, says Stifel Nicolaus analyst Steve West. Meanwhile, cooking has become hip, says Rick Smilow, president of the Institute for Culinary Education, where registration for recreational courses was up 10 percent last year.

It would be interesting to see more data on this: how many of these meals at home are made out of mostly fresh ingredients? What kind of food are people spending money on – taking that restaurant money to buy more expensive items or trying to eat on the cheap? How much less are people spending on food overall as they eat out less?

The perception about eating at home might be crucial. The idea that cooking is now “hip” could be tied to a number of factors including more upscale grocery stores (the equivalent of shopping at Whole Foods versus Wal-Mart), a number of celebrity chefs, and around-the-clock cooking shows. Eating at home may be good for the financial bottom line but it will appeal to a lot more people if it is cool.

Second Wal-Mart moves forward in Chicago

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Update 9:52 PM 6/30/10: The Chicago City Council voted tonight 50-0 to approve the second Wal-Mart in the city. Read about the voting and the consequences here.

The Chicago Tribune reports that the Chicago City Council Zoning Committee approved Wal-Mart’s proposal for a store in the Pullman Park neighborhood on the South Side. A quick summary of how the deal was made:

The deal struck Thursday has Wal-Mart assenting to pay at least $8.75 an hour — 50 cents more than minimum wage as of July 1. Unions once wanted $11.03 an hour, but settled for less and touted the company’s agreement to give raises of 40 to 60 cents an hour to Chicago workers after a year. A Wal-Mart spokesman, however, said store workers typically get that kind of bump anyway.

In the end, Wal-Mart appears on its way to getting a second store. The unions, which won’t actually represent any of the workers, get to save face. And aldermen looking ahead to re-election in February get to avoid a repeat of 2007, when several of them lost after angry unions put up challengers who opposed Wal-Mart.

As often happens in politics, a deal is finalized when all the interested actors feel they benefit in some way.

Chicago vs. Wal-Mart: outcome still in doubt

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A news story today from the Chicago Tribune detailing Wal-Mart’s latest offer to build a store in Chicago (it currently has 0 within city limits). Some of the players in the long saga:

1. Wal-Mart. Its latest offer is starting all workers at $8.75 an hour, $0.50 above current minimum wage standards in Chicago. Has been exploring several sites on the South Side for years.

2. Unions. Don’t want Wal-Mart as the company does not allow its workers to unionize. Worried about lower wages.

3. The City. Has primarily been against Wal-Mart because of the wage issue.

4. Those who want cheaper and/or accessible groceries. Several of the neighborhoods Wal-Mart has looked at might be considered “food deserts” (neighborhoods where relatively cheap, nutritious food is not available). Many other companies are not willing to move in while Wal-Mart has expressed interest.

There might be a path to resolution soon – several aldermen now seem willing to support the stories in their wards. This may be particularly timely as Wal-Mart says it would add 12,000 jobs to the city for the next five years if they could build where they want.

Stay tuned.

UPDATE 6/23/10 at 11:10 PM

From the Chicago Tribune: Mayor Daley of Chicago makes “an emotional pitch” for Wal-Mart, Wal-Mart releases a list of benefits for the community, and demonstrators who support Wal-Mart add the vuvuzela to their arsenal.