August 2019 – As seen in Furniture Today

The shrinking store of the future?

The speed at which furniture retailers are moving to get small appears to be accelerating.

This month alone, we’ve seen small-store announcements from two big players. First, Toronto-based Leon’s Furniture opened a 15,000-square-foot “tech flagship” store in Coquitlam, British Columbia. (That compares with an average of 80,000 square feet for its regular full-line stores). The retailer says it’s using AR, touchscreen stations and other technology to extend the aisle and bring shoppers Leon’s typical full offering.

A week later, Ethan Allen followed with the opening of 4,500-square-foot Design Studio in The Westchester center in White Plains, N.Y. The vertically integrated company’s other stores, Design Centers, aren’t exactly huge, but still the Studio is less than half their average size. And again, the idea is to extend the physical offering via technology — interactive tools, large touchscreens and EA InHome App, 3D room planners and the like.

And let’s not forget big-box Ikea’s small store move in April, when it opened its first U.S Planning Studio on Third Avenue in New York — a three-story, 17,500-square-foot showroom that the Swedish home furnishings giant said offers “smart solutions for urban living and small spaces.” Pretty tiny compared with the 300,000-plus-square-foot blue-and-yellow boxes for which it’s so well known.

So is it fair to say that in this time of “digital first,” the era of big-box furniture stores is over?

No, it’s not, says Julie Feinblum, industry real estate expert and founder and chairman of Julius M. Feinblum Real Estate. Do that, and you’re thinking too small.

“It’s not one size fits all,” he tells me. Understand that the retailers testing small locations are doing so for a number of reasons, he says. First, they’re investing heavily in technology to stake their claim on business that’s shifting online; rents are high for the A-locations they need in certain major metro markets. A big box would have to do enormous volume to justify these rents, so smaller tech-heavy store may make more sense there.

But not everywhere.

And while Leon’s proclaimed its grand-opening a success, exceeding expectations and posting the biggest grand opening day ever in the market, despite the smaller footprint, Feinblum says it’s way too early to know if these stores will produce the kind of sales and profits necessary to work long-term.

What’s more, there are lots of reasons to expect many big retailers will keep opening big stores. Reason No. 1: They’ve been working out pretty darned well. American Furniture Warehouse CEO Jake Jabs told me the opening of his two 450,000-square-foot superstores and distribution centers in greater Phoenix was one of the best business decisions he’s ever made, and he’s about to do the same in Houston.

Rancho Cucamonga, Calif.-based Living Spaces is on a similar trajectory. Its third Texas showroom and distribution center, opened this spring in Grand Prairie, is 860,000 square feet. Tamarac, Fla.-based City Furniture just opened its largest location in Orlando, Fla. — 120,000 square feet — after opening its first 85,000-square-foot store in the market last year. That was part of a 246,000-square-foot building that also houses it Central Florida distribution center.

And that’s another thing: These retailers opening these gigantic facilities are making a wow statement for consumers driving by. It’s a billboard, a show of dominance, and Feinblum believes it’s one that’s appreciated and understood by consumers.

And we’ve haven’t even gotten around to the retailers buying up the leases of the big-boxes and mall spaces left behind by steadily deteriorating department stores and other struggling retail sectors.

“Also, remember full-line furniture is not only full-line furniture,” Feinblum said. “It’s also full-line bedding and full-line outdoor” (and I’ll add the increasing emphasis on full-blown home accent shops).

“So the required square footage has actually increased because of new product categories,” he says.

Maybe the store trend and the shopping experience consumers want is bigger.

And smaller.

 

December 2018 – As seen in Furniture Today

Challenging 2018 appears to end well

Clint Engel, December 24, 2019

HIGH POINT — Furniture retailers appear fairly optimistic 2019 will be a solid year for sales growth, despite coming off what has been another frustrating year for many stores across much of the country.

Spaces for retail

On the real estate front, Julius Feinblum, founder and chairman of Julius M. Feinblum Real Estate, sees the collapse of Sears as more of a positive than a negative for the industry.

“All these big boxes, these major mall anchors such as Sears, JCPenney and even Macy’s downsizing — it just creates more opportunity for real estate for our very strong regional furniture retailers,” he said.

This proved to be the case over the past two years as Top 100 companies snapped up the leases of the bankrupt Toys R US, Sports Authority, Hhgregg and others.

And even if the Sears and the Kmart leases opening up do not go to this industry, Feinblum argues that they’re still helping. Other big-box users, such as warehouse clubs or Planet Fitness, could take advantage, thus freeing up other spaces for furniture that they may have been looking to expand into before the Sears real estate became available.

Asked if the furniture industry is coming close to overstored at this point, Feinblum said that might be the case in some high-density major metros. But in many less populated but still thriving regions of the country, where the Top 100 and smaller furniture retailers are prominent; there is still plenty of room and appetite for growth.

If there’s one weakness, Feinblum believes it’s the lack of a good succession plan for aging, smaller independent retailers. The industry will continue to see retail consolidation as it has for years now, but that’s simply opening the door for more expansion by the regional and super regional chains.

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