The floors are generally of polished cement or Formica. If there is carpeting, no one would mistake it for a hand-loomed Persian. The ceilings almost by definition feature exposed girders.
The shopping experience in a “big box store” will likely never be compared with walking into Neiman-Marcus in White Plains or the new Ralph Lauren take on retailing in Greenwich, Conn. But the last two decades have demonstrated clearly that consumers can and will support the no-frills shopping experience. And just as Macy’s never consulted Gimbel’s, as the old saying went, so the big boxes slug it out in a competition that plays itself out in closing sales and grand openings through good times and bad. The waters have been notably choppy in this recession.
Grab a cart and welcome to the hypercompetitive box-store arena, where a consumer neither asks for opulent display, nor gets it. It is also an arena with a lot fewer players than just two years ago, part of a savage winnowing that has seen once giant stores like Linens ‘N Things and Circuit City go under while competitors like Bed, Bath & Beyond and Best Buy remain standing, perhaps positioned stronger than ever.
Box stores, according to Doug Healey, senior vice president for leasing for California-based Macerich, which owns Danbury Fair Mall in Danbury, Conn., and which manages Cross County Shopping Center in Yonkers, “are best defined by names: Linens ‘N Things, Michael’s, Borders ”¦ They usually have 20,000 to 50,000 square feet and are either free-standing or located in a ‘power center.'” A power center is a combination of big box stores (or store) and any number of smaller retailers that set up shop either contiguously or utilizing the same commercial parcel.
Box stores are also defined by the fact they present merchandise out of crates. As such, general merchandisers like Target and more specific retailers like Home Depot are considered box stores while the likes of Costco, Sam’s Club and BJ’s Wholesale ”“ warehouse stores ”“ do not qualify.
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“Twenty years ago was not like it is today,” said Healey. “It has evolved over time so now there two to three boxes in a category, as with Borders and Barnes & Noble, and with Bed, Bath & Beyond and Linens ‘n Things.
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“Now, you’re seeing the boxes whittle down,” he said. “Circuit City lost to Best Buy and Linens ‘N Things lost to Bed, Bath & Beyond.
“The one that best connects price with value is the one that’s standing at the end of the day. But you can also say that of all retail at this time. Retailers that are winning are matching value and price.”
Box stores are not the focus at Macerich, whose national retail engine encompasses 26 malls. “We dabble in them, but they’re not the crux of our business,” said Healey, who spoke from Macerich”™s office near Rochester. Rather, what happens is box stores independently seek parcels near Macerich’s and other big retailers’ established venues, a bit of “MacDonald’s seeks Burger King” for consumer goods across the full spectrum.
The stores themselves present unique challenges, and advantages, when a big box goes empty. “I’ve seen vacancies where Circuit City was replaced by Best Buy and Linens ‘N Things was replaced by Bed, Bath & Beyond,” Healey said. “The other alternative is to carve up the space. They generally have a good deal of frontage. Big frontage is an advantage in that you can cut it up and still give retailers frontage. The process leaves deep, narrow spaces, but they’re doable and we’re seeing a lot of it in our industry: You divide it up or you simply replace it” via the demolition of, essentially, a big, empty cube.
“For the future in the short-term, the compression will continue,” Healey said. “The strong will be left standing and they’ll be dominant. But the fact there are less standing has got to open new ideas. In the short-term, the strong will dominate.
“Even in the mall industry, as vacant space becomes available, these boxes can become an alternative for us. Mall owners have found themselves with excess GLA (gross leasable area). We have seen the combination of a power center and a mall as a viable alternative. If a mall has 25,000 or 30,000 square feet available or a vacant anchor, we might look to one alternative, which is to bring in a big box store. We have done this.”
