All retail stores (and retail products for that matter) have a life cycle. Each cycle is described in more detail below.
This is the starting point for a retail store or concept. A business owner has a great idea, puts together a business plan, acquires funding and moves forward with growing the idea into reality. Systems are being developed and implemented and the plan for success can be a little more flexible in this stage and it can be a very exciting time. An example of a retail business in the Innovation phase is the rumored opening of a Google retail store in Manhattan. However, Google has been around for a while, the move into brick and mortar is a new innovation for them after testing the waters with pop up displays throughout the U.S., as well as stations inside Best Buy and other retailers.
In the accelerated development stage, the plan has become a fantastic idea and market demand has grown so much that, if chosen, a plan is put together to grow the retail store or concept into additional locations within your current market or even adding stores in additional markets. Many professionals will sell their businesses at this time to corporations to continue the development. Recently, Ulta, Ross and Stein Mart have all announced expansion plans to increase their footprint and are considered to be in the Accelerated Development stage.
In this stage of the retail life cycle, the business has grown as much as the market will allow. Development slows considerably and unless the retail store or concept reinvents itself, it can quickly move into the final stage of the retail life cycle. Some would have considered Starbucks in the Maturity stage of the retail life cycle, until they announced their collaboration with Oprah for Teavana and even more recently, the announcement of adding alcohol to the menu in 40 locations by the end of the year and more to come in following years. Starbucks has proven the fact that stores can revolve in retail life cycle. Reaching the Maturity stage does not necessarily mean Decline is in the future.
The Decline stage indicates that the retail store or concept is no longer serving the market and either needs to come up with a new plan or slowly but surely this store or concept will die. The company may file for bankruptcy protection, try to reorganize and create a new plan for success, close the doors or sell the company to a willing buyer. Radio Shack, Office Depot and JC Penney are retail stores in the Decline phase of the life cycle with their latest announcements of store closing.
As mentioned earlier with Starbucks, it is possible to move from one stage to another in either direction, at any time, or to even skip stages. Walmart is a wonderful example of a retail store that works hard to keep revolving in the retail cycle with the opening of Walmart Neighborhood Market stores, Walmart Express and now, testing the convenience store concept, Walmart To Go.
As a pure retail REIT, Weingarten Realty monitors the merchants in our centers to evaluate where they are in the retail cycle in order to acclimate to the constantly changing retail climate. We project and plan for upcoming vacancies, keep abreast with current market trends to keep mature retail concepts happy, as well as look for new retail developments for the retailers in the innovation and accelerated development stage.