Retailers Returning to Main Street as Urban Storefronts Take on Greater Prominence

For Immediate Release
Kathy Grannis or Scott Krugman (202) 783-7971
grannisk@nrf.com or krugmans@nrf.com

Retailers Returning to Main Street as Urban
Storefronts Take on Greater Prominence

Washington, October 19, 2007—Though the majority of retail stores will continue to be located in malls, retailers are slowly moving back to Main Street to diversify their storefronts, according to findings from the 2007 NRF Retail Real Estate study conducted by AMR Research.

The study, which surveyed 43 retail real estate executives, found that retailers plan to have eleven percent of their stores in urban street-front locations by the end of year, compared with eight percent last year. To compensate, companies have cut back slightly on their number of mall and strip mall locations (44% this year vs. 48% last year). The survey also found that retailers are continuing to move toward lifestyle centers, with nine percent of company stores in that format compared with eight percent last year.

“Urban storefronts are beginning to play an increasingly important role in retailers’ real estate strategies,” said Carleen Kohut, NRF Chief Financial Officer and the manager of NRF’s Real Estate Executives Council. “Throughout the country, traditional main streets are being revitalized to include an assortment of new retail shops, from department and clothing stores to coffee shops.”

When determining the best location for a store, four out of five retail real estate executives say that demographic information is the most important. Half of respondents believe that other crucial factors include evaluating competitive information (51%), traffic patterns (49%), and geographic factors like the existing and future population (49%).

Though the real estate industry remains extremely competitive, complexity and extensive due diligence contribute to one-fourth of retailer respondents (24%) taking more than six months to sign a contract once a site has been approved. On average, retailers said they screen ten potential sites for each one that is approved. About one-third (36%) of stores are owned while the remainder (64%) are leased.

After a contract is signed, retailers said it takes an average of three to six months if the store is part of a remodel or new construction. A ground-up project often takes more than twice as long with the majority of retailers acknowledging that those projects often take more than twelve months. While many factors contribute to duration of construction, there is no denying the risk associated with not opening a site on time and on budget.

Because of the complexity of the real estate lifecycle, many retailers are shifting from homegrown software applications and simple desktop programs like Microsoft Excel to specific technologies that help them manage the process. According to the survey, the sale of software that manages real estate has experienced double-digit growth this year and nearly half of retailers (42%) now use these applications.

“Retailers dedicate a tremendous amount of resources to identify, and ultimately operate, their stores in prime locations,” said Rob Garf, Vice President and General Manager of Retail Strategies at AMR Research, Inc. “As retailers are faced with increasingly complex accounting procedures, competitive environments, and nationwide store management, they are turning to software as a solution to help them manage each stage of the real estate process more efficiently.”

The 2007 NRF Retail Real Estate study will be released in its entirety at NRF’s Annual Convention, January 13-16, 2008 in New York City.

AMR Research is the No. 1 advisory firm focused on supply chain, enterprise applications, and infrastructure. Founded in 1986, AMR Research provides advisory services and peer networking opportunities to supply chain and technology professionals in the manufacturing and retail sectors. www.amrresearch.com

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2006 sales of $4.7 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com

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