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Bed Bath & Beyond's locations were never the problem, and now other retailers are eager to take its places. Burlington will take over 50 of 109 Bed Bath & Beyond store leases for $13.5 million. The company secured 44 stores at auction for $12 million and secured the other six outside the auction process for $1.5 million. Other retailers taking over Bed Bath & Beyond leases are Michaels, Havertys, Macy’s and Barnes & Noble. Many of the locations are in prime shopping centers in prime markets across the country. Meanwhile, home furnishings e-commerce operator Overstock.com acquired Bed Bath & Beyond’s intellectual property and will rebrand its own U.S. web site as Bed Bath & Beyond later this summer.
Thrift shops are a growing tenant category serving not only low-income shoppers but also those with disposable income. Wall Street investors, private equity firms and pension funds just showered Savers Value Village with dollars in an IPO that values the firm at about $4 billion.
The Bellevue, Washington-based company operates 317 thrift stores in Canada and the U.S. under the Savers, Value Village, Village des Valeurs, Unique and 2nd Avenue banners. It derives 40% of revenue from its Canadian operations but plans to boost its U.S. profile and has pinpointed 2,200 potential locations, according to chief executive Mark Walsh. Small-footprint stores that sell only textiles will be a major component of the retailer’s push into urban markets, he said. The customer demand is there, he added. The company’s sales at stores that had been open for at least one year climbed by 13.5% in 2022. Sales totaled $1.4 billion for the year, and net profit reached $84.7 million.
The company, whose main competitors are nonprofits Goodwill and The Salvation Army, accepts donations from the public and buys donations from charities and nonprofits to resell. Some 4.7 million customers belong to its loyalty program, which is growing fast, Walsh said. “There is a trend toward understanding the circular economy and the waste in terms of textiles and what that means for the planet.”
Savers Value Village, Goodwill and Salvation Army by far are not the only players. In 2022, 25,000 thrift shops in the U.S. generated $15 billion in sales. That revenue is expected to double in 2023, according to NARTS, an association of resale professionals.
Many are moving into second-generation space. Greensboro, North Carolina’s Freedom House, a nonprofit that operates an addiction-recovery program for mothers, opened its first thrift store in a former Cricket phone store, and its third location opened in April in a former mattress store, according to Bizwomen. “It’s important for us to run a high volume and ever-changing inventory all the time,” Freedom House executive director Houston Core said in the publication. Freedom House Thrift’s sales totaled $2.5 million last year, and the organization plans to double that this year. Freedom House Thrift displays higher-end items in a boutique way that appeals to shoppers. “The majority of our customers have discretionary income,” Core said.
While clothing is the most popular resale category, 82% of Americans, or 272 million people, buy or sell pre-owned products across a range of categories, also including electronics, furniture, home goods and sporting equipment, according to online marketplace OfferUp.
And the trend is only bound to grow stronger as the key Gen Z demographic’s earning power grows. According to ICSC’s new report, The Rise of the Gen Z Consumer, 13% of Gen Z shoppers in the U.S. shop frequently at thrift or secondhand stores like ThredUp. Meanwhile, 11% of Gen Z shoppers buy frequently on Facebook Marketplace, where most products are secondhand.
MORE FROM C+CT: Resale Is Cool Again. Does It Make for a Viable Tenant?
Big Lots is cashing out of the store-ownership business. The discount chain has raised $318 million through a sale-leaseback agreement with affiliates of Blue Owl relating to 26 owned store locations and Big Lots’ distribution center in Apple Valley, California. The retailer previously sold and leased back other regional distribution centers in 2020. It is making a deliberate effort not to own any of the 1,420 stores it operates, according to president and CEO Bruce Thorn. “We are highly focused on ensuring we have plenty of liquidity to get through this period of macroeconomic challenges, and monetizing these assets is a significant step forward in ensuring such liquidity,” he said.
Christmas Tree Shops will close all 82 of its stores and liquidate its leases after failing to meet covenants in its Chapter 11 bankruptcy restructuring program. Owners Marc and Pam Salkovitz purchased Christmas Tree Shops from Bed Bath & Beyond in 2020.
Givenchy is one of several LVMH-owned luxury brands beefing up their presences in the U.S. The Parisian brand opened a 6,500-square-foot temporary store on Rodeo Drive in Los Angeles’ Beverly Hills this week to prep locals for its permanent opening on the street next year. The high-concept boutique is the edgy fashion label’s ninth freestanding U.S. store.
Lowe’s is adding outlet stores to reach more consumers and to offload damaged merchandise. The retailer opened its 11th Lowe’s Outlet store last week, in Greensboro, North Carolina. It’s not in a factory outlet center but rather in a power center, occupying a 36,000-square-foot former Stein Mart in Brassfield Shopping Center. The first Lowe’s outlet store opened in fall 2019 in California, and such stores now operate in Connecticut, Florida, Georgia, Illinois, Missouri and Texas.
Walgreens will shutter 150 underperforming stores within the next fiscal year and, according to a recent earnings call, will slow the openings of VillageMD healthcare clinics in some markets. Net income has plunged at the company as COVID testing and vaccination traffic have dwindled.
On Jan. 1, Jonathan Pong will take over the position of Realty Income treasurer and CFO from Christie Kelly, who is retiring. Pong, who joined Realty Income in 2014, is currently senior vice president and head of corporate finance. He previously worked as an equity analyst at Robert W. Baird covering the REIT sector, and he began his career as an accountant at Deloitte & Touche.
Quick-service restaurant chain Savvy Sliders named Bryon Stephens chief development officer. Stephens brings 35 years of experience, including stints at A&W Restaurants, Yorkshire Global Restaurants and Yum Brands. Stephens previously served as vice president of development, as COO and eventually as president of Marco’s Pizza. He also has worked as CEO of leadership coaching company Extreme Leadership Institute. Stephens will guide the three-year old Savvy Sliders, which operates 35 stores and has another 30 in development, toward more than 500 stores over the next 48 months.
By Brannon Boswell
Executive Editor, Commerce + Communities Today
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