RETAIL OUTLOOK: Tech-Driven Interruption of Shopper Habits Will Continue in 2015

Retailers Can Thrive Simultaneously in Online and Brick & Mortar Worlds, They Just Need To Adjust

The current challenge has a lot more to do with technology and a lot less to do with sales and spending. Still, the results could be just as dramatic on the retail marketplace.

"Every few years the retail sector experiences a spurt of store closures that temporarily spooks the CMBS market. What I focus on more now is how technology is changing the retail landscape, Marshall Glick, senior vice president and senior analyst of Securitized Asset Management Group at AllianceBernstein LP, said at a CMBS and CRE roundtable this month hosted by Standard & Poors.

Noting that iTunes effectively eliminated the need for pure music retailers and large electronic stores are closing locations or moving toward a smaller footprint due to internet retailing, Glick said he continues to believe in clothing retailers. They keys, as always, are execution and location. "Department stores could downsize the store formats and become a bit more current in their retailing methods," Glick added. "In a thriving mall, this becomes an opportunity for the owner to bring new excitement to the property; while in a sub-performing mall, [this] could be a trigger to a death spiral.

Our credit team here at [AllianceBernstein] is concerned about Sears, but it may be more of a 2016 event, rather than next year, Glick answered.

In one post, Lampert addressed the questions of just how much retail floor space does the company need to deliver a great shopping experience. And with more and more of its sales and member engagement moving online or via mobile, do those stores need the same kinds of stock rooms and warehouses?

And his answer is basically: not nearly as much as it has now.

"Some of our stores are simply too large for our needs, given that populations shift, new roads are built and new retail areas open constantly, Lampert wrote, adding that he plans to continue to execute the retailer's plan to integrate its store and digital capabilities, which will include adjusting the size and number of stores it operates.

"Additionally, Sears Holdings will continue to build and experiment with new capabilities in stores and on its mobile and online platforms, with an emphasis on its Shop Your Way membership program and integrated retail offerings.

Of course, Sears is far from alone in tackling these questions.

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RETAIL OUTLOOK: Tech-Driven Interruption of Shopper Habits Will Continue in 2015