Summary
This article presents a common industry practice as being newsworthy and in the process, gets it all wrong. The practice of retailers taking over other failed retailer's locations has been going on since time immemorial. I guess it was a slow news day.
Analysis
A certain Mr. Paul Kinney, the executive director of some new organization called "National Retail Tenants Association" (NRTA), was interviewed for this uninformative article in Retail Traffic magazine. Either Mr. Kinney or the NRTA apparently is looking for some publicity and succeeded in only demeaning the expertise of the NRTA and its executive director.
My purpose in bringing this poorly written article to the attention of the GLG News reader is not to simply trash a well intentioned retail organization, there is something far more important to bring to our faithful reader's attention.
My real purpose is to point out that this article is misleading in several important aspects. By highlighting the fact that " retailers with stable financial footings are making silk purses from other retailer's sows ears", and then going into detail about how the "stable retailers" start looking at their brethren's failed locations as if this is some novel phenomena brought about by the recession, Mr. Kinney is being dishonest and reveals a total lack of knowledge of the way successful retailers operate.
Every successful retailer I have ever worked with in my 40 + years in the industry, regularly keeps close tabs on not only their competitors but darn near all other retailers who use the same size boxes as they do. Certainly when the news first gets out that some comparably sized retailer is having trouble, these retailers start acting like wolves following a herd of reindeer and just waiting for the old or weak members to distance them selves from the pack. By the time the weakened retailer has actually filed bankruptcy, the healthy retailers have not only contacted the troubled retailer, they have also contacted the creditor's committee and the entire group of companies that typically buy bulk packages at auction.
In my opinion it is disrespectful and misleading to portray the auction process as being as haphazard and/or surprising as this article suggests. The GLG clients who are interested in learning the inner workings of the retail real estate industry should steer clear of these types of poorly informed articles and interviews.
Kenneth Leonard consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
