Best Buy Q2, Nordstrom Rumors, Equal a Weird Retail World

Tom Woodard, Director GRS | Corteq (561) 325-9857 twoodard@grs-global.com

Tom Woodard, Director
GRS | Corteq
(561) 325-9857
twoodard@grs-global.com

The ship has sailed for those expecting any normality in the retail real estate industry.

For years, landlords have dealt with mass store closures and the pressure posed by online shopping, most significantly Amazon, but now things have gotten strange to the point of complete inconsistency.

Several years back, Best Buy seemed headed for major trouble because of consumers reportedly using it for “showrooming,” where customers would look at products in stores and then turn around and buy them on Amazon for cheaper. With the online giant’s insane growth, why would that change?

Well somehow Best Buy has seemed to buck the trend with a strong second quarter. It’s same-store sales rose a very strong 5.4 percent year over year, due to a reported increase in demand for consumer electronics, and net earnings came in at $209 million, above the $198 million during 2016’s second quarter.

This is completely contrary to current logical thinking. Shouldn’t big box stores be dying? Can’t you get any of the products it sells on Amazon?

Well, apparently there is still a contingent of consumers who want to shop at this retailer in person.

In other bizarre retail news, it looks as though Walmart and Amazon could be vying to purchase Nordstrom, one of the country’s most lauded luxury department stores.

Nothing Amazon does at this point is surprising.

But there are two other factors in play that make such a deal counterintuitive.

First of all, the department-store sector of retail has seen plenty of fallout with closures by Sears, Macy’s and JCPenney. Nordstrom has even shut some of its locations, and the retailer’s stock price has been inconsistent. So why would either Amazon or Walmart be interested in such a buy?

And speaking of Walmart, it’s the undisputed leader of brick-and-mortar discount retailing. So why would it want to purchase a luxury department-store chain? It seems a bit out of the company’s wheelhouse. The thinking is apparently that Walmart would make the buy to attract consumers that would not normally frequent its stores.

One thing that can be said about the retail real estate industry right now, is that the space is far from boring. We are excited to see what transpires and just hope that it’s beneficial to retail landlords and investors.

 

 

 

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