make any comparisons between programs
or draw additional conclusions.
Within Colliers’ 105-retailer sample
set, 78 companies (74 percent of the total)
increased their CapEx budgets in 2012.
Nine companies estimate that they will
spend more than $1 billion, including the
leaders in each merchandise category: big
boxes Walmart, Costco, and Home Depot;
drugstores CVS and Walgreens; Kroger and
Safeway in grocery, and McDonald’s and
Yum! Brands in quick-serve restaurants
(QSRs). Building on their strong 2011 performance, 16 companies have increased
their 2012 CapEx budgets by more than 50
percent over last year. This group includes
The Buckle (up 132 percent), Cost Plus (up
91 percent), Family Dollar (up 74 percent),
Brinker International (up 71 percent),
Starbucks (up 69 percent), and Williams-Sonoma (up 61 percent). As these companies effectively demonstrate, having the
means to reinvest in their businesses is the
result of being good at what they do, which
leads directly into the next success strategy: reworking physical locations to better
showcase the brand.
As e-commerce has expanded in the past
decade, it exposed the vulnerabilities of certain brick-and-mortar retail chains: those
selling products that were content-related
(and could be digitized) and those that
relied on volume sales rather than margin
(competing on price) to generate revenues.
Doing business in a commodity-driven
marketplace relegates the physical store to
merely a distribution facility versus a place
that plays up brand identity and creates a
space where customers can interact with it.
The dizzying pace of technology advancement, combined with the sticky process
by which retailers and landlords allocate
remodeling capital, means that most existing brick-and-mortar stores don’t yet offer
the experiential components sought by
Retailers “ahead of the curve” in reinventing their physical spaces elevate the shopping experience to focus on every aspect
of their business that matters to their customer. They seek to create spaces that are
not only integrated with their online business but offer something special that online
can’t deliver: a multisensory marketing blitz
plus a personal touch. Apple distributes its
product through multiple retail channels,
none more successful than its 300-plus
company stores worldwide. There, shoppers have unrestricted access to create their
own experience; to try out anything in the
product line, conduct their own research in-store, flag down an iPad-toting sales associate, or chat with other customers to answer
questions, and check out quickly. All this
takes place within a physical space that perfectly reflects Apple’s corporate branding.
“The dizzying pace of
technology advancement, combined with
the sticky process by
which retailers and
means that most
existing brick-and-mortar stores don’t
yet offer the experiential components
sought by today’s
It’s a safe bet that much of the 2012 technology CapEx mentioned earlier will be
spent by retailers trying to apply Apple’s
execution to their own platforms. Looking
ahead, it will be interesting to see how other
successful retailers with a less specialized
product line (e.g., CVS, Safeway, Staples)
evolve their branding programs. By offering time-pressed customers a shopping
option that’s more than just shopping, outperforming retailers will cement the value
of their brick-and-mortar locations and
maintain the vibrancy of their brand.
This article is excerpted from
“On the Road Again,” a white
paper published in May 2012
by Seattle-based Colliers
International. Ann T.
Natunewicz is manager, retail research USA
for Colliers; e-mail ann.natunewicz@colliers.
com or call 202-742-1105.
K.C. Conway is executive
managing director, market
analytics; e-mail kc.conway@
The full eight-page report
is available for download in PDF form