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Convenience Drives Retail Expansion

Whatever happened to taking time to smell the roses? These days, hurried consumers want fast computers, drive-thru coffee shops and same-day dry cleaning. Shopping Center World's 18th Annual Retailers' Expansion Plans Survey results mirror the fast pace of life in the '90s.

The 94 retailers who responded to this year's survey are listed in a directory beginning on page 81. (A more complete roundup of retailer expansion plans will be published in the April 1999 issue of Shopping Center World.)

In addition to reflecting the demands of busy shoppers, the survey results conclude that retailers plan to get bigger and bigger as the new millennium approaches. In 1998, surveyed retailers opened a total of 3,354 new stores, and plan to open even more in 1999 and beyond (see Figure 1).

Among all respondents, the average number of store openings planned for 1999 is 51.1.

The majority of respondents have a store size in the 0 to 10,000 sq. ft. range. Among the 68 respondents in this group, the average number of stores set to open in 1999 is 54. In 2000, this group plans to open an average of 58 stores.

The 0 to 10,000 sq. ft. category also exhibits some of the trends attributed to living in a society of time-constrained consumers. For instance, tremendous growth is expected in the hair salon chain category. Industry experts say customers prefer the convenience these chains offer.

The fruit smoothie category is growing for similar reasons. These frozen concoctions are becoming dietary supplements for consumers who don't have time to stop and eat.

A third growth category reflecting the demand for convenience is drugstores. Falling into the 10,000 to 20,000 sq. ft. category in SCW's survey, these retailers are moving into the next century by providing one-stop shopping.

Taking a micro approach, Shopping Center World elected to interview industry professionals from three retail categories about how trends are affecting their expansion plans.

Great Clips, great expectations While growing its number of stores, Minneapolis-based Great Clips is cutting out the mold for haircare chains.

With approximately 1,225 stores currently in operation, Great Clips plans to open 300 stores in 1999 and 350 in 2000. Great Clips locations average about 1,100 sq. ft., and are located in neighborhood strip centers, community malls and power centers.

"We are nearly one-fourth of the way into our national expansion," says Dean Wieber, senior vice president of Great Clips. "We fully expect to have between 3,000 and 4,000 salons."

Despite the optimistic numbers for expansion, the newness of this growing retail category makes it difficult to predict the future.

"This is a concept whose time has come," Wieber says. "What we don't know is, 'What is full penetration in this category?' We know what it is for hamburger chains and other chains."

Considering that fast-food chains have been popular for years because they are just that, "fast," perhaps hair chains will keep expanding for the same reason. Because hair salons are making it easy to get a haircut at a moment's notice, the concept appeals to rushed consumers.

"With the walk-in, no-appointment style chains, customers are looking for convenience," Wieber says. "They want to get a cut close to home, and they want to pay a reasonable price for that."

What differentiates branded haircare chains from the local salon is that they are recognizable to consumers. With locations all over the country, Great Clips and other haircare chains offer consumers a familiar, trusted name, no matter where they are.

"It's a salon clientele, rather than a stylist clientele," Wieber says. "There are some stylist clientele, but generally customers come to any one of the stylists at any time and get the same quality haircut."

Another reason for the explosion of haircare chains is that people get haircuts more often than in the past, says Frederick Marx, a retail analyst and partner at Marx Layne & Co., a Farmington Hills, Mich.-based marketing and public relations company

A shorter haircut is a more corporate look, Marx says, and a man might need to go twice a month to maintain that cut. Also, he says, hair is important to people, and they want to change or maintain their styles at reasonable prices.

"Hair is a big deal," Marx says. "You talk to any teenager, and they don't even know they have teeth or any other body part. It's all about hair."

Planet Smoothie blends nutritious quick fix Smoothie retailers are creating a fruitful business. As consumers on the go become more health conscious, retailers are serving smoothies as a nourishing alternative or complement to a meal.

One such retailer is Atlanta-based Planet Smoothie. With 85 store locations, Planet Smoothie expects to open 300 additional stores in 1999 and 500 in 2000. Approximately 70% of the new stores are expected to be located in shopping centers.

"We see this as one thing that was lacking in the American diet," says Martin Sprock, president and CEO of Planet Smoothie. "There's just very little nutrition in people's diets today. Fast food is loaded with fat."

Smoothies, which are blended fruit drinks often mixed with protein powder and other nutritional supplements, are the perfect solution, Sprock says.

They are made with fruit because it is plentiful around the world and its great taste masks the supplements. Smoothies are not recommended as a substitute for meals all the time, but Sprock hopes Americans will drink them occasionally to cut fat from their diets and add essential nutrients.

"We're the competitor of fast food in the sense that you can go to Burger King and eat, as long as you come to us for the next meal," he says. "We provide something that's healthy, that tastes great, and that you can get on the run. We're not trying to be the saving grace."

Smoothies are becoming more popular around the country, but so far the trend is more prominent on the West Coast. The East Coast is taking longer to catch on, for two reasons, Sprock says.

First, there is less awareness on the East Coast about being healthy. Also, with smoothies being a seasonal business, the moderate climate on the West Coast attracts more customers throughout the year.

Although Planet Smoothie is interested in opening stores across the country, Sprock says, the retailer is concentrating more of its business on the East Coast.

"In the next four or five years, people will become a lot more aware," he says. "It's definitely not a fad."

CVS/pharmacy prescribes one-stop shopping Get what you need and get out. That's how consumers nowadays want to shop, especially when looking for food and household items.

In the drugstore category, retailers are doing what they can to meet the needs of these time-pressed shoppers.

"There will always be a demand for drugstores," says Sue Lanois, real estate department manager for Woonsocket, R.I.-based CVS/pharmacy. "Now, though, there is more demand for one-stop shopping. Customers want to get whatever they can in one store."

CVS/pharmacy is distinguishing its business by opening freestanding locations, where customers can get more of what they need, instead of just being an additional stop on the grocery-shopping trip.

"The trend is to go to a convenience location as opposed to a shopping center," Lanois says. "Instead of competing with grocery stores for convenience foods, we have our own convenience foods."

The movement of drugstores to freestanding locations is an outcome of grocery megastores, says Marx Layne & Co.'s Frederick Marx.

"Grocery stores are closing more smaller stores to open up the 60,000 to 65,000 sq. ft. megastores," he says. "The neighborhoods that used to have these smaller grocery stores don't have them anymore. Drugstores are providing not only a pharmacy, but also many of the day-to-day services people need."

Because they supply many convenient goods and services, freestanding drugstores are a great neighborhood concept, Marx notes. But, he says, now more than ever the pharmacy is the most essential ingredient.

"What we have around the country is an aging population," he says. "There are tremendous levels of increased prescriptions. Price isn't really the issue. It's convenience and credibility of the pharmacy."

In addition to freestanding stores, trends in the drugstore industry include drive-thru pharmacies, one-hour photo labs and 24-hour stores, Lanois says.

By the end of this year, CVS/pharmacy will operate approximately 4,100 stores in both freestanding and shopping center locations. In 1999, while the company plans to close some of its existing shopping center locations, it will open 400 freestanding stores. Therefore, although 78% of CVS/pharmacy stores in 1997 were located in shopping centers, this number could drastically change in the coming years.

With another 400 openings planned each year through 2002, CVS/pharmacy will remodel 1,000 stores in 1999 and 800 more each year through 2002. The pharmacy has locations in the Northeast, Southeast and Midwest, but plans to focus on saturating certain markets such as Atlanta, Greensboro, N.C., and Charlotte, N.C.

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