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Physical Stores on the Horizon for Five Below and Zalando and On the Block at Macy’s

Rivet's 2020 Denim Circularity report takes a deep dive into how the global denim industry is plotting its circular future amidst a worldwide pandemic.

As e-commerce continues to surge, retailers continue to try to navigate the brick-and-mortar space. In some cases, that means bullish expansion, while other strategies include liquidating the real estate.

Five Below heads West

While other teen retailers are shrinking—or even folding—value-priced Five Below is on a rapid growth path.That could have something to do with its concept: pricing is capped at $5.

The store recently opened nine new locations in California. The L.A. area shops will focus on the store’s signature trendy assortment, including branded and licensed merchandise spanning clothing, craft goods and room décor.

“To be successful you have got to offer value and you have got to offer a great store experience,” Joel Anderson, CEO of Five Below, told the Orange County Register.

In March, the company reported a 20 percent increase in net sales for FY16 to $1 billion from 832.0 million the previous year. Comparable store sales inched up by 2 percent. The retailer opened 85 stores in 2016 and plans to add 100 more in 2017.

The company operates 550 stores in 32 states and is headquartered in Philadelphia.

Macy’s to downsize in Chicago

Cost cutting to improve profitability is a common strategy in the retail landscape today. Another is leveraging real estate holdings to create liquidity.

For Macy’s that means selling part of its Chicago flagship, which it inherited with the purchase of Marshall Field’s, according to the Chicago Tribune. The department store is looking to offload the 8th through 14th floors of the building, which total approximately 650,000 square feet. The space, which is a Chicago institution, is currently used for special events, offices and storage.

“Macy’s is continuing to execute on our real estate strategy that is focused on creating value through monetization and, in some cases, redevelopment of our assets,” Macy’s spokesperson Andrea Schwartz told the paper. “We are still working on a plan for a downsized Macy’s State Street store, which we expect will result in a more vibrant and productive store.”

Zalando plots brick & mortar move

E-commerce leader Zalando is considering opening physical stores. The locations would be situated in fashion capitals like London, Berlin and Paris, reports Reuters.

“We have proper fans in the metropolises who spend much time with us and order a lot,” co-chief executive Rubin Ritter is quoted as saying in the publication. “It could be interesting for them to also experience the brand offline.”

The retailer sells 1,500 brands, including international and local labels, fast fashion and private label for men, women and kids. Zalando operates in 15 European markets with assortments that cater to local tastes. The retailer attracts more than 160 million visitors a month, 68 percent of which via mobile in the fourth quarter of 2016.

The company’s preliminary report for the first quarter of 2017 estimates revenue increased by 22 percent to 24 percent to 971 million euros to 987 million euros ($1.04 billion to $1.06 billion). The company’s outlook for the full year puts revenue growth between 20 percent and 25 percent.

It’s also reported that Zalando is planning to offer 3-D printing capabilities to small to medium fashion brands.

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