Connect with us

Real Estate Corporate

How big box stores are stalling Whole Foods expansions using leasing contracts

(CORPORATE NEWS) As Amazon begins its Whole Foods expansions, other big box competitors are trying to put the wabash on them using their leasing contracts.

Published

on

whole foods

Over the summer it was made known that Amazon was buying Whole Foods then a few months later we learned that the new owners were revamping store pricing and poaching competitor’s customers.

Despite only having 450 locations, Whole Foods is slowly turning the supermarket market in their favor. However, some of the older, bigger players aren’t having it and have figured out that they can use their own real estate contracts to level the field with Whole Foods.

Apparently it is common practice for bigger retailers in commercial real estate to sign leases with conditions that prevent their landlord from renting to other businesses that would create competition.

For instance if a Starbucks is renting in one location they might include a term that says no other coffee shop can be adjacent so if an Dunkin’ Donuts wanted in next door they couldn’t.

For Whole Foods that means because they are now selling Amazon electronics like Echos or AmazonFire TV, their usually docile neighbor Best Buy could go track down the fine print of their leasing contract and forbid Whole Foods from selling those products.

It’s like they always say — All is fair in love in retail. Well, you know what I mean.

If we’re being honest an Amazon + Whole Foods team is pretty enticing. It makes a whole lot of sense that other retailers that can only offer half of that package would resort to any means necessary to impede their progress.

Even Target is getting in on the defense reportedly not allowing Amazon Lockers to be installed. I get it, you want people there to shop at your store, not to pick up merch they bought elsewhere.

Granted with Target’s new collaborations with companies like Brit + Co, May Designs and Magnolia Market, I doubt they have too much to worry about.

At any rate, this sort of fine-print legalese defense seems like a pretty large indicator that other retailers are feeling the heat from this merger.

Kiri Isaac is the Web Producer at The American Genius and studied communications at Texas A&M. She is fluent in sarcasm and movie quotes and her love language is tacos.

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Real Estate Corporate

Discount stores are banking on the bad days of underclasses

(CORPORATE NEWS) Despite brick and mortars closing, discount stores seem to be doing well. But that success seems to be at the expense of the downtrodden.

Published

on

dollar general discount

Few sights are as ubiquitous in rural America as the simple yellow and black logo of Dollar General, and this is not going to change any time soon.

In a signal of the times, Dollar General’s marketing executive Jim Thorpe said that Dollar General’s best customer was the low income, government assistance recipient.

By the fact that Dollar General’s expansion strategy is to create more stores in small towns and cities, that’s a signal to many that the business world is not expecting incomes to rise in the heartland of the United States.

“Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America,” Garrick Brown, director for retail research at the commercial real estate company Cushman & Wakefield was quoted saying.

“It’s based on the concept that the jobs went away, and the jobs are never coming back, and that things aren’t going to get better in any of these places.”

Rival discount stores Dollar Tree Inc. and Family Dollar (also owned by Dollar Tree) are also operating out of the same principles to give Dollar General a run for their money.

While they do not enjoy as much market share as Dollar General, these discount stores are also trying to compete for the stretched dollar of the $35,000 salary household. These same households may find it difficult to travel out of their town to do their grocery shopping due to the cost of gas.

Dollar General, in its confidence of a permanent lower class in America, is also alleviating the problem of food deserts.

According to the Centers for Disease Control (CDC), food deserts are areas that lack access to affordable fruits, vegetables, whole grains, low-fat milk, and other foods that make up the full range of a healthy diet.

Dollar General, while not having a full and robust grocery section with many fresh fruits, are offering more than what one can get in a gas station for certain and are alleviating the lack of affordable, moderately healthy options.

With U.S. income inequality still on the rise, Dollar General’s market share is not going anywhere, and the discount store chain might just become the next small-town staple in rural America.

Continue Reading

Real Estate Corporate

To reinvent leasing, Airbnb is creating branded apartments

(CORPORATE NEWS) Airbnb originally set out to disrupt the leasing world but has decided now to just reinvent it.

Published

on

airbnb

Airbnb doesn’t like being thought of as your friendly neighborhood disruptor and has found a new alternative to the more traditional rented house/apartment/room (or castle, a tiny house, treehouse, converted barn loft, etc…): branded apartment complexes.

San Francisco based home-sharing partner group Airbnb has formed a partnership with Newgard Development Group (known as “Niido Powered by Airbnb”) to create the space-sharing concept, which will be comprised of 324 units, starting with Kissimmee, FL (just south of Orlando) and is slated to be available for move-in sometime in 2018.

The units will have amenities of a hotel such as keyless entry and an app that will allow tenants to check-in remotely. On-demand cleaning and luggage services will also be available, making the process much more streamlined for both guests and tenants.

Upon signing an annual lease, residents may rent out their apartments through Airbnb for up to 180 days, and thus must of course, remain as full-time residents for at least half of the year.

This should help to cut down on issues where landlords were replacing tenants’ leases and rental agreements with a full-time Airbnb gig.

The setup of the branded apartment complex encourages home sharing, and offers a communal environment in which all neighbors are either hosts, or guests.

Okay, so while it kind of sounds like a hotel rather than an apartment, (a timeshare, even) Airbnb does still want to keep that “hominess” aspect that defines the brand, intact. It’s been reported that they will be providing some design assistance, though will remain hands-off in ownership interest in the building.

It’s too soon to say how lucrative a spot in one of these elusive buildings will be or how much a spot will cost, but it can’t be helped to wonder at what point does this sort of expansion stop Airbnb from being… Airbnb?

With this many parties involved, it does sort of lose its charm as being a unique travel experience people have come to expect with Airbnb. I mean, it’s not a yurt in Alaska, after all.

Expansion for the branded apartment complexes will be prioritized in Miami and the Southeast, but is expected to branch out into other cities such as Nashville, TN, Charleston, SC, and “cities in Texas.”

CEO Harvey Hernandez stated that the plan was to build over 2,000 units over the next couple years. Lookout world, The Grand Budapest Airbnbs will be hitting a city near you.

Continue Reading

Real Estate Corporate

KB Home exec is learning to watch his tongue the hard way

(CORPORATE NEWS) Character is what you do when no one is watching and for this KB Homes exec, it is what he said that is getting him in trouble.

Published

on

kb home

Keep the shade to yo self

Need a life lesson about keeping nasty comments to yourself? Take it from KB Home CEO Jeffrey Mezger.

bar
This past week, KB Home cut Mezger’s 2017 bonus by 25 percent after profane comments he made about comedian Kathy Griffin came to light.

D-list drama

Mezger, in an audio recording obtained from the security cameras on Griffin’s house, called her a list of not-safe-for-work names after she called the police on him for a noise complaint. This was reportedly one in many noise complaints that she and partner Randy Bick required police assistance over.

Since the incident was reported, Griffin and Bick have filed a restraining order against Mezger.

KB Home, an upscale builder with frequent home price tags in the millions of dollars, made a statement to the press regarding Mezger’s comments, saying the CEO had apologized for his language and that it did not “reflect who his he is or what he believes.” A spokesperson from the company also reported that a further problematic incident would trigger Mezger’s immediate dismissal.

Twenty five percent of nothing

Some who believe in the power of private industry to self regulate problematic behavior hold this action by KB Home as an additional example of the shifting tide of CEO expectations.

Consumers reported in a 2016 Stanford study that it would be appropriate for a company to fire its CEO over “morally questionable behavior” even if said behavior was not technically illegal.

Uber’s former CEO Travis Kalanick was ousted by the company last year after reports of rampant sexism in the workplace were published.

However, some have questioned if this “punishment” has any actual weight behind it, or if it is just for show. For starters, KB Home did not release any data on how much of a salary cut would be–and if it would actually affect Mezger at all. In an analysis from the Los Angeles Times, columnist Michael Hiltzick found that in addition to the lack of baseline bonus information from KB Home, that the CEO has reportedly not received a bonus since 2014. As Hiltzick points out “taking 25 percent of nothing is painless.”

Repercussions to follow

Besides the question of how much the incident will cost Mezger, a larger question looms on how this may potentially affect the KB Home bottom line. Suze Orman, a TV personality and financial advisor, has already taken to Twitter to encourage her followers to not choose KB Home to receive their business.

Long run, it is yet to be seen how much this will affect Mezger and the company he runs, but for the time being it certainly serves as a nice reminder of the adage: “if you cannot be positive, then at least be quiet.”

#KBHome

Continue Reading

Emerging Stories

Get The Real Daily
in your inbox

subscribe and get news and EXCLUSIVE content to your email inbox