What some see as the future of retail is coming to Kohl's stores.
The department store chain is marketing space in its four Arkansas locations as part of its right-sizing program, which the chain said is aimed at shrinking the footprint of select stores and leasing or selling the vacated space in a bid to leverage its real estate and drive traffic.
The program is an alternative for the retailer, rather than abandoning the big store concept as the public appetite for online purchases has grown.
Coresight Research, a New York firm specializing in retail analysis, said last month that U.S. retailers have announced 7,062 store closings in 2019 versus 3,022 openings.
"The good news is that Kohl's is not going anywhere," said Hank Kelley, chief executive officer and executive broker with Flake & Kelley, a Little Rock commercial real estate firm that was recruited to market the properties. "They are not closing down -- they're saying, 'Hey, I'm making my space available for the market.'"
Kohl's also is trying to capture some of those online customers. It announced earlier this year a partnership with Amazon, the online retailing giant, in which all 1,500 Kohl's stores accept Amazon returns. Kohl's will pack and ship the returns at no charge.
The chain also reached an agreement with Planet Fitness to open fitness centers at 10 stores to help drive traffic and cut costs.
The Arkansas stores are looking for a similar mix to accomplish the same thing.
"It's really this simple," Kelley said. "Kohl's is looking for people in certain locations where their downsizing a facility can be organized in a way where another tenant can be brought in that will be complementary to the business."
Kelley and a colleague, Brooke Miller, are tasked with finding complementary tenants for Kohl's stores in Little Rock, Sherwood, Conway and Fayetteville.
For instance, the Little Rock store, at 13909 Chenal Parkway, has a footprint totaling nearly 89,000 square feet. The store has 24,000 square feet designated for a complementary tenant, or about a quarter of the store's total space, according to marketing material.
"The space is not available to anyone who wants to rent it," Kelley said. "It's an effort to find that complement to their business that enhances the tenant mix."
Flake & Kelley is part of the Kohl's program through its affiliation with ChainLinks, a national network of retail advisers.
"We just hit the market with it," Kelley said in an interview late last month. "We're out talking to people. We've had a couple of inquiries already."
Leasing the space won't help just Kohl's, he said.
"It's not unusual that a retailer would be interested in it that thinks they can thrive on being next door to a Kohl's," he said. "They're drawn to the space because of the traffic Kohl's is generating. Kohl's is OK with that as long as it's a complementary tenant."
Planet Fitness is an example of a complementary tenant, Kelley said.
"The parking doesn't compete with each other," he said, noting fitness center users typically arrive in the early-morning hours, long before regular shoppers arrive. "The other complement is a level of merchandise that doesn't compete with Kohl's, but brings people into the shopping center."
"It's all about the mixing the tenants that, instead of competing with each other, they bring people to a place where they cross shop."
Business on 08/03/2019