The Richmond, VA-based chain announced last week that it would shutter the stores and lay off 4,400 workers across the nation as part of a Chapter 11 bankruptcy filing. That's bad news for many relatively small towns in the Midwest and South, where the typical Heilig-Meyers store of 15,000 to 20,000 sf is considered fairly large.
But it's a different story out West, experts say. Though the chain plans to close 81 stores in California and a few dozen more in neighboring states, the West Coast retail market has been strong and owners of retail property shouldn't have much trouble replacing Heilig-Meyers with one or more new tenants.
Though the chain has been around for decades, it didn't start expanding into the West until the mid-1990s, says H-M spokesman Barry Brockwell. And even after the closures, the 87-year-old company will still have 596 stores and 12,900 employees in 29 states.
Howard Wong, a broker and vice president of broker Jones Lang LaSalle's Retail Group in Downtown LA, says the closures will have a minimal effect on the Southland's retail market because Heilig-Meyers stores are not free-standing ones in prime home-furnishing locations.
In Southern California, the chain has stores in Montebello, Culver City, San Fernando, North Hollywood, Canoga Park, Redondo Beach and many Inland Empire and Central Valley cities, Wong notes. Heilig-Meyers customers are typically middle-income people with mid-level tastes when it comes to furniture, he adds.
"The vacated stores, typically with 15,000 to 25,000 sf, will be rented sooner or later, depending on the market and location," Wong tells GlobeSt.com. "There's always demand for space of this kind for discount stores, appliance stores, etc. The furniture business has experienced ups and downs as tastes change, with stores like IKEA appealing to many of today's trend-seekers."
Jack Kyser, chief economist of the nonprofit Los Angeles Economic Development Corp., says the Heilig-Meyers closing announcement was not surprising, in that the chain never really made its presence felt in the West.
"Like many companies, they didn't realize what a competitive market California is," says Kyser, whose LA-based group supplies research and plays a key role in attracting and maintaining businesses. "Wal-Mart, Target and IKEA compete strongly for young furniture buyers," he adds, which makes it hard for newcomers to succeed.
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