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Retail Owners Must Be Flexible

LOS ANGELES—As retail evolves, retail owners need to have the flexibility to cater to changing market demands, Westwood Financial's Randy Banchik and Joe Dykstra tell GlobeSt.com.

By Carrie Rossenfeld | carrierossenfeld | Updated on May 22, 2017
Dykstra: “The mainstream headlines are that e-commerce is taking over the retail world and brick-and-mortar stores are antiquated and dead. That can’t be further from the truth.”

LOS ANGELES—As retail evolves, retail owners need to have the flexibility to cater to changing market demands, Westwood Financial‘s co-CEOs Randy Banchik and Joe Dykstra tell GlobeSt.com. The firm’s recent restructuring provides the flexibility and capital to meet these changing demands, allowing the company to cater to the shifting needs of its tenants. We spoke with Banchik and Dykstra about how flexibility comes into play in the dynamic retail environment and how financial considerations are also a concern.

GlobeSt.com: Why does flexibility matter for retail owners?

Dykstra: Retailers are searching for the right balance. The right store footprint and the right number of stores in a market supported by a home delivery option.  As retailers search for the optimum store size, they are ideally looking for an owner that can provide the flexibility for them to grow or shrink store sizes. Some properties and stores are harder to reshape than others.  It’s not always practical to be flexible because the economics of relocations and changing store sizes is economically challenging, but where owners can be flexible, it is a valuable tool for competing for new tenants and retaining existing ones in an evolving marketplace.

Banchik: We’re clearly in a rapidly evolving retail environment with e-commerce and brick-and-mortar retail. All tenants are assessing not only their location, but also the best prototypes and formats to deliver their goods and services to their clientele. What we’re definitely seeing in the grocery space as grocers share some of their thought processes is as they approach the adaptation of their stores, they need to partner with their landlords to meet those prototypical requirements.

Banchik: “What we’re definitely seeing in the grocery space as grocers share some of their thought processes is as they approach the adaptation of their stores, they need to partner with their landlords to meet those prototypical requirements.”

Dykstra: The mainstream headlines are that e-commerce is taking over the retail world and brick-and-mortar stores are antiquated and dead.  That can’t be further from the truth.  According to the US Census Bureau, 90-percent of retail sales are NOT done online and over 90-percent of pure online e-retailers lose money, hardly a sign of an apocalypse. It’s true that there have been many high profile retail failures with thousands of more store closings to follow.  E-commerce clearly had a serious impact, but just as important to the failures was traditional retails entrenchment in the past, overleveraged balance sheets,  lack of imagination and poor execution – K-Mart, Sears, JC Penney and many others have been  a “dead man walking” for years and wouldn’t have survived without the internet.  The fact is, the off price apparel retailers – Ross, TJ Maxx, and Nordstrom Rack are thriving.  By my count there are over 70 retailers that have intentions of opening thousands of stores over the next few years and even Amazon is rumored to be planning an expansive retail store network. The weak will die and the strong will get stronger.

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