Moving sale
October 20, 2010 4:01 PM Subscribe
Why do big box stores move, build brand new box stores, the exact same size, in the same neighborhood, what seems like every couple of years?
I could almost see the new big box from the old location. Same size, same description, just a quarter mile or so down the road. I have observed this in a few different areas.
I could almost see the new big box from the old location. Same size, same description, just a quarter mile or so down the road. I have observed this in a few different areas.
According to this article, it's mainly because it's so much more valuable to have a bigger, newer store. They might be implying tax breaks and the ability to squeeze your competitors are factors in moving "down the road" too.
posted by Several Unnamed Sources at 4:29 PM on October 20, 2010
posted by Several Unnamed Sources at 4:29 PM on October 20, 2010
Might have something to do with branding, too. All the Targets in my area recently expanded their respective food sections to be much more in line with something you'd see in a supermarket. Building new stores might be something they do if some new part of the brand statement necessitates it.
posted by andrewcilento at 4:43 PM on October 20, 2010
posted by andrewcilento at 4:43 PM on October 20, 2010
Maybe the terms of the lease are so much better that it is worth the move.
posted by k8t at 4:47 PM on October 20, 2010
posted by k8t at 4:47 PM on October 20, 2010
Moving instead of retrofitting is also attractive in terms of downtime; if they set up a new store they can keep the old one open right up until the new one opens. If the Target you usually go to is torn up for months of remodelling, even if they spend the extra time and money to keep it kinda semi-functionally open while they work on it, you might change your habits and start going Walmart instead.
posted by contraption at 5:51 PM on October 20, 2010 [1 favorite]
posted by contraption at 5:51 PM on October 20, 2010 [1 favorite]
Exactly. Retail type buildings really aren't all that expensive to build, and when you add in other factors like downtime, it becomes an easy choice to just build a new place exactly how you want it. And then you can sell the old building to some second tier retailer.
And big retail does a LOT of traffic and demographic research. If they found that a site down the street is suddenly The Place To Be, they might pull the trigger on a move they were just considering.
(I once worked in a project like this. Retail store grossed $1.5 mill a year. Rebuilding versus renovating was about the same cost, about a million. But the renovation would cost an added two months of down time. That's adding 20% right to the top of your cost.)
posted by gjc at 6:34 PM on October 20, 2010
And big retail does a LOT of traffic and demographic research. If they found that a site down the street is suddenly The Place To Be, they might pull the trigger on a move they were just considering.
(I once worked in a project like this. Retail store grossed $1.5 mill a year. Rebuilding versus renovating was about the same cost, about a million. But the renovation would cost an added two months of down time. That's adding 20% right to the top of your cost.)
posted by gjc at 6:34 PM on October 20, 2010
Sometimes a quarter mile down the road can make a real difference, for example if the old location was only easily accessible from highway traffic in one direction, or if it required a left turn that was hellacious during busy times, or maybe the new lot is nearer to more food/beverage-type establishments so as to draw in people that were just there for a quick bite but have some spare time, or maybe it's visible now to cars driving on a major thoroughfare, etc.
posted by Rhomboid at 10:55 PM on October 20, 2010
posted by Rhomboid at 10:55 PM on October 20, 2010
In West Virginia, many, MANY businesses are given HUGE tax breaks to open. The examples I can think of from personal experience are Wal-Mart and Lowes. Generally, the state provides some form of a land grant + X years of tax exemption, whether from sales/employee/or some combination.
I can't remember the exact year, but it was the late 90's before any Wal-Mart in WV actually had to fund 100% of their own land or building, and I believe their exemption from a large percentage of taxes was also something like 10 years.
In our fair town, Lowes has moved about 5 times in 15 years. There are now two locations. I happen to know absolutely that Lowes gets (got, as recently as 2003) a 4 (I think 4, it might be 5, it's been a while since I did the research) year break on most taxes to the state: revenue, employee, etc. The way the original agreement was written, it was something like "4 years per store", so basically, they'd be in operation for right about 4 years, then move---taking advantage of land-grant/construction funds to build a new store, abandon an old one, and get more years of exemption. At one point, one moved within like 2.5 years, so the new store was actually exempt for like 6.5.
So around here, that's why.
posted by TomMelee at 5:20 AM on October 21, 2010
I can't remember the exact year, but it was the late 90's before any Wal-Mart in WV actually had to fund 100% of their own land or building, and I believe their exemption from a large percentage of taxes was also something like 10 years.
In our fair town, Lowes has moved about 5 times in 15 years. There are now two locations. I happen to know absolutely that Lowes gets (got, as recently as 2003) a 4 (I think 4, it might be 5, it's been a while since I did the research) year break on most taxes to the state: revenue, employee, etc. The way the original agreement was written, it was something like "4 years per store", so basically, they'd be in operation for right about 4 years, then move---taking advantage of land-grant/construction funds to build a new store, abandon an old one, and get more years of exemption. At one point, one moved within like 2.5 years, so the new store was actually exempt for like 6.5.
So around here, that's why.
posted by TomMelee at 5:20 AM on October 21, 2010
In our fair town, Lowes has moved about 5 times in 15 years.
Wow. This must be very regional, since nothing seems to move around here in the Northeast. The whole question is actually a bit puzzling. Every big box store I know in the surrounding 20 miles is in the same location it opened in, for the last five or ten years. Maybe because there are less buildable empty lots? The Walmart here had to spend a fortune landscaping their location to convert it from a hillside, and it's still not very good.
posted by smackfu at 6:08 AM on October 21, 2010
Wow. This must be very regional, since nothing seems to move around here in the Northeast. The whole question is actually a bit puzzling. Every big box store I know in the surrounding 20 miles is in the same location it opened in, for the last five or ten years. Maybe because there are less buildable empty lots? The Walmart here had to spend a fortune landscaping their location to convert it from a hillside, and it's still not very good.
posted by smackfu at 6:08 AM on October 21, 2010
One location went from where it was (less than about 3 years old) to a little bit away where it stayed for about 3 years, then back where it started. The bonus side effect of an armada of Lowes' is that we now have several 84 Lumber's in their old locations and a few locally owned alternatives at others.
posted by TomMelee at 7:57 AM on October 21, 2010
posted by TomMelee at 7:57 AM on October 21, 2010
Response by poster: Interesting answers folks, thank you. The store in this case was Home Depot. My local branch didn't have enough of what I needed but the store an hour away did. Said store was no longer there and I spent 45 minuets driving around before finding the new location a few stop lights down the strip. American consumerism at its finest I guess. And smackfu, I'm from the Northeast and have observed this phenomenon in several New England states, so I found your answer surprising.
posted by woodjockey at 3:54 PM on October 21, 2010
posted by woodjockey at 3:54 PM on October 21, 2010
This thread is closed to new comments.
It either case, retailers typically plan on remodeling their stores every so often. I think 5-10 years is typical and they might find it cheaper to move into a new space than to retrofit an existing store. At least, that is probably one factor in the equation. The real answer is probably a combination of the possibilities I've listed and some other stuff I don't know about.
posted by VTX at 4:26 PM on October 20, 2010