Trader Joe's

[bchris02]

The key is not only seeing emerging trends but also timing them right. For instance, many of the dot-coms in the late 1990s were about 10 years too early to the game. People weren't ready to fully jump onto the ecommerce bandwagon at that time so they went under. Likewise Microsoft (still a strong company) came too late to the game with the Zune and it failed. It looks like the Surface might suffer a similar fate. It will be the same with retail that moves downtown. If it's destination retail it could do well even today, but if its neighborhood retail, it will be all about when there is enough business to keep it afloat.

[Plutonic Panda]

Yes. That's how it works in real cities. You want to be "ahead" as much as possible and select up and coming nabes. Not discounting Urbanized's incredibly detailed explanation, of course.

Agreed

[soonerguru]

The key is not only seeing emerging trends but also timing them right. For instance, many of the dot-coms in the late 1990s were about 10 years too early to the game. People weren't ready to fully jump onto the ecommerce bandwagon at that time so they went under. Likewise Microsoft (still a strong company) came too late to the game with the Zune and it failed. It looks like the Surface might suffer a similar fate. It will be the same with retail that moves downtown. If it's destination retail it could do well even today, but if its neighborhood retail, it will be all about when there is enough business to keep it afloat.

Good post. As for the dotcoms, the problem was not that people weren't ready to embrace e-commerce. It was that so many of the companies immediately went public (so founders could cash in). Many of the failing dotcoms failed because they couldn't meet Wall Street profit projections -- when they actually would have been profitable as private companies.

[BoulderSooner]

Good post. As for the dotcoms, the problem was not that people weren't ready to embrace e-commerce. It was that so many of the companies immediately went public (so founders could cash in). Many of the failing dotcoms failed because they couldn't meet Wall Street profit projections -- when they actually would have been profitable as private companies.

Strongly disagree. About why the companies failed

[ctchandler]

Urbanized,
My son worked at Builder's Square and I also remember the Lowes on MacArthur. And living in the Edmond area, I spent a few bucks at Payless Cashways as well. I thought I was the only one that knew about those places.
C. T.

When I was maybe 18 or 19 I worked at Builders Square (RIP) and my dad encouraged me to interview with a friend of his who was general manager for the soon-to-open Lowe's near NW 10th and MacArthur. Wait...don't remember that one? Probably not, because it only lasted a very short while. Anyway, the GM wanted to hire me, and pointed out that Lowe's was (at the time...maybe still?) the largest home improvement center company in the world. I was unimpressed. Because...it was an old-school lumberyard with a hardware store slapped on the front, much like Payless Cashways (RIP), if you remember them.

[soonerguru]

Strongly disagree. About why the companies failed

Shocker. Well, you're wrong.

[Urbanized]

Urbanized,
My son worked at Builder's Square and I also remember the Lowes on MacArthur. And living in the Edmond area, I spent a few bucks at Payless Cashways as well. I thought I was the only one that knew about those places.
C. T.

Haha I think I might know your son, if he has the same last name. One of my very good friends at the time, if so. I've even been to your house, jumping on a trampoline straight into the swimming pool..? Electric windmill out back? He and I worked together in more than one place, actually. I've seen your name before and wondered if there was a relation.

Also, when I first moved to OKC (actually Edmond) in 1986 the very first place I worked was that Payless Cashways at 33rd and Broadway. The stark contrast between there and Builders Square informed my understanding that Payless and Lowe's at the time were outdated models. Lowe's adapted, Payless did not, and we see which one survives to this day.

[tomokc]

^^^ Cool post!

[DoctorTaco]

Risk is a carefully controlled tool, they are accountable to investors who want a return tomorrow, not 5 years from now. Thus, they only go for the safe option guaranteed by a formula to be profitable.

Sums up just about every industry and its line of thinking except the oil industry.

With the exception of Aubrey McClendon, this is exactly the line of thinking in the oil industry as well.

[ctchandler]

Urbanized,
Guilty as charged!
C. T.

Haha I think I might know your son, if he has the same last name. One of my very good friends at the time, if so. I've even been to your house, jumping on a trampoline straight into the swimming pool..? Electric windmill out back? He and I worked together in more than one place, actually. I've seen your name before and wondered if there was a relation.

Also, when I first moved to OKC (actually Edmond) in 1986 the very first place I worked was that Payless Cashways at 33rd and Broadway. The stark contrast between there and Builders Square informed my understanding that Payless and Lowe's at the time were outdated models. Lowe's adapted, Payless did not, and we see which one survives to this day.

[shawnw]

Urbanized,

Thanks for the awesome, detailed posts. Those help. Don't take mine as being disrespectful of your expertise or somehow doubtful of what you're telling me based on your experience (I'm a past customer of your establishments and have sent people your way as well). I'm just trying to understand this stuff and have a long way to go, I realize.

Part of what I'm trying to understand is why a TJ couldn't be successful in north midtown, on the edge of HH/MP, where there are a lot of households immediately adjacent to the north, with many more coming online to the south very soon. Also, while completely unscientific, I hear so many people say "I'd live downtown if there were better grocery options", which is a chicken-and-egg scenario (TJ would go in downtown if it had the rooftops, but the potential for rooftops depends on there being a TJ [or other mid-to-large grocery]). At some point we have to break that cycle right?

[Urbanized]

C.T., glad to make the association! Tell him hi for me. I think he still sees my dad from time to time. Would love to get together with him and play golf or something. Seriously, one of my very closest friends for a good number of years. We just ended up going different ways, job-wise, and we all know how much of an influence that tends to have on who you spend time with.

[Pete]

Keep in mind Trader Joe's is not a developer of properties... They are tenants, I believe almost exclusively.

So they look for existing buildings or new shopping centers -- and they are usually not free-standing.

They also need a bunch of parking as their stores are almost always crowded.


I could see them going into some of the older Homeland locations, as that is typically about their size of store. A lot of their locations in California are where old grocery stores used to reside.

The Homeland on Classen would be a perfect location for them, even if the go into NH Plaza.

[CuatrodeMayo]

The Homeland on Classen would be a perfect location for them.

I would die with happiness if that ever happened. That HL sucks, sucks, sucks. It is the only grocery store between my office and home but I'll deliberately drive to a store a mile out of my way to avoid it.

[Pete]

TJ's has gone into a ton of former Safeway's here in California, as their old model from the 60's and 70's is about their perfect size. I'm sure part of their business model is to go into these old grocery spaces because they are too small for modern full-service grocers and too big for most everything else.

In fact, the one a mile from my house was an old grocery store that first was converted to a Whole Foods, then WF moved down the street because they now want much larger stores.


And BTW, when I found out TJ's was coming in that spot by me and that WF was moving on, I was excited to the point of embarrassment. And it's proven to be everything I hoped, because most of their locations here are crazy crowded to the point you have to really psych yourself up to deal with it all... But the one by me has great parking and a good layout, which means unless I go at peak times, it's easy just to breeze in and out of there. Now, I shop there at least once a week, often just picking up a few items.

I've never felt so strongly about a retailer before because there is simply nothing else like it and they do an amazing job.

[Urbanized]

shawnw, appreciate your patronage, though thankfully someone who actually knows what they're doing took over the store operation! We learned a lot through trial and error; school of hard knocks. I do believe I now have a pretty good understanding of the downtown market, though. And of course, our operation bore little resemblance to the well-oiled machines that are national chain retailers, so I am certainly no expert there. But I do understand now why they make decisions the way they do.

I also learned a lot about this over the years from friends/colleagues in the commercial real estate industry. Most notably, when I was director of Automobile Alley and I just could not understand why I couldn't pick up the phone and call places like Restoration Hardware or Crate and Barrel and get them to open a location along Broadway. I mean, we had all of this great building stock, all originally designed for a different type of retail of course, but still great retail space along a major corridor in an emerging downtown. I mean, I knew it was an emerging downtown... Yes, I was a bit naive, but I think that as actually a bit of a benefit when in a position like that. You need to honestly believe that the sky is the limit for the area you represent. I see much of the same belief and emotion on this board 15 and more years later, as the seeds we planted in the nineties are now bearing some serious fruit. Everyone - much as I did then - wants to know why the heck we don't have these things now...NOW!!

But I very much recall conversations with - among others - Nick Preftakes, who was very involved in AA at the time as an investor, a developer and as a board member. He had extensive experience leasing commercial and retail space throughout OKC, and when he arrived in the district I thought "sweet! Here we go. Finally someone who knows what they are doing in this regard and who will go get all of these national retailers I am envisioning in the district." But when I discussed it with him, he was at the same time kind but also firm in saying it wouldn't happen for years in AA. "Why?" I asked. "Because retail follows rooftops." He went on to tell me that it would happen someday, but we would have to be patient, and see much more housing in and around the core. He also told me that the first retailers would likely be locals going with their gut. All these years later, I see how right he was. Not necessarily what I hoped for, but correct nonetheless.

So, not to dampen enthusiasm, I'm only here to temper it a bit. We're not in a sprint. It's more like a marathon. It took half a century to destroy most of what WAS a great downtown. Will it take half a century to bring it back? Not sure, but I don't think so. Let's call MAPS the starting point, though there were individuals working hard for downtown before that. Well, there is 20 years of it already gone by at this point. I do think we're reaching a tipping point though, if we haven't already reached it. I would be surprised at this point of downtown didn't feel mostly if not fully redeemed in another 20, at the rate we're going. Maybe sooner. Which means that grocery store will be here in less time than that. Will it be two years? Five years? Ten? I don't know. But it WILL arrive.

And the points that you make regarding proximity to other great neighborhoods are salient. BUT, I think that the gravitational pull of those neighborhoods also make the case for the first new grocery store being not far from where we already have stores, that is, the Homeland at 18th and Classen, or the stores around 23rd and Penn. Maybe Midtown? Uptown? Who knows. Will that be good enough for those who want one downtown? Again, who knows. But it WILL happen. Just maybe not as quickly as we all here (including the wide-eyed wet-behind-the-ears Urbanized of 15-18 years ago) might want it to. That's the truth. I think we all just need to settle in and enjoy the ride, bumps and all.

[Urbanized]

So while I was composing all of that malarky, I see where Pete and Cuatro are talking about the very Homeland I referenced. Truly, that is the best location for a grocery store near downtown at present. Great access to Gatewood, Classen Ten Penn, Plaza, HH, Mesta, Military Park, Putnam Heights, Jeff Park, Central Park, Edgemere, Paseo, and Midtown/Downtown. The closest thing to a no-brainer that exists. Which only shows that Homeland has no brains. It's almost a shame that it hasn't already gone the way of the stores west and north of there, so that another operator could come in and be a hero. The only problem is that there is always the chance that nobody does, anytime soon, making the situation even worse.

[Pete]

BTW, TJ's generates more sales per square foot than any other grocer -- almost twice that of Whole Foods.

Just shows you how amazing they are because they do this with much lower prices than Whole Foods.


I've often thought that if I ever moved back to OKC, that Trader Joe's would be the one retailer I'd miss the most. It's truly one of kind, which is a rare thing these days.

[bchris02]

So while I was composing all of that malarky, I see where Pete and Cuatro are talking about the very Homeland I referenced. Truly, that is the best location for a grocery store near downtown at present. Great access to Gatewood, Classen Ten Penn, Plaza, HH, Mesta, Military Park, Putnam Heights, Jeff Park, Central Park, Edgemere, Paseo, and Midtown/Downtown. The closest thing to a no-brainer that exists. Which only shows that Homeland has no brains. It's almost a shame that it hasn't already gone the way of the stores west and north of there, so that another operator could come in and be a hero. The only problem is that there is always the chance that nobody does, anytime soon, making the situation even worse.

Yeah in OKC, the most plausible situation if a Homeland (or any grocery) closes is that it will just sit empty. Wal-Mart and Buy for Less already have stores close to there. Crest isn't that far away either. Sprouts would be the most likely candidate but I don't know if they would go to that location. The best option is that Reasor's or some national player buys up Homeland. That is a pie in the sky wish but would transform the grocery market in OKC.

[shawnw]

So while I was composing all of that malarky, I see where Pete and Cuatro are talking about the very Homeland I referenced. Truly, that is the best location for a grocery store near downtown at present. Great access to Gatewood, Classen Ten Penn, Plaza, HH, Mesta, Military Park, Putnam Heights, Jeff Park, Central Park, Edgemere, Paseo, and Midtown/Downtown. The closest thing to a no-brainer that exists. Which only shows that Homeland has no brains. It's almost a shame that it hasn't already gone the way of the stores west and north of there, so that another operator could come in and be a hero. The only problem is that there is always the chance that nobody does, anytime soon, making the situation even worse.

Agree it is a great grocery location and I shop there often. I know it's not a great store as Homelands go, but it has most of what I need for daily shopping. However, I wouldn't mind at all if TJ's came in and bought it out...

[Rover]

The lesson IS that more of you on this board that are so convinced of the opportunities need to strike out and create them, It isn't the role the corps play. Go out and put your ideas to the test. THIS will make downtown more special anyway. Lots of local businesses that will take a chance to create something special. Just understand what the risks really are.

[Spartan]

Yes, several of these chains (like McDonald's) are famous for their research and analytics. Competitors merely piggy-back off them all the time.

And as I mentioned, it's surprisingly easy to get a pretty good idea of what a retailer or restaurant is doing in terms of revenues. And once you know that, you pretty much know how much your particular business will do very nearby.


Similarly, I used to be a consultant for Paramount Pictures and it's the same type of philosophy for movie sequels. They can almost guarantee making at least 75% of the revenues as the previous movie, not matter how good or bad it may be. It's why there are so darn many sequels and sit-com spinoffs; a complete new movie or show is a very expensive crapshoot.

And it's the same when it comes to adapting comic books, old TV shows or even novels.... The built-in name recognition is money in the bank in the entertainment biz.


All this is not only important from a revenue-generation perspective, but also the ability to get financing. You can go in with some sort of basis for your projections which results in a much great likelihood of getting a loan or investors.

I was at a real estate conference recently where we had a fascinating keynote speaker from the McDonald's Corporation who said that McDonald's is NOT a hamburger company, but rather the world's largest real estate company that just produces burgers to help their tenants pay the rent.

Just for added emphasis.

[Spartan]

BTW, TJ's generates more sales per square foot than any other grocer -- almost twice that of Whole Foods.

Just shows you how amazing they are because they do this with much lower prices than Whole Foods.


I've often thought that if I ever moved back to OKC, that Trader Joe's would be the one retailer I'd miss the most. It's truly one of kind, which is a rare thing these days.

On average $2,000 per square foot, right? I think Target is well-known as the benchmark for phenomenal and they're $300, just to give you an idea.

[bluedogok]

I was at a real estate conference recently where we had a fascinating keynote speaker from the McDonald's Corporation who said that McDonald's is NOT a hamburger company, but rather the world's largest real estate company that just produces burgers to help their tenants pay the rent.

Just for added emphasis.

IIRC that was a line from Harry Sonneborn in a book about their expansion a long, long time ago.

[tomokc]

One of the car companies - GM, I believe - used to describe the importance of their financing unit (GMAC) to profits. To paraphrase, "GM isn't an automobile manufacturer that offers financing, they're a financing institution that makes cars."