May 19, 2024
It's a fine building on a visible corner of the road and I think it has the potential to be much more than it is now.
So when I saw a “pending” sign recently, I was curious to see what kind of business would go in there.
I won't say the name of the location, broker, or building owner because that's not the real story.
But what about future tenants? It turned out that the tenant was a smoke shop.
Another smoke shop.
Basically, if you can smoke and snack, there seems to be a market for it at the moment. Likewise, if you can wash your car there, fill it up, or order through a drive-thru, you'll find a retail concept on the other side that's looking to grow in Sioux Falls.
I think this is less a reflection of the city itself as a market than it is a reflection of the state of retail and, by extension, the state of consumers.
The ICSC's annual conference begins this weekend. Despite its acronym, ICSC is legally the International Council of Shopping Centers. Our longtime readers may remember that I was a longtime participant in the National Retail Report. I considered participating again this year, but ultimately decided against it because I wasn't sure how many deals I actually needed to share with you guys there.
We have ongoing retail deals and hope we can still share some good ones in the next week or so, but it will certainly take time and there are fewer concepts that are expanding. It seems that.
I'll be covering the retail market in more detail in Monday's article, but I think it's important to recognize that the retail industry reflects consumers rather than creating them.
So when we hear about smoke shops, we think of the rise in vaping, especially among young people. When we hear about the growth of gas stations, convenience stores, and car washes, we are reminded that these are businesses that can withstand rising land, construction, and financing costs because of what they sell.
The same goes for quick service restaurants. These concepts benefit from a market where large-scale restaurants are expensive to run, from ingredients to labor, and from consumers who appear increasingly price-conscious. Another trend I'm seeing that clearly reflects pent-up demand post-pandemic is indoor entertainment. Stay tuned for more details on who will be expanding their operations in the coming weeks.
What hasn't grown much? Think about apparel. Remember the multiple boutique closures we've seen in our markets recently? Look to Walmart and Amazon as emerging players in apparel, especially women's fashion. This is because they are looking for ways to offer attractive products that look luxurious at low prices.
And don't miss the message behind McDonald's recently announced $5 meal deals coming in June. The chain will sell four items for $5: a McDouble or McChicken sandwich, small fries, a small soft drink and four pieces of Chicken McNuggets. His is one of several restaurants the company is trying to attract customers by lowering prices. And I know there's a reason they're doing it.
One of the reasons I enjoy covering retail is because the industry provides insight into the hearts and minds of consumers. And the message I've gotten from the last few weeks of reporting is clear. Consumers are moving away in search of value and perhaps struggling to cope with it all.
Another theme is one I've covered before, but it bears repeating. When it comes to new business growth, Sioux Falls isn't the only city competing. National retailers are increasingly looking beyond Sioux Falls' suburban communities to other South Dakota cities such as Aberdeen, Brookings, Mitchell and Yankton. We're starting to see national names opening there, attracted by the more affordable buildings and the population size that can support them. And again, these are value-oriented players like Five Below, the Marshalls, and TJ Maxx.
There is a lot of speculation about when and how deep the recession will be. I don't think the retail industry is waving red flags, but I'm sure there are red flags coming.
