Are Mid-Level Retailers In Trouble?

According to Jason Baker, principal with Houston-based retail brokerage Baker Katz, mid-level retailers that don’t offer a unique or private label product are going to get hurt more and more in the near future.

by Natalie Dolce

From Macy’s and JCPenney’s to Payless, without a doubt, it is clear there is a “shake up” underway and very few are bulletproof. That is according to Jason Baker, principal with Houston-based retail brokerage Baker Katz.

He recently told GlobeSt.com that the strong will get stronger and the weak will get weaker—or close their doors altogether. “Mid-level retailers that don’t offer a unique or private label product—like Kohl’s and JCPenney—are going to get hurt more and more in the near future. Kohl’s is at least making an attempt to adjust by rightsizing their stores, but it’s unclear if that will really address the issues they’re facing.”

And as a result of these trends, he adds, “everyone is scratching their heads as it relates to retail and the future of the industry. However, in markets like Houston, retail occupancy and total retail square footage are both at all time highs.”

As for what the future holds? “In spite of some of the negative announcements among retailers, the forecast is really pretty positive from my perspective,” he explains. “While online is and will continue to be a threat, you have to look at the other side of that equation as well. Amazon recently revealed another 1 million-square-foot distribution center in the Houston market—which means thousands of jobs and more consumer confidence and spending.”

Meanwhile, he says, online retailers are continuing to move to bricks-and-sticks, establishing, at a minimum, a showroom-type concept to complete the customer experience they’re offering online.