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A LEADING Shark Tank entrepreneur insists the US economy is experiencing a “retail renaissance” despite mass closures and layoffs across the sector, forecasting a major boom over the next few years.
In an exclusive sit-down interview with The U.S. Sun, Croatian-born investor Robert Herjavec said retail companies could be successful if they sold high-quality products and offered shoppers a destination experience.
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Using the examples of Canada Goose and Lululemon, Herjavec said companies need to build a trustworthy brand in order to cut through with customers.
“We’re going through a renaissance of retail,” Herjavec told The U.S. Sun.
“What I really believe is that people want experiences. I will drive out of my way to go to a Lululemon store, so it’s different from what it was where you could simply open up a bunch of retail stores to create a brand.”
I think today you have to have a brand, you have to be a destination
Robert Herjavec
“Canada Goose opened up retail in order to support their online presence, so it’s a different strategy, but I think you’re going to see a lot of growth in retail.”
The comments come amid a resurgence in demand for shopping centers with diverse offerings like restaurants, fitness operators, and medical facilities.
For the first time in 20 years, demand for retail space in shopping centers outstrips supply, with tenants offering recreational experiences like ax throwing or pickleball doing much better than traditional retailers like bookstores and apparel brands.
But Herjavec acknowledged the retail sector was suffering, saying it had become harder for businesses to operate at scale.
RETAIL DESTRUCTION
The comments come following a flood of closures in the retail sector, with experts warning of a so-called “retail apocalypse” amid high inflation and economic uncertainty.
Hundreds of stores have closed in recent years, sparking rising public concern for pharmaceutical, food, and pharmacy deserts.
According to Coresight Research, major retailers have announced 6,189 store closures so far this year, already outpacing last year’s total of 5,553.
Major retailers are suffering as the sector grapples with changing consumer behavior, the rise of e-commerce, and inflationary pressures sparked by the pandemic.
With a raft of chains, including Walmart, winding back their retail footprint, experts say retailers are in financial strife due to increased borrowing costs and consumers tightening their wallets amid ongoing cost of living pressures.
Some companies’ rapid expansion during Covid — like Dollar Tree’s $8.5 billion acquisition of Family Dollar – is now coming back to bite them.
CVS recently dumped its CEO Karen Lynch, replaced her with company veteran David Joyner, and withdrew its profit forecast.
The pharmacy giant announced laying off nearly 3000 staff and closing about 300 stores.
Department stores are also struggling, with Macy’s announcing the closure of about 150 underperforming stores, blaming competition from big box retailers and a shift to online shopping.
Discount retailer Big Lots has also announced the closure of more than 340 of its 1,400 shops across the country after it filed for Chapter 11 bankruptcy in September, while Family Dollar is planning to shutter at least 600 stores this year.
Herjavec told The U.S. Sun that drug stores, including CVS, were “really scaling back” and warned companies needed to focus on operational efficiency when operating on a mass scale.
He noted that Amazon was an operational business at its core, enabling them to “sell anything” because they have the infrastructure.
“I think it’s hard to operate at scale in retail, and I think when you get to a certain size, your operational efficiency becomes really, really important,” Herjavec said.
COMMUNITIES TO ‘DIE’
The comments come after billionaire investor Mark Cuban warned American communities would “die” if policymakers and business owners didn’t act to prevent further closures of brick-and-mortar stores.
In an exclusive interview with The U.S. Sun, Cuban, the Shark Tank judge and minority Dallas Mavericks owner, said vulnerable people in communities across the country are being impacted by the closure of brick-and-mortar stores.
Calling it “a big problem to solve,” the entrepreneur said all levels of government should work with entrepreneurs to prevent a growing number of food and pharmaceutical deserts.
“If you just say, just let the market take care of it, we see what happens, communities die,” Cuban warned.
“And so we have to be open-minded. The way I look at it personally, there’s a problem to solve.”
