Retailers World in a Down Market

The tenants we foresee occupying our shopping centers in the San Antonio market are well capitalized, service oriented and efficient retailers. The days of the undercapitalized retailer or undercapitalized service provider’s expansion, are on hold for the time being. However, retailers who are well capitalized will be in a position to expand. This group will carry little debt and will be able to continue to purchase inventory either on a cash basis or a revolving credit basis.

Consumer profiles are changing to adjust to the current economic conditions and service has become the most important issue. The consumer in today’s environment has limited funds to purchase product, and not only demands quality and value, but now requires service with the product purchase. This service includes responsiveness, honesty, and purchasing from a reputable establishment. The retailer who provides strong service will continue to enjoy strong sales.

In addition to adjusting to the changing consumer profile, the healthy retailer must operate in an efficient manner so that this retailer can pass on the value to the consumer. Efficiency includes, as examples, opening only during the productive hours (i.e. closing at 7 pm if no sales are enjoyed after 7 pm), outsourcing real estate departments, and operating on a very “lean” basis.

Finally, as fewer retailers exist, we believe the remaining retailers will expand only into the high quality locations. Meaning, retailers will be more vigilant in studying MSA’s to find the “perfect location” that combines the ideal household income, the ideal accessibility and the ideal visibility for their stores. HPI will continue to build and market the centers in these “perfect locations” which these healthy retailers demand.