Down to Business: Sears, market hoping deal is win-win
Did you do a double take, as I did, on the news that Whole Foods Market plans to enter the Capital Region by building its first local supermarket inside the Sears store at Colonie Center?
That the Texas-based organic and natural foods grocer would expand here wasn’t what had me scratching my head. What did was that the up-market “Whole Paycheck,” as the company has been dubbed by detractors, would co-locate with the down-market Sears.
But then again, the deal was, as the saying goes, a win-win: Whole Foods avoids headaches in costs and approvals by taking already-existing retail space, and Sears puts some excess square footage to productive use by leasing it out.
Indeed, parent Sears Holdings Corp., which was created with the merger of Sears and Kmart in 2004, has been struggling of late, losing more than $3 billion last year. In response, it has been shedding stores and brands, and last fall began offering subleases at nearly all of its Sears and Kmart locations — including the 293,000-square-foot Sears store at Colonie Center.
And that apparently played right into Whole Foods’ hands. The grocer, according to the site-selection criteria outlined on its website, looks for locations in high-traffic areas (both pedestrian and vehicular) with a population of 200,000 or more within a 20-minute drive, of whom a “large number” are college-educated. It also seeks “abundant parking available for our exclusive use”; easy access from roadways; and excellent visibility.
Check, check, check and check, as far as Colonie Center is concerned. The mall, a retail mecca at the crossroads of major arterials, underwent a massive three-year makeover beginning in 2005 that brought the only L.L. Bean, P.F. Chang’s China Bistro and Cheesecake Factory sites to the market. The makeover added a third level for a movie theater and produced a lively facade facing Wolf Road — except, that is, at the dour southern end of the mall that is owned and anchored by Sears.
But that will change when Whole Foods takes 32,000 square feet on the first floor of the two-story Sears. The grocer likely will put its well-known logo and awning on a new entrance to the supermarket space, much as it did in subleasing at a standalone Sears in Greensboro, N.C., that is sandwiched between two shopping centers. Whole Foods opened last month in 34,000 square feet on the first floor of that two-story Sears, which now displays its own snazzy new facade logo in pictures uploaded to the Web.
Walls separate the two stores and they operate independently — although the Greensboro Sears reportedly adopted Whole Foods’ 8 a.m. opening time. While a Whole Foods spokesman could not be reached for comment on the subleases, one local retail leasing agent said he understood the grocer was working with Sears on plans for nine U.S. locations.
Whole Foods, which took a hit in the recession that slowed expansion, is back on a growth tear that should see as many as 27 new stores this year and 32 next year. (The Colonie Center store is expected in early 2014.) Sales for fiscal 2011, which ended in September, totaled $10.1 billion, up more than $1 billion from fiscal 2010.
The company knows, though, that it faces competition from just about anyone selling food — and that it needs to work hard to overcome the “Whole Paycheck” rap, according to its 2011 annual report. But its stated mission remains this: “We strive to transform food shopping from a chore into a dynamic experience.”