Buying The Whole Store

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Ecommerce companies are selling, leasing, hiring and IPOing like never before and the common word on the street is - brick and mortar retail is slowly inching towards its doom. 

The truth is as far from it, as Monday morning is from Friday evening. 

Time To Go Real Estate Shopping

To the untrained eye, it may seem futile for brands to buy stores rather than lease in a time of decreased store footprints and rising e-commerce transactions. 

However, per this Forbes story, there are situations in which it is not only viable but advantageous to own retail real estate.

That's because if a brand is going to be around in the long-term and has the capital, then investing in real estate makes sound financial sense. 

There are savings on rent, increased fixed revenue from leases, and potentially big gains on the property over time.

More Than A Theory

🛒 IKEA has started writing out some big checks for real estate purchases. It recently bought the Topshop location in London on the intersection of Oxford Street and Regent Street for USD523 million. 

🛒 Earlier this year Uniqlo had bought its New York City flagship store for USD160 million.

🛒 In 2020, Chanel bought its London flagship store on Bond Street for USD400 million - 30% more than the asking price.

The Way Ahead

Emerging brands will stay away from the trend as the capital investment for a real estate purchase is incredibly high, while more prominent brands will likely continue to lease small footprint locations, especially in Tier II and III cities. 

But established brands with deep pockets know that there is a clear advantage in acquiring retail property, and over and above the financial gains, retail properties are a big value-add for the brand.