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VOL. 126 | NO. 66 | Tuesday, April 05, 2011

Brand Strategy

Host of national retailers making Memphis market debut

By Sarah Baker

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It was two years ago at a Five Guys Burgers and Fries franchisee conference when license rights to Memphis were up for grabs.

The Urban Outfitters store at 2151 Central Ave. in the Cooper-Young District is one of a number of new retailers coming to Memphis. Others include Chipotle and Five Guys Burgers and Fries.
(Photo: Lance Murphey)

Mark Moseley, director of franchising for the Lorton, Va.-based burger chain and friend of FedEx Corp. founder Fred Smith, approached Alabama franchisee Seth Hargett about putting together a package and asked him if he wanted Memphis.

“I said, ‘Sure, I’ll take it,’” Hargett said. “A lot of people were trying to say Memphis is depressed or things like that, but I don’t see that, I see a lot of opportunity for Five Guys.”

Like many other national retailers, Five Guys seeks to penetrate a town’s best trade areas, focused on location, high visibility and daytime population.

Leah Fyfe Stokes, at the time a broker with CB Richard Ellis Memphis, was the first person Hargett worked with and a true “ambassador” for the city.

“Leah said immediately, Poplar and Perkins, but everything’s pretty much taken there,” Hargett said. “So I said, ‘Where’s the next place?’ Well, that just happened to be Primacy Place.”

In March, the 38-year-old president of Jubilee Restaurant Group LLC signed the first of 10 leases in the greater Memphis area, with franchise rights from Madison County, Tenn., to Crittenden County, Ark. Each store is expected to employ up to 60 associates and bring in $1.4 million sales revenue annually.

Five Guys has 750-plus locations in more than 40 states and four Canadian provinces. This will be the company’s 19th location in Tennessee.

It’s a trend that’s all too familiar for Memphis, which is now seeing a handful of national retailers enter the market. For franchisees, it boils down to interest, while corporate offices have more defined holding patterns, said Scott Barton, senior vice president of retail services with CBRE.

“At the end of the day, retailers are still primarily concerned with location and growing their brand,” Barton said. “Oftentimes, Nashville will have a retail concept before Memphis.”

That’s because national retailers look at all aspects of the real estate decision before pulling the trigger, from income levels to rental rates. Including city and county, Memphis’ annual property taxes are $7.21 per $100 of appraised value, while Nashville’s total is a mere $4.13.

In conjunction with demographics, retailers are also analyzing online sales and social media to give their customers want they want. Two weeks ago, Philadelphia-based Urban Outfitters opened its doors at 2151 Central Ave. to a loyal following that had previously only been able to shop online or at the company’s upscale sister operation, Anthropologie, in Saddle Creek.

While many merchandisers aren’t willing to go beyond the traditional mall or lifestyle center, Urban Outfitters often chooses standalone buildings and retrofits the space for its needs. The tenant approached Charlie Ryan, president of the entity that owns the Cooper-Young building, with that specific locale in mind.

“I was surprised of how knowledgeable they were of the market – they knew Poplar Plaza, they knew all these places,” Ryan said. “It’s quite a complement to Cooper-Young.”

It’s also natural for retailers to enter the state’s center in the beginning stages and then expand their markets outward, Barton said. Just look at commercial real estate development company Greer Cos. – the largest franchisee of Cheddar’s Casual Café – which plans to open an 8,600-square-foot store in Centennial Commons by this fall.

The Lexington, Ky.-based company owns more than 20 locations in Tennessee, North Carolina, Kentucky, Indiana and West Virginia. This will be the casual American dining chain’s first restaurant in the Memphis area and seventh in the state, following smaller markets like Cookeville and Kingsport.

“Our concept is pretty mainstream; we don’t have to do too many studies,” said Lee Greer, project developer. “If certain casual dining restaurants do well there, then we usually blow them away.”

Greer hopes to eventually open a total of three Memphis-area locations, including one in the Wolfchase area. But because of the restaurant’s lot size and parking space, it can be a challenge to find available parcels with the right dynamics.

Along with strategic locations, the timing certainly has to be right. Recent evidence of that can be found with Framingham, Mass.-based Staples Inc.’s 17,945-square-foot lease at Ridgeway Trace.

The office products company has historically limited its locations to smaller markets, like Tupelo, Miss., for instance. But with Office Max and Office Depot having financial difficulties in a sluggish economy, the retailer saw a good opportunity to stake its claim.

“You can have the greatest location in the world, and if the company at the macro level is not prepared to expand, it’s just not going to happen,” Barton said.

Staples – a “junior anchor” in Ridgeway Trace – will join primary anchors Target and Best Buy, plus a host of smaller tenants, many of which are also new to the market, including Genghis Grill, Yogurt Mountain and Chipotle Mexican Grill Inc. Approximately 70,120 people live in the shopping center’s three-mile radius, with an average household income of $67,633.

As the economy improves and retailers become more comfortable with growth, Ryan is bullish on Memphis’ ability to land more and more national names.

“It’s not easy, I’ve been casting the net really far,” he said. “I’m confident Urban will bring others here.”

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