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Against the grain: These retailers are adding stores in Michigan

Posted By: The Detroit News on March 10, 2023.  For more information, please click here to read the source article.

For more than a decade, a former Kmart store sat vacant in the Utica Park Place shopping center on Hall Road.

The 61,000-square-foot space finally got a new use this past fall with the opening of the department store Gabe’s in October. The store is among two recently opened locations in Michigan as the off-price retailer expands into the state.

“We were excited to have an anchor retailer looking for space, coming to Michigan and willing to take up the volume of the entire space,” said Sean Valentino, director of retail operations for Redico, which owns Utica Park Place. “That was a big win for us. It’s a big win for retail in Michigan as well as anchor stores getting geared up, expanding.”

As retailers close stores amid inflation, the rise in online shopping and evolving consumer buying habits, there is a segment of retail that’s growing in the bricks-and-mortar space. That’s discount stores, where cut-rate prices offer a hedge against the rising cost of goods.

Gabe’s is among discount retailers opening up shop or expanding within Michigan. Another chain, Ross Dress for Less, is expected to open at least two locations this year in Metro Detroit. Burlington is opening new stores in Ann Arbor and Novi. Discount grocer Aldi also recently opened one new store in the state, with three more openings planned within the month.

Discounters lead growth

According to real estate firm JLL, retail tenants absorbed nearly 76 million square feet of space nationally during 2022, the highest level since 2017. It’s twice as much as 2019, when total net absorption was roughly 38 million.

Discounters were among the top retail categories to announce openings along with restaurants, grocery markets and apparel stores, according to the firm’s fourth-quarter report.

“I guess the biggest thing that I’m noticing is the discount retailers either coming into the state and or opening more locations, i.e. Dollar General, for instance,” said Robert Mihelich, a retail property expert at JLL Inc. “They’re in the marketplace looking to open some more stores as well … As far as the retailers go, that seems to be the buzz right now. Everybody’s looking for some sort of deal.”

Among consumers looking for a deal recently were Renee Madonna of Macomb Township and Linda Stone of Clinton Township. The women shopped together at Gabe’s in Utica and filled a shopping cart with items. The store carries products including clothing and accessories, pantry items, home décor and cleaning supplies.

Stone said she spent $80 and picked up bathing suits, a purse, sweaters and other items. Madonna said it doesn’t surprise her that discount retailers are expanding as prices are rising. The most recent Consumer Price Index pegged inflation at an annual rate of 6.4%.

“People are trying to do more discounts than anything else,” said Stone, adding that she prefers to shop at bricks-and-mortar stores because that helps support local jobs.

Andrea Bitely, a spokeswoman for the Michigan Retailers Association, notes the jobs and economic activity that new bricks-and-mortar retail businesses bring to the state.

“If you have local stores, you’re employing local people to work the day shift, work the night shift,” she said.

“Work around the clock at that location. You are also creating an opportunity for additional retail outlets to open around that. … Whether it be a traditional retailers like a JCPenney or a Meijer or a discount retailer, that still gives the opportunity for other businesses, whether they be other restaurants, retail-type places to open up and be around that. People like shopping districts is what it comes down to.”

Communities welcome new retailers

Leigh Guldig, a spokesperson for Gabe’s, said the chain had long considered a move into Michigan. Founded in 1961, the West Virginia-based company has 124 locations in 15 states, now including Michigan. The chain opened its first Michigan location in Flint in September, followed by its store in Utica.

“Michigan is located very close to our northern distribution routes, so it felt like a perfect match for our operations team,” she said. The company hopes to open more Michigan stores, but she added that she couldn’t share expansion plans.

Burlington plans to open a new store in Ann Arbor on March 31 and one in Novi on July 28. Those outlets will bring the company’s number of Michigan stores to 25, according to the company. “Burlington is continuing to expand our footprint across the country and are excited to bring even more stores to Michigan soon,” said Charise Lewis, a spokesperson for the company.

Grocery stores also are expanding in the state. Aldi’s plans three new stores in Sturgis, Berrien County’s Lincoln Township and Genesee County’s Vienna Township. And although it’s not usually considered a discount retailer, Meijer opened two smaller Meijer Grocery store concepts in Lake Orion and Macomb Township in January.

At least two Metro Detroit communities will soon see the opening of Ross Dress for Less stores, with locations planned in Southgate and White Lake Township this year, according to officials.

“I know there is a lot of buzz around the store and people are excited about it,” said Southgate City Administrator Dan Marsh. “In Southgate, we’re happy to have one of their first locations.”

The Southgate store will replace a former Office Depot that closed in 2020 on Dix Toledo Road. Marsh said the city is also getting discount retailer HomeBuys, a chain with eight locations in Ohio and Kentucky, according to its website.

Within the past two weeks, HomeBuys filed an application to move into a building on Eureka Road that previously housed a Big Lots, which moved to a larger building down the street. Marsh said: “That’s another one we’re going to be excited about.”

In White Lake Township, a Ross Dress for Less outlet will occupy a former Bed Bath & Beyond store on Highland Road that closed about a month ago, said Sean O’Neil, the township’s community development director.

After the Bed Bath & Beyond closure was announced late last year, the building’s landlord quickly approached the city about Ross Dress for Less occupying the space, O’Neil said. The city expects the store to open in late spring.

“We never want to hear that any retailer or any business is closing its doors because generally the folks who live or work or commute through White Lake appreciate having the opportunity to stop and pick up items or food …” O’Neil said. “We like to have a good array of businesses here. So it’s kind of a quality-of-life thing.”

O’Neil said he thinks the surrounding retail and the number of motorists who use Highland Road was a key selling point for the discount clothing seller.

“My hunch is that the traffic that the M-59 corridor carries and the traffic in the shopping center that this is going to be located in is enough to really pique the interest of Ross Dress for Less and make them think, yeah, this is a place that we want to be,” he said. “I certainly hope that they’re successful.”

It remains to be seen if the draw to discount retail stores will remain high after inflation subsides, said Stephanie Cegielski, spokeswoman for ICSC, a New York-based retail organization.

“The unknown is that once inflation comes down … will people continue to shop at those stores at the pace of their shopping now, or will they go back to some of the other apparel stores that they were frequenting before,” she said. “We’re in such an interesting economic climate because we have high inflation but low unemployment.”