What You Need to Know About Investing in Big-Box Stores

September 29, 2017

Big-box stores were once a no-brainer when it came to investing in commercial real estate. It seemed like an obvious financial move to invest in such a thriving sector of business. However, with every passing day is appears that consumers are shifting away from big-box stores to more online forms of retail. Although the retail sector of business is still dominating and growing more and more by the minute, the way that consumers are conducting their business is transforming. Therefore, investing in big-box stores is now a decision that requires a little more deliberation than previously assumed.

It should be of no surprise that almost all aspects of our culture are being revolutionized by the internet. All business and companies, not just big-box retailers, are having to adapt to this new form of consumerism. Unfortunately, it has been difficult for some business to maintain their pace amongst all of this online change. Many big-box stores have suffered in the face of this changes and had to make serious decisions in light of their consumer reports. Some companies even began to close down some of their chain stores that weren’t attracting as much revenue as their more competitive locations in hopes of isolating and growing those more populated areas. Stores such as Nordstrom and Kohl’s, which seem to be functioning just fine on the exterior, had to make major cuts many of their locations.

On the flip side, businesses that had expanded their online presence were beginning to dominate the realm of consumerism. Take for example Amazon, a company with a thriving digital platform that is commanding Internet retail and is only expecting to continue on this profitable path. This has meant that many big-box companies are stuck at a cross-roads to determine if it is in their best interest to attempt digital advancements in their company. Wal-Mart decided to make an attempt at E-commerce and purchase an online retailer called Jet.com. This website actually aligned quite similarly with Wal-Mart’s approach to savings and lower pricing, which really only reiterated Wal-Mart as a big-box company and moved consumers away from physical stores and further into digital commerce.

A majority of big-box stores seem to struggle with their online presence, which is only hurting them in the long run. From an investing standpoint, we would recommend analyzing the company’s technological plan and strategies to see if their are going to be successful in the transition from primarily physical commerce to primarily E-commerce. This does not mean that you should avoid investing in big-box stores, but rather to be conscious of the trends in retail and seeing if these stores will be competitive online.

To see if investing in a big-box company is a financially savvy decision for you or for more information on commercial real estate and industrial real estate, come see us at NAI Isaac. We are dedicated to serving you in a way that is both customized and dependable. We are located in Lexington, Kentucky and serve the surrounding area.

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