Service retailers lack e-commerce competition

This Massage Envy franchise near Paseo del Norte and Ventura NE is advertising for employees. (Roberto E. Rosales/Albuquerque Journal)

ALBUQUERQUE, N.M. — Whether it’s a large national chain like Bed Bath & Beyond shuttering a store or a small boutique such as soon-to-close Gallery One in Nob Hill, it sometimes seems nearly every week brings news of a retailer giving up the ghost or scaling back operations.

Brick-and-mortar businesses, especially those dealing in apparel and soft goods, are struggling to restructure and reinvent themselves in the face of e-commerce competition.

But the metro area’s commercial real estate industry players see a lot of opportunity in service-oriented businesses – restaurants, coffee shops and juice bars, gyms, barbershops, cellphone stores – to lease empty storefronts at shopping centers and strip malls.

Ben Perich

For landlords, it’s a no-brainer. They want to fill these retail vacancies with new concepts, said Ben Perich, a senior associate for commercial real estate firm Colliers International. “One of the bright spots for retail has been health and beauty.”

Landlords love businesses like barbershops and hair salons because they see them as exempt from competition from e-commerce. There is no way to get a haircut online. Regional malls, shopping centers and strip malls are all good places to provide personal services that neighborhoods need: manicurists, hair salons, yoga studios, even dental and medical offices.

For decades, service-oriented purveyors have been the workhorses of Albuquerque’s retail centers, says Perich. “These types of businesses are small, many of them locally owned with a couple of people cutting hair, doing nails or offering personal/fitness training. We’re talking in-person experiences that are very internet-resistant by their nature,” said Perich. “Services like massage, laser hair removals and eyebrow threading … they’re all experiential” with a regular income stream for the owners.

Other than off-price purveyors, “Apparel (as a retail category) is sucking so bad because of the exposure to the internet,” he added. “There’s tons of competition and simply less foot traffic to apparel sellers.”

And the broader economy is diverting more dollars to food and services and less to apparel retailers, he added.

In a large shopping center, it’s not surprising to see that a grocery anchor like Walmart or Smith’s or a drugstore such as Walgreens will drive traffic and work well for “the little guys,” helping them survive and prosper, with perhaps a pizzeria, dry cleaner, hairdresser, UPS store and other service providers popping up, said Perich.

Two recently opened businesses in the Unser Pavilion in Rio Rancho include a hair-cutting shop and a nail salon. (Steve Sinovic/Albuquerque Journal)

Real estate developers are wooing snazzy barbershops or franchises like Great Clips and Supercuts. They add value and convenience to their projects, require only modest space and create a lot of customer traffic, said Perich.

Old School New Styles Barber Shop is a textbook example of a service-oriented retailer with a growing following. Owner Manuel Rascon, who opened his first business with partner Irene Leaton in 2014 in Rio Rancho, said he’s close to opening his second barbershop in a new strip mall in the 3600 block of NM 528 in Albuquerque.

Owner Steve Maestas, a local developer of retail centers, sought out Rascon and Leaton for expansion when he saw that the Rio Rancho barbershop was voted business of the year by the Sandoval County SBA last year. Rascon and Leaton, who cashed in her retirement account in order to fund the opening of the first Old School New Styles, were honored at an event in Santa Fe for their business success as well as launching a charity called Caring through Clothing, which brings school clothes to low-income kids.

Both barbershops are tucked inside neighborhood shopping centers anchored by national chains.

Rascon said there’s a good living in male grooming, and that’s backed up by national studies. According to a study by Statista, revenues from barbershops in the U.S. have grown from $510 million in 2011 to $837 million in 2017. By 2020, Statista projects barbershops will rake in $910 million.

State licensing boards make tracking the numbers difficult, but National Association of Barber Boards of America Executive Officer Charles Kirkpatrick estimates the annual growth at roughly 10 percent in the last two years. Barbering is one of the fastest-growing profession in the U.S., according to Indeed, an employment-related search engine for job listings.

The barbershop boom follows a global explosion in male grooming products. One study estimates that men will spend nearly $61 billion on toiletries, deodorant and skin and hair care products in the year 2020.

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