Background
In 2024, a significant number of US retailers faced bankruptcy, with prominent examples including Big Lots, Party City, and The Container Store, all filing for bankruptcy. The year also saw a notable increase in store closures, with 7,327 retail stores closing their doors, a 57.8% increase compared to 2023, according to CRE Daily.
As retailers and restaurants fail, so is opportunity created. These bankruptcies create a window to evaluate and potentially move into a massive number of sites at once that could perfectly fit your brand. If you are a retailer with an average store size of 12,000 square feet, Big Lots vacant sites probably aren’t relevant, but every Party City site is an opportunity.
Problem Statement
Cavender’s is the premium Western Wear brand in the US. GrowthFactor has been supporting Cavender’s ongoing real estate process for a couple months leading up to the Party City auction.
When the ~800 party city leases became available, Cavender’s asked if GrowthFactor could support them in understanding, prioritizing, forecasting, and ultimately taking over the best leases available.
Like most retailers, Cavender’s team is lean, and they had been going through sites 1 by 1, often taking 15-30 minutes to evaluate sites that wouldn’t work and several hours to evaluate the ones that could work. Given the number of sites in the auction, this would imply 5+ weeks to screen each site.
Methodology
We built and executed a clear playbook to prioritize and evaluate sites:
- Use generative AI to gather information on every available lease
- Store this data in a database
- Enrich this data with other important data points, such as distance to ~50 other brands, demographics, psychographics, traffic, cannibalization potential, and more
- Forecast revenue for each potential site
- Prioritize sites with the highest revenue potential
- Build cash flow models for each priority site
- Discuss all priority sites in a data driven and consistent way
- Bid on the highest potential impact sites
Ultimately, we want our customers to make the best decisions for their companies. Our goal is to facilitate decision making through accurate, consistent, and accessible data and analyses.
Impact
GrowthFactor’s methodology and systemic approach allowed all sites to be screened in 48 hours instead of 5 weeks. Once we had a list of priority sites, we created detailed analyses (in-depth decks detailing each data point, such as traffic, cotenants, cash flow forecast, etc.) on each priority site.
"I've been doing commercial real estate since the early 80's, and doing all the analysis myself, but with GrowthFactor coming on we've been able to expand much faster, make quicker decisions, whether its traffic count or demographics, we don't have to dig. Whatever our needs are, it's there for us. Their state of the art AI, and doing what I do best- visiting the sites, getting a feel for it- give more educated decisions so I can negotiate and grow faster."
-Mike Cavender
Cavender's Family, Co-Owner and Head of Real Estate
We joined every meeting with Cavender’s to run various “what if” scenarios and ensure that the sites they moved forward with worked under a variety of circumstances.
On the day of the auction, our CEO and data scientist flew down to be in-person with the Cavender’s team. We spent the entire day with their team, displaying relevant analyses to each site and giving a “maximum bid amount” based on the downside scenarios for each site.
Outcome
Cavender’s acquired 15 sites through the Party City auction, representing a 17% increase in their number of sites. Due to the quick turnaround of the event, few retailers had finished evaluating all sites by time of auction – Cavender’s was one of six retailers to participate in the auction.