Viacom to Close Michigan Avenue Store Amid Retail Retreat

Strategic Insights -

Michigan Avenue is experiencing a significant shift as major corporations like Viacom, Planet Hollywood, and Limited Inc. reassess their retail strategies. Viacom's massive store on Michigan Avenue, which opened just last May, is set to close amid declining revenues and a broader pivot by the entertainment giant. This decision follows on the heels of Planet Hollywood's announcement to scale back its expansion plans and Limited Inc.'s closure of its Henri Bendel store.

Key Takeaways:

  • Viacom's Michigan Avenue store is expected to close less than one year after its opening due to declining revenues, which fell short of predictions of $15 million to $18 million in annual sales.
  • The store's closure is part of a larger trend as nationally recognized companies, such as Planet Hollywood and Limited Inc., retrench their retail strategies.
  • The strong demand for Michigan Avenue real estate will likely enable Viacom to make a profit on the sublease of its 32,000-square-foot space.
  • Viacom plans to focus on opening smaller Nickelodeon stores, with three such stores opening late last year and about a dozen more expected nationwide this year.
  • The company's revenue has struggled, with a loss in 1996 and a narrow post-tax loss last year after selling off $1.2 billion in assets.

Statistics:

  • Retail sales along Michigan Avenue and Oak Street increased nearly 6% last year to $1.30 billion. (Greater North Michigan Avenue Assn.)
  • The asking rents for ground-floor Michigan Avenue space range from $175 to $250 per square foot.
  • Overall, asking rents average more than $60 per square foot.
  • Limited Inc. plans to close its 25,000-square-foot Express-Structure store at Michigan Avenue and Huron Street, which has 10,000 square feet of selling space.
  • Viacom posted revenues of $13.2 billion in 1997.

Sources:

  • Greater North Michigan Avenue Assn.
  • CB Commercial Real Estate Group Inc.
  • Northern Realty Group Ltd.
  • Planet Hollywood International Inc.
  • Limited Inc.
  • Cohen Financial
  • Chicago Tribune
  • Orlando Sentinel
  • Forbes