It’s well known that for a warm pick-me-up drink, coffee is the leader in the United States.
But for tea enthusiasts, Teavana is a cool, mainstream alternative to an independent specialty store where one can try a variety of different flavors and blends, not to mention the ability to purchase of a variety of drinkware.
Well Starbucks, the owner of Teavana, is shutting all of its 379 locations. Poor sales are reportedly the main culprit and the concept’s predominant presence in malls.
It’s a bummer for tea lovers, as well as Starbucks, presumably. The coffee giant spent $620 million to purchase Teavana in 2012. At the time, Reuters reported that Starbucks founder Howard Schultz said: “We will do the same for tea as we did for coffee.”
This obviously did not transpire.
Though they don’t have that many locations in the scheme of retail leasing, it is still more bad news for malls. The retail real estate industry has seen a throng of mall-store closings this year. Besides the major department stores that are shutting their doors, plenty of in-line mall tenants, such as Teavana, have had trouble. The majority so far have been apparel chains such as Gymboree, Bebe and Rue21, but this latest development makes it apparent that several types of enclosed-mall retailers are struggling.
But the Teavana situation might not be the fault of mall foot traffic. Experiential retail is the lifeblood of successful malls right now. Apple Stores, restaurants and cinemas, in addition to common-area events, are driving customers to these facilities. Teavana seemed to fit that category well, with free samples and instructions on how brew tea.
But Starbucks owns another popular tea brand, Tazo, that has more name recognition in its cafes and in retail stores. Plus, the company also shut its 23 La Boulange bakery stores a few years back. So, this could be more of a problem regarding Starbucks’ ability to concentrate on operating chains other than its namesake locations.
But tea is reportedly the world’s most popular drink. And there are plenty of independent tea houses out there that are well visited, such as Harney & Sons in New York’s SoHo neighborhood, so the shutting of Teavana should not be a sign to retail real estate landlords to steer away from these concepts.
About GRS Group
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.
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