June 22, 2010 / 2:38 PM / 9 years ago

Hilco sees retailers past prime squeezed out

NEW YORK (Reuters) - Video entertainment and mid-tier jewelers may not have a long shelf life as their business models wane and stronger retailers sweep up the best U.S. real estate deals, a retail real estate expert said on Monday.

Nina Kampler, Executive Vice President of Strategic Retail and Corporate Solutions at Hilco Real Estate, speaks at the 2010 Reuters Consumer and Retail Summit in New York June 21, 2010. REUTERS/Shannon Stapleton

“The commercial real estate economy demands the survival of the fittest,” Hilco Real Estate Executive Vice President Nina Kampler told the Reuters Consumer and Retail Summit in New York.

Companies like Blockbuster Inc BBI.N and Zale Corp ZLC.N exemplify industries or business models that may be past their usefulness, as the customers they target are either too shaken to spend on luxuries, or the services they provide are behind the times.

“Why would you wait even 24 hours for something to come in, when you could call your kid and have them get it for you in seconds,” Kampler said, referring to the model of video rentals from a physical store, or mail-in service, that is being overtaken by instantaneous digital downloads from the Internet.

Middle-market jewelers are also in a tight spot, she said.

“Despite the cash infusion into Zale I don’t get it and I’m not sure — absent reinventing themselves or some massive change to the US economy that changes unemployment, housing valuations and the struggling lower middle classes ... how that type of company ever becomes successful again now,” Kampler said.

Both Blockbuster and Zale have been fighting financial problems of late, and while private equity firm Golden Gate agreed to lend the jewelry store chain $150 million for five years last month, Blockbuster is still seeking financing as it struggles to avoid bankruptcy.

Bookstore chain Borders BGP.N was also likely to lose out as the company has failed to revamp itself as fast as rivals like Barnes & Noble BKS.N, she said.

“Walking into a Borders store feels like Circuit City a year before it closed,” Kampler said, referring to the bankrupt electronics retailer.

Blockbuster, Zale and Borders did not return calls seeking comment.

However, stores that cater to basic necessities like grocery chains and drugstores will continue growth, she said, as would chains in shopping centers that have a strong brand placement.

“The centers anchored by strong manufacturers and well-displayed products will continue to sell,” she said.

“You want to buy a strip center that is anchored with a Trader Joe’s (specialty grocery store) ... it’s always packed, and packed with all demographics. But then, pull up in front of Pathmark Stores Inc — you are miserable, you can’t wait to get out, it’s just not done right,” she said.

Reporting by Nivedita Bhattacharjee; Editing by Tim Dobbyn

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