Shanice Lodge
In commercial real estate, we’ve all heard the phrase: Location, Location, Location. In retail, the golden rule might be, “Co-tenancy, Co-tenancy, Co-tenancy.”
Why would a billion-dollar brand like Lululemon pay top dollar to be in proximity to a rival like Alo Yoga or Vuori? And vice versa. For high-growth retail brands, selecting neighbors is about amplifying lifestyle rather than avoiding the competition.
Hubexo is tracking over 35k+ active retail projects across the U.S. Successful retailers actively seek proximity to complementary brands to capture a shared customer base.
What is Co-tenancy?
Co-tenancy is the concept of strategically filling a shopping center with tenants that align with each other and hopefully amplify business. According to Occupier, “When you’ve got a vibrant mix of businesses in one location, it naturally attracts more foot traffic. Increased variety means more chances for customers to find exactly what they’re looking for, plus opportunities for cross-promotion between co-tenants.” This results in tenant mix synergy.
What is an example of tenant mix synergy?
Tenant mix synergy, defined by Tenant Science, is “simply putting together a collection of tenants to help maximize sales traffic, which would in turn increase the sales revenue of the tenants.” The athleisure market is a standard example of tenant mix synergy. When Lululemon chooses to be next to an Alo Yoga or Vuori, they are capturing the customers of these brands: Affluent, health-conscious consumers.
Why do brands choose to be next to their competitors?
Brands choose to be next to competitors to capture their customer demographic. When a high-income shopper decides they need a new workout set, they visit a shopping mall or center and have a range of options to choose from to compare fit and style. According to Constructionwire data, only 2.9% of Lululemon stores on the market are freestanding, showing that co-tenancy is active in their strategy.
How to find out a retail competitor’s strategy?
Knowing your competitor strategy is all about having the right project data. When you have accurate market data, you can analyze trends, changes in competitor activity, and white space. Hubexo provides your team with high-value insights so your market research can be a breeze. Book a free 1:1 to tour your trade area today.
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