CORNERING THE MARKET VS. MARKETING THE CORNER

It seems that retailing has always been nothing more than a funny game of real estate.st likely finds its origins in the earliest marketplace, where the vendors with the best corners seemed always to win. The same appears to hold true today. Witness the Kroger Co., which recently reported that real estate, plant and equipment accounted for nearly 50% of its total assets in 2001.Retailers have quickly

It seems that retailing has always been nothing more than a funny game of real estate.

st likely finds its origins in the earliest marketplace, where the vendors with the best corners seemed always to win. The same appears to hold true today. Witness the Kroger Co., which recently reported that real estate, plant and equipment accounted for nearly 50% of its total assets in 2001.

Retailers have quickly learned that it's all about real estate from marketers as well. As a result, retailers regularly market their corners (and their ends) to space-hungry brand marketers, at a hefty margin.

The process continues as more brands sell the space on their packages to promote everything from theme park discounts to Internet Service Providers. Many of these deals are transacted as part of barter arrangements, so that the brands, in turn, get space at the theme parks and ISPs as rent in kind.

The circle is complete as brands offer some of this newfound space back to the retailers in return for reduced rent on their original space.

One can only imagine what a loaf of bread might actually cost in a rent-free society.

-- Tim Hawkes, managing director of Chain Reaction, a unit of D'Arcy Marketing Services