E-commerce Rising Stars Legislative Forecast Top Retail Center Debuts
FIND IDEAS. SOLUTIONS. INNOVATION. ADVANTAGES. YOUR WOW. With over 1,000 solution providers, ProMat 2019 is where manufacturing and supply chain innovation comes to life – in person and in action. So come find WOW-worthy solutions, network with your peers and learn from the industry’s brightest minds in keynotes and over 100 conference sessions.
ATTEND FOR FREE PROMATSHOW.COM
from the editor’s desk
Techbytes: a retail tech column
On the level: a real estate column
VOL. 95 JANUARY/FEBRUARY NO. 1
Top 10 Women in Tech: Ten executives making their mark in retail technology
Retail Forecast: Legislative and regulatory outlook for 2019
Canadian retailer Showcase sets its sights on store expansion in the U.S.
Retailers can eliminate #MeToo harassment with transparency and tracking
Emerging retailers: Four hot online players
Vendor Q&A Lexmark International’s John Linton talks about printing and digital signage strategies.
CSA (USPS 054-410; ISSN 0193-1199), is published bimonthly by EnsembleIQ, 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631, on a controlled basis to qualified retailer titles and architects. Real estate and shopping center owners and developers $75 per year. All other nonqualified $119 per year. $129 per year for Canadian subscribers; $225 per year for foreign subscribers, air-mail only. Single-copy price: $18. Periodicals postage paid at Chicago, IL and additional mailing offices. POSTMASTER: Please send address changes to CSA, Circulation Fulfillment Director, P.O. Box 3200, Northbrook, IL 60065-3200. Subscription changes may also be emailed to firstname.lastname@example.org, or call 847-564-1468. CANADA POST: Publications Mail Agreement # 40612608. Canada returns to be sent to Bleuchip International, P.O. Box 25542, London, ON N6C 6B2. Vol. 95, No. 1, January/February 2019. Copyright ©2019 by EnsembleIQ. All rights reserved.
CHAINSTOREAGE.COM JANUARY/FEBRUARY 2019
Contents VOL. 95 JANUARY/FEBRUARY NO. 1
Protecting retail environments with design patents
Vendor Q&A: Brinco’s Ron Prager discusses effective HVAC management and cost control.
New Nike flagship blends physical and digital to make for localized, immersive and seamless shopping experience.
Tops of the Props 2019 Hudson Yards, Miami Worldcenter, and Philly’s Fashion District lead the list
Hot Markets: Dallas/Fort Worth More jobs mean more rooftops…and 5 million sq. ft. of new retail.
Do you really know me?
u No two customers are truly alike. Every customer wants to feel understood through a personalized experience. But look-alike modeling misses the critical nuances that let you connect effectively to each as a segment-of-one. So much data, so little insight. RedPoint has the solution. The RedPoint Customer Engagement Hub empowers brands to deliver a personalized customer experience that is seamless across all interaction touchpoints. Our market-leading technology connects all your customer data into a golden record, uses that data as fuel to automatically generate the next-best action, and orchestrates interactions so they are contextually relevant to each customer. Transform how you engage with individual customers in real time, all the time.
You can. With RedPoint.
Learn how a Customer Engagement Hub can help you enhance experiences and increase customer lifetime value. Download here: www.redpointglobal.com/UcanCEH
See RedPoint at NRF: The Big Show. Booth #841
CHAIN STORE AGE
FROM THE EDITOR’S DESK
New CEOs to Watch The door in the corner office swings fast in the retail industry as companies tap new leaders to steer their ships in today’s disrupted marketplace. Below are five chief executives who took the reins in 2018 and face some big challenges in the coming year. • Michael C. Appel, Rue 21: The teen apparel retailer tapped its chairman as CEO to replace Laurie Van Brunt, who resigned in November after less than six months on the job. Interestingly, Appel served as interim CEO of the retailer from October 2017 until June 2018, when Van Brunt took the reins. Rue 21 emerged from Chapter 11 in fall 2017 after closing about 400 stores and reducing a good deal its debt. But it has struggled to regain its footing in a competitive teen market driven by online, fast fashion and social influencers. • Shaz Kahng, Gymboree Group: A member of the Gymboree board since 2017, the 30-year retail veteran, who helped lead turnarounds of Lucy Activewear and various Nike business segments, was tapped as CEO in November. She arrives at a critical juncture at the children’s clothing retailer, which recently announced plans to close its value-oriented Crazy 8 stores and “significantly” reduce the number of Gymboree locations in 2019. It also is reviewing strategic options — including a possible sale — of all its brands. All this comes some 16 months after Gymboree emerged from bankruptcy. • Scott Key, David’s Bridal: The former Gap Inc. executive was promoted to the top spot at the nation’s leading bridal retailer in May. He is now steering David’s through bankruptcy (it filed for Chapter 11 in November). Key has taken a high-profile role in assuring customers that all dress orders 6
will be delivered on time and that bridal appointments will not be affected by the bankruptcy, with all 300 stores remaining open. The retailer is optimistic that it will complete the court-supervised process by early January, with a good chunk of its debt reduced. Still, the road ahead won’t be easy for Key as he deals with increased competition from lower-priced competitors and changing bridal fashions. • John Mehas, Victoria’s Secret: For troubled Victoria’s Secret, the appointment of a new CEO is just one step in what industry experts say is a badly needed total brand overhaul. Mehas, who most recently served as president of women’s luxury apparel brand Tory Burch and previously spent 13 years as president and CEO of Club Monaco, succeeds Jan Singer, who resigned in November after two years on the job. He has his work cut out for him at Victoria’s Secret as the formerly high-flying lingerie retailer struggles with declining sales amid heavy competition from such brands as Aerie and Rihanna’s Savage x Fenty line and rising online players. Another challenge: Victoria’s Secret’s overtly sexy image, which has come under fire for being tone deaf in today’s #metoo era. • Jill Soltau, J.C. Penney: The first woman to lead the 116-year-old department store retailer, Soltau is a 30-year retail veteran who most recently was president and CEO of Joann Stores and, prior to that, served in various executive merchandising roles at Shopko Stores, Sears, and Kohl’s. Industry experts are hopeful that Soltau’s deep experience of retail — especially in terms of merchandising — will prove invaluable in turning the retailer, which is struggling with slumping sales, around. Help Wanted: As of mid-December, a number of big-name retailers were still looking to fill vacancies in ther corner office. Among the companies still on the hunt: J. Crew Group, Sprouts Farmers Market, Joann Stores, Barnes & Noble, Tailored Brands, AutoNation and GameStop.
Marianne Wilson email@example.com
CHANNELS chainstoreage.com > COMMERCE > CUSTOMERS
An EnsembleIQ Publication
Corporate Office: 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631
Vice President, Brand Director (CSA) SPECS Chairman Gary Esposito (212) 756-5118, firstname.lastname@example.org
Editor Marianne Wilson
(212) 756-5261, email@example.com
Technology Editor Deena M. Amato-McCoy (516) 208-9493, firstname.lastname@example.org
Real Estate Editor and Manager Al Urbanski (646) 957-5224, email@example.com
Online Editor Jennifer Mosscrop
(212) 756-5264, firstname.lastname@example.org
Regional Sales Manager Michael Morrissey (312) 645-5072, email@example.com
Eastern Sales Manager Lise Slaviero Groh (610) 458-7655, firstname.lastname@example.org
Sales Director-Technology Joel Wethall (847) 302-6796, email@example.com
Executive Director of Events Katherine Boccaccio (225) 751-2225, firstname.lastname@example.org
Event Attendance Manager Melissa Murphy (212) 756-5059, email@example.com
Event Coordinator Rita Ruzalski
(212) 756-5268, firstname.lastname@example.org
Marketing Coordinator Farida Batuta (212) 756-5269, email@example.com
Vice President, Production Derek Estey 877.687.7321, firstname.lastname@example.org
Creative Director Colette Magliaro
Media Production Assistant Betty Dong (212) 756-5134, email@example.com
Senior Vice President (HBSDealer, Drug Store News, Chain Store Age) John Kenlon (212) 756-5238, firstname.lastname@example.org
Publishers of Chain Store Age, Hardware + Building Supply Dealer and Drug Store News. Subscriptions/Customer Service: For subscription problems, call (847) 564-1468, email email@example.com or mail us full details, including the mailing label from the last copy you received, along with your telephone number. Write to CSA, Subscription Department, P.O. Box 3200, Northbrook, IL 60076-3200. Address changes can be made online at chainstoreage.com/subscribe. Single-copy price: $18. Circulation List Manager: Elizabeth Jackson, MeritDirect (847) 492-1350 x318. Reprints: To order reprints call PARS International at (212) 221-9595, ext. 435, or e-mail LF-Reprints@parsintl.com. Minimum: 100 copies. Permissions: Materials in this publication may not be reproduced in any form without written permission. Direct permission requests to Gary Esposito, Publisher, Chain Store Age, 11-43 Raymond Plaza West, 16th Floor, Newark, NJ 07102. Contact Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 646-2600 or (855) 239-3415, or on the Web at copyright.com for immediate authorization to photocopy from Chain Store Age (ISSN 0193-1199). Editorial Calendars: chainstoreage.com. Back issues: (813) 627-6707. News Tips: Call Marianne Wilson at (212) 756-5261 or e-mail: mwilson@ chainstoreage.com. Letters to the Editor: Must include name, address and daytime phone number for confirmation. We reserve the right to edit correspondence for clarity and space. Send via e-mail: firstname.lastname@example.org or via mail: Marianne Wilson, Editor, Chain Store Age, 11-43 Raymond Plaza West, 16th Floor, Newark, NJ 07102
Corporate Officers Executive Chairmain Alan Glass Chief Executive Officer David Shanker Chief Financial Officer Dan McCarthy Chief Digital Officer Joel Hughes Chief Innovation Officer Tanner Van Dusen Executive Vice President, Events & Conference Ed Several
Legislative/ Regulatory Outlook What retailers should expect in 2019 By Joe Kefauver As with all new years, 2019 will come with a new set of issues and challenges for retailers in both Washington, D.C., and across the country. But the election results from November will shape the tone and tenor of the issue landscape more than any other single factor. The impact of a U.S. House of Representatives controlled by Democrats is obvious. But the real story may be at the state level. With seven new Democratic governors, seven new state chambers under Democratic control and four new Democratic attorneys general, the state playing field looks very different in 2019. In states like Colorado, Illinois, Maine, New Mexico and Nevada, where Democrats now control all levers of state government, we can expect significant legislation on wages, leave and benefits. Additionally, now having a majority of state attorneys general, look for some Democratic AGs, particularly those in Minnesota, New York, Illinois, Michigan and Washington to aggressively engage corporate brands over wage and hour enforcement, sexual harassment policies, pay equity, and a host of other issues. Here are some of the key issues to pay attention to in 2019. Data Privacy: Over the past several years, the major concern has been the legislative and regulatory reaction to data breaches. Facebook has changed that dynamic significantly and the buying and selling of data and the manipulation of that data is now first and foremost in policymaker’s minds. Washington state is contemplating legislation similar to California’s new law, which should impel retailers to push harder for a federal solution. The conversation has caused other industries to be more focused 8
on a federal solution as well, which could provide more momentum. Smart retailers will continue to advocate for secure consumer data, uniform data breach notification laws and responsible enforcement. Trade: The trade situation with China will likely not level out anytime soon. The perceived “win” by Trump on NAFTA will further embolden him as it relates to China. But China will continue its traditional game of slow-playing the issue and pushing off major policy changes as long as possible. It is important for retail operators to understand that the president’s trade policies have nothing to do with economics or global commerce. They are purely political and designed to appeal to a subset of his base. When and if the economic consequences of the trade uncertainty are ultimately felt by Middle Americans, only at that point is there any chance for stability in this space. E-Fairness: Following the landmark Supreme Court decision in South Dakota v. Wayfair that did away with the physical presence standard for state sales tax collection authority, almost every state with a sales tax is expected to have taken action by the conclusion of the 2019 session. The longsought-after ‘missing’ revenue from a tax that has been on the books for decades will be the chief motivator for legislatures across the country. Traditional retailers will be working in lock step to ensure that most, if not all, sales are finally treated equally. The good news is, this time the Overstocks and Amazons of the world are finally on the right side of the argument and promoting reasonable policy solutions. We shall see if this newfound partnership extends to other more traditional retail issues.
Key Issues Data privacy Trade E-Fairness Paid leave Minimum wage Restrictive scheduling Overtime California Paid Leave: The environment around paid leave has shifted quickly over the last two years. With many Republicans now embracing some form of the issue as a response to their poor showing with women voters and companies themselves instituting leave policies in order to recruit and retain the best employees, the train has left the station on this issue. Look for increased pressure in Washington from the new Democratic House as well as states with new Democratic majorities and pay particular attention to the Washington state model effective in January. The program is an important test of paid leave as a government-sponsored program or “insurance” fund. The monies — paid in part by employers and deducted from employees’ paychecks — are deposited into the state fund to be distributed to employees when they become eligible. If the mechanics of the program work, expect other states to adopt the model. And, perhaps more JANUARY/FEBRUARY 2019
importantly, a functional program lays the groundwork for a future portable benefits program. Minimum Wage: The new Democratic House will begin the push for a national $15/hr wage immediately in January. While that legislation is likely dead on arrival in the Senate, many in the business community may be of a mind to compromise for a lower wage level coupled with possible concessions on joint employer, tips or other labor issues â&#x20AC;&#x201D; potentially creating a situation where Democrats oppose a final package. At the state level, look for strong pushes for a $15 wage in New Jersey, Connecticut, Illinois and other states that are now Democratic trifectas as a result of the November elections. Restrictive Scheduling: While no federal action is likely in the capital, look for states and localities to continue pursuing restrictive scheduling legislation across the country. Pay particularly close attention to Illinois, Maine, Chicago, Los Angeles and Washington, D.C., as proposals are either pending or very likely. Many of these bills call for two to three weeks advance posting CHAINSTOREAGE.COM JANUARY/FEBRUARY 2019
of schedules, penalty pay when an employer changes a schedule, restrictions on hours between shifts and some call for the offering of additional hours to existing workers before additional workers can be hired. Overtime: It is likely that the Labor Department will begin the process for a new overtime standard in the spring. Labor Secretary ALexander Acosta has publicly stated that a new, higher standard is necessary but likely much lower than the Obama Administrationâ&#x20AC;&#x2122;s proposal. If and while that process proceeds, look for blue states to follow California and New York and begin the process of setting their own standards. A potential patchwork of
At the state level look for strong pushes for a $15 wage in New Jersey, Connecticut, Illinois and other states that are now Democratic trifectas as a result of the November elections.
different state requirements could result in retailers and other employers calling for federal action. California: While California has always been politically difficult to navigate, it will likely get much more precarious. Outgoing Governor Jerry Brown, while a strong liberal, was much more pragmatic in his approach to business issues and had a strong understanding of the retail business model. In fact, Brown recently vetoed a bill forcing companies to report pay data based on race and gender. His successor, Gavin Newsom, is much more aligned with the labor and activist community and meaningful conversations on core business issues are about to get significantly tougher. Additionally, Democrats in the legislature now have a veto-proof supermajority so it will certainly be an interesting year â&#x20AC;&#x201D; in both California and the rest of the country. Joe Kefauver is managing partner of Align Public Strategies, a full-service public affairs and creative firm that helps corporate brands, governments and nonprofits navigate the outside world and inform their internal decision-making. 9
Showcase Expands in U.S. Canadian retailer sets its sights on U.S. expansion By Marianne Wilson A Canadian-based retailer that has built a thriving business by studying and leveraging emerging trends in health, beauty, toys and the home is looking to make its mark in the United States. With 108 stores in Canada, Showcase launched the first phase of its U.S. expansion in July, debuting at Walden Galleria in Buffalo, N.Y. The company is on track to have 10 pilot U.S. locations open by January. Based on the performance of its pilot group of stores, Showcase will adapt its model and roll out an additional 90 locations starting in 2019. Looking more long-term, the company believes the U.S. market can accommodate 1,000 stores. Showcase’s merchandise mix ranges from mainstream to wacky gadgets. Stores average from 1,000 sq. ft. to 1,500 sq. ft. and carry up to 500 SKUs. Chain Store Age spoke with Showcase CEO Samir Kulkarni about the company and its U.S. plans. Q What is the real estate strategy? It is focused on top A and B malls, where traffic is highest and consumers are open to discovering new retail experiences. Since Showcase specializes in emerging retail trends in health, beauty, home and toys, our ideal location is near other trend-setting stores in any of these categories — such as Zara, Sephora, and Apple to name a few. The first 10 stores are in top U.S. malls determined through close partnerships with major landlords Simon, GGP/Brookfield, Macerich and Pyramid. Q Describe the Showcase store experience. Showcase’s store experience is about fun, interaction, and entertainment. Customers can browse and enjoy demonstrations of products representing emerging trends. Our store design is modern and trendy, with interactive play spaces, engaging displays, flexible planograms and digital signage. This 10
allows the store to morph as required to new and emerging trends. Q What criteria do you to determine the trends and the products that make it onto your shelves? Showcase is a technology company, developing and employing disruptive technology to identify emerging trends. On any given day, our big data platforms are tracking 4.1 million potential new trends to trigger alerts on those products that may be spiking in demand. This suite of algorithms is fed with data sources ranging from standard (for example, vendor recommendations) to crowdsourced (search and social big data, tracked regionally and locally), from quantitative (both free and paid external sources) to qualitative (sentiment and psychographicweighted data), from existing customers (behavioral triggers in store and online) to the anonymous public. Using the trends identified from this technology, we then source the product using the nimblest supply chain in retail, by launching it to all stores within days or weeks to ensure that we are able to capture the early adopters in the lifecycle of the trend. Typically, products launch within two to six weeks of identification. A launch that takes longer than six weeks is considered a failure — and a learning opportunity. Q How would you describe the brands sold by Showcase? Showcase looks to transform hard goods retail in the way that “fast fashion” retailers H&M and Zara have transformed soft goods. These companies adopted a nimble sourcing model, buying small volumes of emerging and experimental trends they had identified from the street and the runway, then going to market in days and weeks, then adapting and evolving their
assortment based on early results and consumer feedback. The systemization of the trend process on a global scale has led H&M and Zara to become the world’s largest apparel retailers. Showcase has developed and refined this “rapid retail” methodology in its business, upending traditional toy, health, beauty, and home retailers. The availability of our products varies by trend and by category. About 50% of our items are branded but may be in short supply or not well-merchandised at other retailers, or are niche brands that are usually only available online. The other 50% are exclusive private labels designed and developed by Showcase. Q How has Showcase evolved over time? The company was founded in 1994. In its earliest days as a single store in Edmonton, Alberta, Canada, Showcase staff wrote down new products that customers came in and requested, then faxed the list to the office for immediate sourcing. After frantic sourcing, the product would arrive and the staff would entice customers with education, demonstrations, and training of these novel items. This nimble, customerand entertainment-focused culture is still part of our DNA today, albeit with more sophistication and scale. We are proud to have built a national chain that stays true to these core principles, while employing the latest in technology and industry best practices, and are eager to now spread the Showcase gospel to the U.S. JANUARY/FEBRUARY 2019
Build it RIGHT from the start
With more than 30 years in store construction, we know the ins and outs of retail spaces better than anyone else. Let us work alongside your brand teams and architects to ensure every building decision is the right one, from day one. l
Help select high-quality sites based on extensive build-out knowledge
Ensure building plans are fully up to date
Negotiate better lease terms following detailed site surveys
Increase tenant improvement allowances
Address issues like structural problems and mold early on
Avoid overdesigning and project delays due to change orders
Bring the builder in FIRST to stay ON BRAND, ON TIME, and ON BUDGET. Contact Warren Zysman for more information at email@example.com 800-255-7483 | www.all-riteconstruction.com
A tradition of excellence for 30 years
The Big Reveal
Eliminate #MeToo harassment with transparency, tracking By Sarah Alter Last year was marked by women acting together. In small groups and large, women took on one of the most formidable barriers to gender equality: sexual harassment. Women and their supporters took to the streets, the airwaves and the courts, charging some of the biggest names in corporate America with sweeping workplace harassment claims under the rug. Many of these women’s efforts were aimed at ridding the workplace of mandatory private arbitration of sexual harassment accusations, a practice that prevents women from having their day in court or sharing their accusations publicly, so that other women who may be vulnerable to the same harassment would be warned. Last May, after 14 women who had accused Uber drivers of assault wrote a letter to Uber’s board enjoining them to end mandatory arbitration, Uber eliminated the practice. Lyft quickly followed suit. That same month, workers at McDonald’s stores in eight states filed 10 complaints with the Equal Employment Opportunity Commission, alleging they had been sexually harassed or assaulted on the job and had faced retaliation when they complained. At the time, a McDonald’s spokeswoman said the company didn’t tolerate misconduct. “We are and have been committed to a culture that fosters the respectful treatment of everyone,” Terri Hickey said in a statement. But in September, hundreds of McDonald’s workers who claimed they faced workplace sexual harassment went on strike in 10 cities. Those who led the strike urged the company to hold mandatory training for managers and employees and to create a better way of responding to sexual harassment complaints. McDonald’s responded, noting it has “strong policies, procedures and training in place specifically designed to prevent sexual harassment.” But the company went a step further, saying, “To ensure we are doing all that can be done, we have engaged experts in the areas of prevention and response, including RAINN [Rape Abuse & Incest 12
National Network], to evolve our policies so everyone who works at McDonald’s does so in a secure environment every day.” Two months later, thousands of Google employees staged a walkout after The New York Times revealed Google had given millions in payouts to male executives accused of sexual harassment while remaining silent about their wrongdoing. Employees who organized the global walkout asked for the end of mandatory arbitration, a report on sexual harassment instances, greater transparency on salaries and other compensation, an employee representative on the board and a chief diversity officer with direct access to the board.
Touting gender-equality and diversity & inclusion policies on a company website is not enough. Companies need to back up their words with decisive action — and tell the world about it. Google, a week later, changed its policy mandating private arbitration for sexual harassment cases. Facebook followed and changed its arbitration policy the next day. From 1991 to 2017, the share of U.S. private sector, non-union employees who were subject to forced arbitration rose from 2% to 56%, according to a report by the Economic Policy Institute. While arbitration has its place, especially for women who prefer to maintain confidentiality, organizations must be more forthcoming in their handling of sexual harassment and discrimination claims — and their efforts to put an end to both. The Power of Accountability Talented women steer clear of companies that allow hostile, unhealthy or unsafe work conditions. Touting gender-equality and diversity & inclusion policies on a company website is not enough. Companies need to
back up their words with decisive action, and tell the world about it. A common refrain from victims of sexual harassment — and from women who doubt their company’s gender equality efforts — is the lack of process, commitment and transparency around bias, harassment and discrimination, which often lets perpetrators continue without consequences and creates a hostile workplace. Sexual harassment and gender-diversity training is a must, of course. But here are other actions company leaders should be taking to ensure transparency: • Widely publish and share clearly written policies around bias and harassment and make very explicit the consequences for breaking them. • Encourage employees to speak up if they notice a problem. Professor Rosabeth Moss Kanter of Harvard Business School recommends appointing selected employees as “witnesses” to keep an eye out for misbehavior. • If a complaint is made, respond immediately. A company that does not address an accusation straightaway could be credibly accused of disregarding the complaint or attempting to hide it. • Communicate to all staff when harassment has occurred and what has happened to the harasser. • Keep and publish metrics on gender diversity, women’s leadership, pay parity and number of claims of gender bias and harassment. The most successful companies keep and share with their employees metrics on sales, margins, expenses and profits. Today, measuring, benchmarking and sharing gender-related metrics is just as crucial to your business. Companies can avoid putting themselves in jeopardy — legally and competitively — by treating the elimination of gender bias and harassment as a business priority, with goals set to measurable metrics that are communicated to all stakeholders. — Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing 12,500 members representing 900 companies and 22 regional groups in the United States and Canada. Learn more at newonline.org. JANUARY/FEBRUARY 2019
CHAIN STORE AGE -FAST SAFE EFFICIENT 2/3 Vert 2018REV_AD 8/20/18 1:27 PM Page 1
ADVANCE DOCK LIFTS ARE FAST, SAFE, EFFICIENT & VERSATILE
real estate around the
the globe. Want to know who is opening stores, and who is closing? Interested in new developments coming out of the ground? What about real estate movers and shakers, and acquisitions and mergers? There’s only one place to get all the retail real estate news that matters. For editorial submissions and advertising inquiries, contact Al Urbanski, real estate editor, AUrbanski@ChainStoreAge.com
Sign up TODAY!
DOCK LIFTS VERSUS NOTHING: Unloading trucks without any equipment is very slow and puts dock personnel at risk for shoulder, back and metatarsal injuries. Also, goods may be damaged. DOCK LIFTS VERSUS CONVEYOR UNLOADING: Conveyor unloading is 2 to 3 times slower than using a dock lift. It leaves personnel at risk of shoulder, back and metatarsal injuries and goods are at risk. DOCK LIFTS VERSUS TRUCK TAILGATES: Tailgates and their maintenance are more expensive than dock lifts. Tailgates reduce truck payload and increase vehicle wear. Tailgate platforms are smaller and do not offer handrail protection available on dock lifts, more risk for operators and cargo. DOCK LIFTS VERSUS DOCK LEVELERS: Dock levelers can only serve a limited range of truck heights (usually 8”) so they cannot serve all size trucks. An Advance dock lift can service any size truck without limitations.
AdvAnce Lifts 4 4 4
The most recessed dock lift models. The most top of ground dock lift models. Coast to coast turn key service.
That is why Advance Lifts has been the #1 dock lift builder in the country for more than 40 years.
1-800-THE-DOCK (800-843-3625) advancelifts.com Untitled-4 1
11/6/2018 3:35:08 PM
COVER STORY–TOP TEN WOMEN IN TECH
By Deena M. Amato-McCoy The Merriam-Webster dictionary defines a “leader” as a person who has commanding authority and influence. The female executives highlighted in the fifth annual Chain Store Age “Top 10 Women in Retail Technology ” report — profiled below in alphabetical order — exemplify the innovation and leadership needed to succeed in today’s ever-changing retail environment. They share a record of success that is worthy of emulation by all their peers.
senior VP, marketing (media, guest engagement and measurement) Target Kristi Argyilan learned early in her career that a business must stay in a constant state of change if it wants stay relevant. The lesson has helped her transform Target’s approach to customer engagement. Argyilan has spent her career working with big brands. She started her professional journey as the associate manager, media development for Clorox Company in 1992, where she created the media strategy for the company’s largest brands. She went to work for a variety of advertising agencies, creating media market14
ing strategies for such companies as Nike, Starbucks, eBay, Dunkin Donuts, TJX and CVS. In 2007, she joined Universal McCann Media Agency as executive VP, global managing partner and quickly moved up the ladder to chief transformation officer. Throughout all of these roles, she learned an important lesson: “Few companies truly view their brand as an asset, and invest in marketing and guest experience accordingly.” Target, according to Argyilan, is one of these “few companies” that builds an amazing experience resulting in a strong emotional connection between itself and its customers. “Their commitment to brand through marketing and customer experience made my jump to Target an easy decision,” Argyilan said. Since joining Target in 2014, Argyilan has been transforming all paid, owned, earned and shared media channels, focused on strategy, events and measurement. She has also been tasked with creating a new level of
customer engagement — one the puts the customer in control. Constant change driven by ever-evolving customer expectations keeps Argyilan on her toes — and makes her relationships with technology providers especially valuable. “I am in the lucky position to meet with some of the most advanced data, technology and content companies in the world,” she explained. “I get super excited about the possibilities when you bring different combinations of them to the same table to solve a guest or business problem.” Argyilan takes the same approach when embarking on transformational projects — initiatives that often require a quicker speed to market. To stay on task, she relies on a team that can offer different points of view that will keep her end-game on point. “My brain is hard-wired to think conceptually and act with only the first few steps laid out in front of me,” she said. “But to truly accomplish transformation at scale, I need others whose wiring complements mine. A more diverse group of skill sets can bring ideas together; this results in rapid expansion of stronger ideas and longer term success.” This mindset has helped Argyilan successfully launch a variety of projects, including Target’s media network. The company’s entry into the advertising business offers a high-quality audience-based media product to other advertisers. Additionally, Target is building strong relationships with companies are also changing the marketing and retail landscape, such as Google, Comcast/NBCU, Pinterest and Disney. “Given the pace of change that society is going through, members of the business community don’t have the luxury of rest,” Argyilan said. “I learned early in my career that a business must continue to change or possibly become extinct. My job is to manage change.”
executive VP, CTO Lululemon Athletica When Julie Averill began pursuing her dream of becoming a CIO, she didn’t get much support. The fast-rising tech executive recalled that, years back, when she first told people she wanted to be a CIO, those who knew JANUARY/FEBRUARY 2019
what the position entailed told her it was the most difficult job in a company — and the most lonely. They also told her as a woman, she would be an unlikely candidate. “But I think all that motivated me because it gave me a challenge and I became focused on what it would take,” she added. “Soon it became a real goal I started working toward, then it became a reality.” Averill started her professional career in 1999 when, armed with an MBA, she took a position as director of project management at a website development consultancy, moving on to VP of a financial site. In 2003, she joined Nordstrom as VP, selling and marketing systems. She spent a decade there, honing her skills in the demanding and fast-changing world of retail. Among her accomplishments: leading the company’s initiative to deliver store fulfillment capabilities and leading a mobile POS initiative, and integrating Hautelook as a new business model for the retailer. In 2014, Averill joined REI as VP, information technology. Less than two years later, her dream became a reality when she was named the first CIO of the outdoor apparel and gear retailer, responsible for technology solutions across the company, including stores, digital experiences, marketing and analytics, strategic merchandising, call center, supply chain, and data centers/cloud infrastructure. In 2017, Averill joined Lululemon Athletica as executive VP, CTO, attracted by the athletic apparel brand’s mission of “putting the customer first.” She keeps a sharp eye out for innovations that create engaging and memorable experiences for customers through all channels, and also for ones that empower store associates and business partners to be more efficient and effective. Averill, who is tasked with preparing Lululemon for international growth, has created a strong, global technology team that is balanced between the retailer’s corporate base in Vancouver and Seattle. Averill shares her expertise on various CHAINSTOREAGE.COM JANUARY/FEBRUARY 2019
community and non-profit boards. She is an independent director for fast-growing retailer Indochino, where she provides strategic counsel on the custom menswear company’s technology infrastructure and growth strategy. At home, Averill often counsels her teenage children on their own career goals, encouraging them to focus less on planning their career, and more on applying themselves. “It’s about understanding what’s uniquely you and being proud of that,” she added. “Set goals, tell people about them, and work hard.”
VP of IS & IT White Castle Management Company Technology has always been a family affair for Susan CarrollBoser. White Castle Management Company’s VP of IS & IT got her first taste of technology from her tech-savvy parents. Her father held IT positions spanning programming to network security at Ohio Bell, AT&T and IBM. He also set up a network of Unix computers at her childhood home, making Carroll-Boser “comfortable with computers long before personal computers were the norm,” she recalled. She got even more exposure during annual “Bring your Daughter to Work Day” visits at her father’s various offices. “It made a lasting impression,” she said. Meanwhile, her mother implemented an ERP system for their family business during Carroll-Boser’s college years, a move “that made everything flow better,” she said. “The idea that you could transform your business process with something so simple intrigued me.” After graduating from Keller Graduate School of Management of DeVry University with an MBA in information technology, she joined White Castle in 1994 — kicking off a 24-year career with the company. Initially, she focused on administration and
support, and then took on analyst positions. Soon, she transitioned into management roles, where she was increasingly exposed to more opportunities, she explained. She spent 15 years as director of IS, and was recently promoted to VP of IS & IT, a move she credits to her passion for innovation. Among the initiatives she is most proud of include efforts to pinpoint and decrease internal loss. Additionally, Carroll-Boser is bullish on the company’s Team Member App, “a shared platform that allows us to grow and meet all needs,” she explained. White Castle is currently testing the app on “Wi-Fi only” smart watches, a huge move since “mobility on the floor is the name of the game in a restaurant,” she explained. She also championed the company’s loyalty program. Determined to create her own methodology, she applied for a patent. “Our goal was to drive behavior change segmentation for increased check and visits, but we wanted an entirely different methodology,” she said. “I designed the methodology, and the patent was applied to the entire team of developers.” Carroll-Boser is most driven by initiatives that work on many platforms, and serve different audiences in a customized way. To that end, she is evaluating artificial intelligence around security (both internal and cyber), data mining, and the impact of natural language processing (NLP) AI on ordering and customer support operations.
VP, digital commerce Lilly Pulitzer Kim WilliamsCzopek knows the secret to improving the customer experience — create an emotional connection with shoppers. This philosophy fits well with Lilly Pulitzer, where she is VP of digital commerce. “Increasingly, we’re seeing that customers expect greater relevance than ever before, and you can only be relevant to a customer if you personalize their experience,” she explained in a blog on Monetate’s website. 15
COVER STORY–TOP TEN WOMEN IN TECH
For Williams-Czopek, this means learning what the customer — not the retailer — wants. “We need to walk a mile in our customer’s shoes,” she said in the blog. “We can’t just assume they are going to behave the way we want them to.” Williams-Czopek started focusing on customer-centric experiences some 22 years ago, long before it became an industry strategy. One of her first experiences occurred early in her career, when she was a senior project manager and director of usability and information design for Nexiv Internet Design back in 2000. She oversaw both formal and formal lab-based usability testing sessions. The user responses helped her develop and improve operating processes. Little did she know that this background would help her develop user experiences at Lilly Pulitzer 16 years later. At Lilly Pulitzer, her team uses “a variety of systems … to track quantitative measures of success,” she explained. Machine learning is also part of the mix, a solution that helps Williams-Czopek and her team better understand what the customer wants, when they want it, and deliver a more relevant experience faster, according to the blog. Direct access to customer feedback has helped Lilly Pulitzer create a mobile channel. The company partnered with Mobify to launch a progressive web app (PWA), which functions similar to a mobile app, but is accessed through a search engine query and mobile browser. The first week it launched, mobile traffic jumped 80% and mobile revenue rose 33% compared to a year earlier. Mobile has become the company’s highest traffic channel, according to a company statement. Customer feedback also helped Lilly Pulitzer redesign its e-commerce site and add functionality to better meet shoppers’ expectations, such as multi-ship capabilities, a buy online, pickup in store service, and a store locator. “We have a mission to deliver superior digitally-driven retail experiences to our customers, and our new platform … gets us closer to achieving that mission,” she added. At press time, Williams-Czopek was no longer with Lilly Pulitzer. 16
Chief digital officer Subway Carissa Ganelli has one mission as Subway’s chief digital officer: “to deliver as much value as possible to our customers.” Ganelli, a marketing veteran with almost 30 years experience, describes herself as “a rabid customer and fan of Subway, even before I worked for the company.” Ganelli joined the company as VP of marketing technology in 2016 — just as Subway embarked on its five-year transformation effort. Responsible for the company’s digital media and co-leading the digital division, Ganelli focused heavily on executing all web, social media, email and digital advertising campaigns. Driven by the potential benefits of personalization, she and her team spearheaded the company’s digital overhaul, which included launching a more responsive website, deploying on-site digital signage, and most importantly, re-launching the company’s mobile app. The relaunch was an immediate success, producing 25% month-over-month growth in mobile app orders, and the growth of mobile users jumped by 100%. Similarly, the company’s new website doubled its e-comerce orders, she reported. “We created five years’ worth of development within two years, and the results have been incredible,” Ganelli said. “Our iOS mobile app also has a 4.7-star rating in Apple’s App store — the highest rating our company has ever seen.” Promoted to chief digital officer in July 2017, Ganell’s first task was to launch the company’s new loyalty program. Available through Subway’s mobile app, the program features digital coupons and offers. Customers earn $2 for every $50 they spend, and also receive “surprise rewards” based on frequency of visits. Within six weeks of launching the program, the company saw 15% growth in loyalty members. It has also proved a conduit to
attract younger, new customers who may not have been loyal customers previously, according to Ganelli. To further appeal to these new customers, Ganelli saw an opportunity to digitally recreate the “personal touch.” Ganelli and her team to launched a rich communications services (RCS) platform earlier this year which is still in limited tests due to wireless carrier support. Unlike static text messages sent on a “white screen,” RCS messages contain multimedia data, including color, images, and other media, including short videos. Currently, the test targets customers with specific meal deals, and among customers that receive the messages, “we are seeing tremendous results,” Ganelli said. For example, a price promotion deal on two Footlong subs produced a 140% lift in conversion rate, and a meal deal test produced a 60% lift in click rate over SMS. Additionally, Subway features a chatbot interface, providing the company with a platform that fosters two-way conversations with customers. “We are transforming a 53-year old company’s history and using digital channels to make our affordable food more accessible,” Ganelli added. “That is something to be proud of.”
Executive VP, CIO Lowe’s Cos. Amid a major restructuring of executive staff at Lowe’s Companies, one of the retailer’s newest appointments is an accomplished tech veteran who is tasked with leveraging technology to support the company’s long-term innovation efforts, such as interactive customer experiences and mobile payments. Seemantini Godbole joined the home improvement giant as its executive VP and CIO in November, and she brings with her an impressive resume. Godbole, who has 25 years of global technology experience, joined the company from Target where she JANUARY/FEBRUARY 2019
most recently served as senior VP, digital and marketing technology. Throughout almost nine years with the discounter, she held various leadership roles and helped lead Target’s digital technology transformation, including the re-architecture of the company’s digital platforms and the implementation of agile product management. Godbole also introduced technology for new customer experiences, including the mobile applications, buy online and pick up in-store and ship from store programs, guest order fulfillment, digital wallet, localized pricing, and customer loyalty and engagement offerings. Prior to Target, Godbole spent three years as the director of technology at Travelocity, where she directed e-commerce development for the company’s European air, hotel and car operations. Before that, she spent almost 12 years at Sabre Holdings, where she held a variety of senior technology leadership roles. Marvin R. Ellison, Lowe’s president and CEO, described Godbole as “a proven retail executive” who brings “extensive expertise in transforming digital platforms to drive outstanding results by focusing on the technology needed to improve the customer and associate experience. I am confident Seemantini is the right leader to advance Lowe’s technology efforts for the future.” For example, Lowe’s continues to step up its commitment to using digital experiences that enable customers to envision how to design and build their homes. Recently, the company launched the Lowe’s Vision app. It leverages augmented (AR) and virtual reality (VR) to enable shoppers to begin planning their renovation needs before they even set foot inside a store. Other 3D services include Lowe’s “Holoroom How To” virtual reality-based classes, where a virtual reality headset and set of controllers immerses shoppers in a DIY project. The company is also exploring the longterm role of mobile payments.
senior VP of marketing and e-commerce Lamps Plus Angela Hsu’s passion for learning new things, particularly when it comes to CHAINSTOREAGE.COM JANUARY/FEBRUARY 2019
technology, has helped shape her into an ecommerce and digital marketing leader. Hsu’s retail journey dates back 25 years when she joined Warner Bros. as director, global new business development, for the company’s international stores division. While working at Warner Bros., she learned about retail merchandising, operations and marketing, and used these strategies while working on the company’s global expansion. After a stint as director, product management and marketing at real estate site move.com, Hsu jumped back into retail, joining Lamps Plus in 2003 as VP, Internet business and marketing, and tasked with growing the company’s fledgling e-commerce business. “In 2003, Lamps Plus was a category leader in brick-and-mortar, but relatively new in e-commerce. I saw an opportunity to make a difference using my background in retail, analytics and technology,” said Hsu, who became senior VP of marketing and e-commerce in 2017. During her 16-year tenure at Lamps Plus, the company has grown into the nation’s largest lighting retailer. And Hsu has grown her team to more than 40 people focused on site strategy, SEO, analytics, marketing, PR and social media, marketplace (e.g., Amazon, Walmart), as well as creative services in video, web graphic design and content. Such a wide range of responsibilities make it critical for her to break down internal silos between lines of business. “Implementing innovation requires key stakeholders throughout the company to work together,” Hsu said. “It is critical to share visions, encourage ideas, and solicit feedback to make sure everyone is on board.” At any given time, Angela can be involved in multiple projects. Her accomplishments this year included leading a website personalization initiative, increasing the
speed of Lamps Plus’ mobile website by nearly 40%, and scaling its AB testing to an enterprise wide operation. Fluent in three languages — and experienced in the global retail market — Hsu is exploring opportunities to sell Lamps Plus designs through global e-commerce marketplaces, with a special focus on Asia. The company currently sells exclusive designs on Amazon and Walmart.com. Artificial intelligence is another priority. Lamps Plus uses AI to monitor order status, and to support a chatbot for Facebook and SMS text messages. The next plan is to enter voice-assisted commerce with Google Home and Alexa. “Innovation is an absolute necessity for us to compete and continue growing the company’s profitability,” she added. It’s also in my DNA. I thrive when I find new technology solutions that solve our challenges or take our customer experience to the next level.”
Group VP IT, digital stores and Rx Albertsons Cos. Ramiya Iyer had originally planned to follow in her family’s footsteps and work in finance. But she got bitten by the technology bug back in 1993, when she started writing code while interning as an auditor for the State Bank of India. “I realized I had a knack for technology and never looked back,” she said. In 2001, Iyer made the jump to retail technology, joining Walmart’s online division as a senior software engineer. “It was my entry into retail and it was addictive,” she said. She spent the next 13 years moving up the ranks at Walmart’s and Sam’s Club’s online divisions. After a two-year stint at Levi Strauss & Co. as VP, e-commerce, Iyer joined Albertsons Cos. in 2017 as group VP IT digital and marketing, merchandising. Just about a year later, she was named group VP IT digital stores and Rx. Among her many responsibilities: transforming the company’s legacy systems. 17
COVER STORY–TOP TEN WOMEN IN TECH
“I consider this transformation a rebirth that is giving the company a fresh start,” she said. “Transformation is about revamping systems to make a big impact and drive customer interaction.” This philosophy guided Iyer’s redesign of the company’s website, which includes a fresh look and feel and more streamlined fulfillment options, including curbside pickup, as well as a partnership with Instacart that supports same-day delivery of online orders across the chain’s 1,800 stores. Iyer’s team is also responsible for Albertsons’ automated micro-fulfillment center concept, which will be tested at a store in early 2019. Designed to leverage Albertsons’ existing supply chain and store footprint, it will use artificial intelligence-enabled robots and a system of totes and conveyors to collect items for online grocery orders with the product and deliver to an Albertsons employee, who prepares the order for the customer. The process is expected to take minutes — a fraction of the speed and cost of manual-picking processes. “At the end of the day, we need to increase service for customers and simplify the shopping experience,” she said. Simplicity will be a theme in 2019, as Iyer continues looking for ways to take friction out of the shopping experience — especially at checkout. The retailer is currently piloting mobile checkout in one store and plans to roll it out in 2019. “The key is to transition the shopping from a chore to a fun experience,” Iyer said. “That’s our focus for the new year.”
VP, e-commerce Johnston & Murphy Heather Marsh always has one person uppermost in her mind when it comes to improving Johnston & Murphy’s digital shopping experiences — the customer. “The consumer is always number one,” she said. “I always consider how they will feel when we change an experience. At the end of the day, 18
we need to deliver value to our consumers.” Marsh adopted this philosophy while interning at RJ Reynolds in 2004. She recalled that she was struck by how disconnected consumer product goods companies are from the consumer. “They sell to supermarkets, but really don’t know who is buying the merchandise, or how frequently,” Marsh said. “But retailers control the experience from start to finish.” Armed with an MBA from Vanderbilt University, Owen Graduate School of Management, Marsh joined footwear company Johnston & Murphy in 2005 as director of customer relationship management. She was tasked to building a database and manage marketing analytics. Marsh’s passion for IT — and consumer data — helped her rise through the ranks. Not all that long after joining, she was tapped as Johnston & Murphy’s director of e-commerce. The transition revealed to her how “tightly connected” purchase history and CRM data was to the company’s e-commerce operation and, ultimately, the customer’s shopping experience. In 2013, Marsh was named VP, e-commerce, a role in which she manages all facets of Johnston & Murphy’s online site, including digital marketing, direct mail, consumer analytics and enhancements to the website. She also is responsible for mobile. Initially, Marsh found it “difficult to tell our story on a small device, acquire customers and get conversions.” But the brand’s mobile strategy as been a hit. The company is seeing a 1% conversion rate on mobile devices. Across all digital devices, conversion is just over 2%, according to Marsh. “To be successful, you need to stay on top of what is new, how it could benefit the customer and associates, as well as can it save the company money and drive sales.”
VP digital merchandising and operations Hudson’s Bay Co. Anu Penmetcha is using her passion for elevating the customer experience to boost the omnichannel game of department store giant Hudson’s Bay Co., parent company of such retailers as Saks Fifth Avenue and Lord & Taylor. Penmetcha started her career as an engi-
neer in 2003, and quickly became attracted to the field of IT. She made the move to consulting in 2005, when she joined Deloitte Monitor. Looking to expand her horizons, she enrolled at the Kellogg School of Management, where had the chance to intern at Amazon. “Amazon was my first introduction into retail,” Penmetcha recalled. “I loved the online digital experience, and access to real-time data and its impact on the business. It was interesting to see how data can define a specific email campaign, who it is targeted to, and then see the impact in near real-time.” Upon earning her MBA in marketing and general management in 2008, she rejoined Deloitte, where she took on some of the largest digital retail transformations in United States and the UK. Ultimately, however, Penmetcha wanted a more handson experience. In 2014, she joined HBC, as chief of staff for HBC digital. She took on the role of VP of omnichannel in 2016. “A big piece of this position was finding new ways to look at data experience and drive business decisions, but also to keep a finger on the pulse of innovation, and learn new ways to apply it to our thinking,” she explained. Most recently, Penmetcha was named VP digital merchandising and operations, tasked with overseeing the retailer’s digital merchandise team and drop ship team. One of the projects Penmetcha is most proud of is her work on the digital stylist tool available to customers across Saks, Lord & Taylor and Hudson’s Bay. It enables online customers to digitally connect with an in-store associate who can provide personalized, curated assortments to customers through digital tools. “Our highest converting channel is our associates,” she said. “We rely on this technology to bridge the gap between our physical and digital channels, and get digital tools into the hand of our store associates.” JANUARY/FEBRUARY 2019
busy that during the ason, holiday shopping se e must shine! your store’s imag
We Know Retail Inside and Out EMCOR Facilities Services understands the relationship between the condition of your stores and the perception of your brand. From snow and ice management services and lighting upgrades, to small modification and retrofit projects, the people you trust to keep your stores looking their best and operating at peak efficiency have a direct impact on the customer experience. After all, customers don’t make retailers successful—repeat customers do.
Are your stores ready for the holiday rush?
FLOOR CARE & JANITORIAL LANDSCAPE & SNOW REMOVAL HVAC & TRADE SERVICES
866.890.7794 firstname.lastname@example.org www.emcorfacilities.com
FACILITIES MANAGEMENT PROJECT MANAGEMENT ENERGY SERVICES
Retail Disruptors Four hot online retailers making a mark By Deena M. Amato-McCoy The retail industry is awash in emerging online brands — brands that are breathing new life into their respective categories with their distinctive — and often disruptive — business models. Below is a brief look at four online startups that are poised for expansion: OLIVELA This hot new luxury e-retailer is using its partnerships with high-end designers to help change the lives of girls worldwide. Selling apparel, jewelry, accessories and beauty from such luxury brands as Valentino, Givenchy and Stella McCartney, Olivela donates 20% of each purchase to charity partners dedicated to supporting education for girls. The company tried out brick-andmortar last summer, with a small popup in Nantucket, Mass. The 900-sq.-ft. store featured a curated assortment of items from top designer brands, as well as hosted trunk shows and beauty events. The location, which also accepted returns of online purchases, made its standard donation from each sale to its childrenbased charities. The success of the pop-up has spurred Olivela to expand into physical retail, with some 15 new boutiques planned through 2019. BLACK LAPEL With a goal to make ordering customtailored clothing online as painless as possible, Black Lapel has spent the past six years growing its brand into a popular online destination. The company sells custom tailored suits and formalwear, along with custom shirts, blazers, vests, trousers and outerwear and accessories. Black Lapel’s site is customer friendly. It offers digital content and solutions that enable customers to take accurate measurements in the comfort of their home, 20
a process that can range between five and 30 minutes, depending on chosen design elements. The e-tailer boasts a digital concierge team “that handles any post-purchase alterations,” said Derek Tian, co-founder and chief marketing officer of Black Lapel. “These personalized services are contributing to a less than 10% return rate, and a 70% customer retention rate.” UNDER 5'10 This emerging e-retailer was created to alleviate the frustration that shorter men often feel when shopping for apparel. Through his acquisition of Fittery, a digital company that used predictive analytics to create a sizing database that accurately determines body proportions, company founder Elie Robinson has been able to narrow down the best fits and cuts for his target audience. The Under 5'10 web site went live in August, featuring 11 shirt styles in six sizes, all priced at $59.99. The shirts feature narrow shoulders, slim torsos, and a shorter overall length, and are carefully designed and constructed to guarantee a proper fit. To help customers navigate the online shopping journey, the site features a sizing chart, as well as an interactive size recommender. By inputting neck size and sleeve length, the tool can suggest more accurate size options. Notably, Under 5'10 has yet to process any returns since its launch, according to Robinson. The start-up opened its first physical location in October, in Cedarhurst, New York. The store sells an average of six-toeight shirts per transaction, compared to one or two shirts sold during each online sale. The company credits this higher conversion to “more precise sizing and the ability to test and try product.” The company is expanding its assortment into new categories, such as tech
pants and jeans, both of which are launching in January. T-shirts, polo shirts and ties are next on the agenda. THIRDLOVE Women-led startup ThirdLove is using customer data to produce the perfect bra — and disrupting the lingerie category in the process. Co-founder (and former Google executive) Heidi Zak launched the startup in 2013 to offer an alternative to what she considered the ill-fitting bras on the marketplace. Instead of using one fit model to determine hundreds of sizes, ThirdLove used tens of thousands of women’s measurements to find the perfect fit. The company’s innovative bra-fitting app (the Fit Finder) is designed to help women find their correct bra size with no need for an in-store consultation. The brand has remained true to its original mission, disrupting the bra category with an ever-expanding and inclusive range of sizes that include revolutionary half sizes. It now offers a total of some 70 sizes, which is about twice the industry average. ThirdLove’s inclusive marketing, comfortable stylings and emphasis on real women has resonated with women of all sizes — particularly millennials and Gen Z-ers — who are turned off by the overtly sexy images offered by some other lingerie companies. The brand created headlines — and won itself a host of new fans — with a full-page ad in the New York Times written as an open letter to Victoria’s Secret in response to some inflammatory comments made by Ed Razek, chief marketing officer for L Brands, parent company of Victoria’s Secret. “I founded ThirdLove five years ago because it was time to create a better option,” Zak wrote in the ad. “ThirdLove is the antithesis of Victoria’s Secret. We believe the future is building a brand for every woman, regardless of her shape, size, age, ethnicity, gender identity, or sexual orientation.” JANUARY/FEBRUARY 2019
MARCH 3-5, 2019
50+ 1,100+ 4,000+
GAYLORD TEXAN, DALLAS
SPEAKERS ATTENDEES FACE2FACE MEETINGS JOIN US FOR: DYNAMIC KEYNOTES • BEST-IN-CLASS CONTENT •
WOMEN IN RETAILING RECEPTION • RETAILER NETWORKING RECEPTION • “BREAKOUT RETAILER” AWARDS • AND MUCH MORE •
Exclusively produced by: CHAIN STORE AGE
THE BUSINESS OF RETAIL
SPECS brings together leaders from the nation’s top retailers and suppliers to learn, share ideas, develop business partnerships and solve problems across the physical retail space. Discover innovations and ideas to stay ahead of the competition. Form meaningful relationships to elevate your business.
TECH Q & A
Signage in a Digitally Driven Marketplace By Deena M. Amato-McCoy An increasingly digital environment is pushing retailers to revamp their signage needs — and the solutions that support their messaging. Chain Store Age recently spoke with John Linton, industry director, retail & manufacturing, Lexmark International, who discussed the latest printing and digital signage strategies.
Q How are increasing customer expectations and evolving technology impacting retailers’ efforts to best serve their shoppers? Retailers are being squeezed by Amazon on one hand, and Walmart on the other. Customers expect more because they can — they are getting more from their technologies and they have an expanded range of choices. Retailers must adapt to survive and thrive in this new age. Retailers are working to improve their customers’ online experience, and provide multichannel capabilities, including access to inventory availability and shipping options. They are also improving visibility into pricing. Q How has in-store signage changed as the shift to digital becomes more prevalent across the industry? The shift to digital signs is driven by cost, ongoing support and the effectiveness of digital mediums. We are seeing more in-store digital signage focused on specific areas to maximize effectiveness. For example, cost is a very important factor — retailers realize this and carefully monitor digital signage costs. Another important consideration is the ongoing support needed to provide content for these signs. Keeping content fresh and relevant requires an investment in people and digital assets. Meanwhile, effectiveness is another key consideration. Retailers need to understand their goals for digital signage and track progress. Meanwhile, retailers continue to leverage digital signage in strategic ways. Rather than mass deployment throughout the store, retailers must carefully consider where they 22
get the biggest bang for their buck — on end caps, in the deli or other specific areas.
ates when and where they need them, so that they can focus on the customer.
Q How important is data security, especially related to the process of printing store-level materials? Data security is very important. Signs contain sensitive information like pricing and product item data. Signage data in aggregate hints at the promotion schedule and planogram layout. Many of the signage systems run in-store, far from headquarters. Newer signage technology runs on mobile platforms in-store, opening another vector of potential attack. We also see cloud-based solutions coming into the marketplace, which require a different set of security practices.
Q How can Lexmark help in these efforts? Lexmark knows retail. More than 400 major retailers rely on our devices to run their stores. Our signage solution serves more than 70,000 stores, and seven of the top 10 global retailers are Lexmark Managed Print Services customers. Beyond our industry knowledge, Lexmark devices are built to last. Our smart MFPs are designed to be used for years beyond the typical life called for in RFPs, with steel frames that enable them to operate in the most challenging environments. Lexmark solutions drive retail productivity at headquarters and in the store. Our signage solutions help retailers deliver consistent branding, accurate item information and up-to-date pricing that drives customer confidence and helps lift sales. For example, our in-store capture solutions helped one of our top 10 retailers improve compliance, data integrity and cycle time while enhancing visibility and accessibility. Meanwhile, Lexmark mobile solutions range from in-aisle signage creation to mobile device printing, keeping associates on the sales floor. And our cloud services solution provides flexibility, productivity and reduces interventions, allowing retailers to better serve their customers. Finally, Lexmark Managed Print Services, which industry analysts place among the best in the industry, simplify fleet management for retailers. We’ve done more than 1,400 professional services assessments for retailers, and now have 11 billion pages under management.
Q How are printer and copier technologies evolving, and how should retailers be refocusing their fleet to be more efficient? Smart multifunction printers (MFPs) are Internet of Things (IoT) devices instrumental to providing retailers with data about their operation. Analysis of that data can drive more efficient deployment of the fleet, as well as proactive supply orders and service calls that minimize disruption. Q How important is a standardized operating platform and device placement? Standardization is critical to retailers with hundreds, even thousands of stores spread around the country or the globe, to drive down cost and improve support. Retailers strive for standardization and a uniform placement plan for their devices to ensure devices are available to trained store associ-
MARCH 3-5, 2019 GAYLORD TEXAN, DALLAS,TEXAS Exclusively produced by:
THE FOREFRONT OF PHYSICAL RETAIL
TWO BIG NAMES AT ONE BIG SPECS SHOW ROBERT HERJAVEC:
CEO & Founder of Herjavec Group, global cybersecurity firm, author, investor and TV celebrity
COO and President of FOCUS Brands, North America
KEYNOTE | Mon. @ 8:00am
KEYNOTE | Tue. @ 8:30am
A leading Shark on ABC’s Emmy-winning show Shark Tank, Robert Herjavec is more than a TV personality. As the SPECS 2019 headlining keynoter, the entrepreneurial icon underscores his commitment to physical retail as part of a motivational presentation designed to encourage the SPECS audience to take chances, take control of their futures, and stay true to their vision. “The world owes you only one thing: opportunity.” —Robert Herjavec
As the current president of Cinnabon’s parent group, FOCUS Brands, Cole drives a multinational food conglomerate while pushing employees, entrepreneurs, and businesses to see the positive and the possible. This Hooters-hostess-turnedsuccessful-executive knows that innovation and success happen when you are immersed in the action. Cole will share her most significant stories and lessons about leadership and innovation — with tips and tools that can be put into immediate action.
L E A R N M O R E A N D R E G I S T E R N OW AT W W W. S P E C S S H OW. C O023M
CHAINSTOREAGE.COM JANUARY/FEBRUARY 2019
From e-commerce and mobility to in-store technology and social media, Connected Retail keeps retail executives in the know about the fast-paced, ever-evolving world of retail tech. For advertising inquires, contact Mike Morrissey, regional sales manager, mmorriss@ChainStoreAge.com.
Sign up TODAY!
Retailers’ To-Do List By Deena M. Amato-McCoy A new year has started and with it comes all sorts of predictions. Here’s mine: Retailers that want to become “go-to” brands in 2019 and beyond should focus on boosting — or in some cas-es, reinventing — their customer engagement strategies. Here are my picks of solutions that can should be on all to-do lists: • One-day shipping. Free and fast delivery have become table stakes, especially when dealing with the likes of Amazon, a company that has built its reputation on successfully offering same-day deliveries. In fact, over two billion orders were placed using Amazon Prime’s expedited shipping methods in 2018, according to the online giant. To stay relevant in an on-demand retailing marketplace, brands need to get in the game. Whether it’s partnering with a fulfillment company or shipping from localized stores or micro fulfillment hubs, omnichannel retailers need to redefine what “fast shipping” means for their companies, and “get product out of their stores and distribution centers and into the hands of customers faster than ever before,” said Jon Beck, CEO, Columbus Consulting. • Voice-assisted experiences. To stay relevant among digitally-influenced shoppers, retailers need to step up their investments in voice-assisted technologies. Companies such as Walmart, Target and 1-800-Flowers aready enable customers to conduct voice-assisted shopping using smart speakers, including Google Home and Amazon Echo. But other voice options are emerging. Also on the rise is voice-assisted search, a concept that replaces typing search words into a web browser with speaking prefer-
ences into a smart device or smartphone. Voice search is not only primed to significantly change to the way web searches will be conducted, but 50% of searches will be voice-controlled by 2020, according to ComScore. • “Phygital” shopping experience. The idea of blending digital experiences with physical ones is not new. However, 2019 will be the year that this concept becomes a reality. More retailers will “open cashierless locations, convenient online purchase pick up options, smart dressing rooms with realtime product recommendations, and [offer] artificial intelligence (AI)-powered customer service options,” predicted Fritz Hasse, chief technology officer, Bazaarvoice. • Interactive product visualization. As retailers increasingly bridge the gap between online and offline retailing, the timing is ripe to create online experiences that resemble those found at store-level. Augmented and virtual reality (AR and VR) solutions are key to driving interactive product visualization — and sales. In fact, 40% of consumers said they would pay more for a product if they could experience it through AR/VR, while 77% of shoppers said they want to use AR to see product differences such as a change in color or style, according to a report form Retail Perceptions. “The desire for online shoppers to be able to come as close as possible to the experience of shopping in-store is clearly there. Retailers will continue to respond through technologies such as 3D and AR/VR,” according to Retail Perception. • Subscription boxes. Subscription boxes, once thought to be a fad, are in fact showing increased momentum across everthing from women’s and kids’ clothing to beauty and pet supplies and household staples. More players are entering the arena, and more consumers are subscribing. In fact, 55% of consumers who consider a subscription service ultimately become a member, and those offering replenishment services see a 65% conversion rate, according to a study from McKinsey and Co.
Deena M. Amato-McCoy email@example.com JANUARY/FEBRUARY 2019
MARCH 3-5, 2019 GAYLORD TEXAN, DALLAS,TEXAS Exclusively produced by:
THE FOREFRONT OF PHYSICAL RETAIL
FEATURED SESSIONS: Step Inside the L’Occitane Experience
Thriving in the Age of Distraction Curt Steinhorst, Focuswise
Take Charge, Fight Back! — Security Protection and Fraud Prevention Robert Siciliano, Safr.Me
Paul Blackburn, L’Occitane
Passing the Torch Stephanie Jhala, Leadership Coach
Building and Preparing for Threats and Disasters Kathleen Eaton, The Home Depot
SPECS has been a big part of my career, providing continuing education, networking opps, and introductions to new methods, products and partnerships.
—Lisa Smola-Hollo, Project Manager, Growth & Development, ULTA Beauty
L E A R N M O R E A N D R E G I S T E R N OW AT W W W. S P E C S S H OW. C O M
Don’t Give Away the Store Protecting retail with design patents
By Daniel Gajewski One of the most important things for a retailer to protect being copied is its retail environment. The thing that makes customers feel they’re in an Apple store, a Burberry store, a Best Buy or a Home Depot — even if there wasn’t a sign on the door. A retailer’s unique style and familiarity can build comfort and trust with its customers — at least until the competition copies this style and it no longer feels unique. Many retailers may feel that nothing in the intellectual property toolkit is perfectly suited to combat this copying. Trade dress, a form of trademark protection for three-dimensional articles, may be the most commonly used tool. But it can be difficult to establish both a protectable right — by showing that consumers identify the look of the store itself with a single source — and infringement of that right — by showing that the look of the copycat store is likely to cause confusion. Copyright is available for some architectural designs, but it also falls short because it otherwise does not cover the design of useful articles per se. Fortunately, patents are available to protect retail environments. Not only can patents protect retail interiors (and exteriors) on the whole, they can also protect individual fixtures, architectural features, and any other physical article that contributes to the overall style of a retail environment. Is your store’s style influenced by the unique design of a display unit, a table, a light fixture, a floor tile? Then patent it! If a competitor copies it, you can assert your patent, even if they don’t use it to create an entire confusingly similar store. TWO TYPES: There are two main kinds of patents. A utility patent, the most common, protects the way something works. A design patent differs from a utility patent by protecting how something looks. Unlike an invention in a utility 26
patent, a protectable design does not have to be technologically inventive, it just has to have a new appearance. While utility patents are important and should be considered along with design patents any time a completely new solution to a problem is invented, design patents are available for any article that has a new appearance, regardless of whether it solves a technical problem. Both design and utility patents give their owners the right to stop others from using what is protected by the patent. But design patent is usually faster, easier and cheaper to get than a utility patent. For a retail owner, this right might be leveraged to support efforts to get a competitor to stop operating in a particular way or to change their store’s appearance.
The patent application should be filed before the design is disclosed to anyone not under an obligation of confidentiality. To get a patent the owner must first apply for it, and soon. The application should be filed before the design is disclosed to the public (i.e., anyone not under an obligation of confidentiality). Unlike a utility patent, which describes its invention in words, a design patent is minimal. This image-heavy definition of the patented design helps make design patents easier to understand than utility patents, which often makes them easier to enforce too. SCOPE: The scope of what a design patent protects can be tailored by using techniques such as showing some parts of the article in dashed lines to convey that those parts do not limit the scope of the patent. Practically speaking, this means that design patents can cover a
building, a store, a fixture of a store, or any portion of any of these, as long as the design can be clearly depicted in the patent application. In many countries, including the US, design patents are incredibly flexible in what they can protect and how they can protect it. This is a great benefit to retail owners, and is the reason design patents can fill some of the gaps left by other forms of IP protection. For example, the design of the interior of a store may be best shown from within the space of the store itself, by images of the walls and fixtures. If the interior and exterior of a building are intertwined enough, they can be covered together as a single design patent. If structural or other features do not have a significant influence on the design, they may be drawn in dashed lines to omit them from the patent’s scope. The thing to remember here is that design patents offer the flexibility to depict designs in whatever way best represents their appearance. The fact that a design is interior to a space is not an impediment. The designs of interior features such as tables, shelving units, other display fixtures, architectural features, or even product arrangements can also be important contributors to a retailer’s look and feel. These kinds of features can be patented individually, as part of a particular layout, or even as part of an entire store interior. Design patents have the versatility to take a significant place in any strategy to protect a retail environment. They can fill gaps in protecting a retailer’s image and brand where utility patents, copyright and trademark fall short, and their flexibility opens up avenues of protection not available under any other intellectual property regime. Daniel Gajewski is a director at Sterne, Kessler, Goldstein, & Fox P.L.L.C., a full-service intellectual property law firm in Washington, DC. JANUARY/FEBRUARY 2019
Focus on HVAC Management Chain Store Age spoke with Ron Prager, COO of Brinco, about how retailers can better manage one of their most critical assets: HVAC systems.
Q What are some of the most common mistakes retailers make when it comes to HVAC maintenance and repair? The most common mistake we see retailers make is deferring or canceling preventive maintenance (PM) service in an effort to reduce expenses. We understand the need to reduce expenses, particularly in the current challenging retail environment. In certain circumstances that necessitates reducing or deferring PM spend, however wholesale cancellation of PM is not the way to go, especially if the equipment employs gas heating. Reduction of PM cost is best dealt with strategically, ie: rotating months of service based on geographic location and other factors. When a retailer simply turns off the PM switch, the result is typically increased expense and increased exposure to substantial liability. The second most common mistake we see is attempting to commoditize a highly specialized and technical service solely via the RFP process. Customers should take into account the HVAC services are just that; a service not a commodity, with many variables including the quality of those services and the capability of the provider to stand behind the service provided. Q What is the best way retailers can control HVAC costs? Brinco is a single trade vendor within the HVAC / refrigeration discipline. Our offerings and expertise within this highly specialized technical discipline are vast and comprehensive. We maintain and CHAINSTOREAGE.COM JANUARY/FEBRUARY 2019
have replaced systems ranging from a single 2 ton unit to 500 ton chilled water systems. We have worked, and continue to work, with retailers to develop prototypical designs and lease exhibits, and multi-year proactive replacement programs. We provide preventive maintenance programs designed to meet the retailerâ&#x20AC;&#x2122;s specific needs and excel at performing high quality demand repair work quickly and at reasonable cost. Q How does Brinco set itself apart from other HVAC service companies? Brincoâ&#x20AC;&#x2122;s model is transparent. Our clients appreciate our integrity, our superior technical capability and expertise, and our dedication to building a comprehensive long range cost effective program. We build long-term relationships with retailers who value what we bring to the table, and strive to deliver maximum value for each dollar spent on their HVAC systems. Q What criteria should retailers use in evaluating an HVAC service contractor? First on our list would be integrity and reputation. HVAC is far too complex a discipline to simply use metrics to make judgements. Second is the total cost of repair and maintenance per square foot, or per ton of installed equipment excluding replacement costs. These are numbers that cannot be manipulated, although their accuracy increases with each year a contractor continues servicing the same equipment. Third would be the ability of the con-
tractor to solve for root cause on ongoing issues, as this is a good measure of the providerâ&#x20AC;&#x2122;s overall ability. Q If you had one piece of advice to give regarding the upkeep of HVAC equipment what would it be? We cannot overstate the importance of maintaining accurate asset lists with all pertinent equipment information as well as accurate service histories. In order to manage repair and maintenance of HVAC systems, the retailer needs to be able to forecast future requirements. These requirements will be based to a large degree on current equipment age and condition as well as historical data. Q How do you think HVAC equipment will evolve during the next five years? Over the past 20 years, we have seen HVAC equipment become increasingly complex at an exponential rate. We believe that this trend will continue over the next five years. The increasing complexity of the equipment is being driven by the application of EMS systems, internal microprocessor based controls, and code required energy savings. Low leakage economizers with self-diagnostics, variable air flow on constant volume equipment, and variable flow refrigerant systems will become increasingly prevalent. We believe that systems will have better self-diagnostics, and that we will soon see equipment that can communicate faults directly, and via wireless communication, to the technician onsite or remotely offsite in far greater detail than has been available in the past. 27
Nike Reimagines Physical Retail Nike’s newest brick-and-mortar concept is a high-tech, experiential showcase designed to make in-store shopping as convenient — and customizable — as online. Located on Fifth Ave. in Manhattan, the six-level Nike NYC, dubbed a “House of Innovation,” combines innovative physical services and digital features fueled by the Nike app to provide a personalized shopping experience. The sleek, crosscategory store boasts two customization studios, one-on-one shoe consultation, fitting rooms with adjustable light levels, curated merchandise presenations, and plenty of selfie backdrops. But it is the digital elements that make it a standout. Nike is debuting several new tech features in New York, including “shop the look.” By scanning a QR code on a mannequin, shoppers can browse every single item on the display, check to see if their size is available in-store or online and see available colors. Then with just a tap, they can request that select products be sent to a fitting room of their choice or receive the items from a store athlete at a designated pick-up spot. The store boasts an array of innovations targeted specifically to members of Nike’s loyalty program, NikePlus. Members can skip the checkout line, for example, and pay for their purchases from within the Nike app using stored or new payment methods. Members can scan the item(s) of their choice, check out like a traditional Nike app purchase and receive the payment receipt within the app.
The customization studio offers shoppers access to an array of personalization options. 28
The ground-floor “Speed Shop” uses Nike digital commerce data to provide a localized assortment.
Designated “instant checkout” stations are positioned throughout the store so that shoppers can bag products if they want before leaving. Also, if shoppers don’t want to haul their bags around the city, they can request to have their in-store purchases delivered to their home, hotel, office or any location in Manhattan within the same day. Hyper-Local: The ground floor is home to the “Speed Shop” which uses Nike’s digital commerce data to provide a localized assortment that features the most loved products by local NikePlus members, along with curated seasonal picks. The floor, which has its own entrance, is also home to the “Sneaker Bar,” which provides easy and fast access to Nike footwear and customization opportunities. In addition, members can reserve items they want to try on and/or buy via the app and pick them up in lockers. Other store features include the company’s first-ever dedicated floor for NikePlus members. It offers a range of services, from one-on-one sessions with Nike experts to access to seasonally exclusive
products. It also offers cut-and-sew customization of Nike’s latest apparel launches and other personalization options. The store exterior (the building was designed by CallisonRTKL) utilizes slumped and carved glass that is meant to reflect and create motion that mirrors the movement of athletes. The area just inside the entrance — called “Nike Arena” — showcases immersive seasonal and sport-inspired storytelling moments. The space also boasts a customization studio where customers can embellish Nike footwear with laces, fabrics, decals and more. The interior has product floors dedicated to men, women, kids, and the footwear-obsessed. The “Sneaker Lab,” on the fourth floor, has the largest concentration of seasonally current Nike footwear anywhere in the globe, according to the company. Customers can scan shoes for in-depth product information. “Nike NYC is designed to be a dynamic store environment, that is just as personal and responsive as digital,” said Heidi O’Neill, president, Nike Direct. “This premium destination gives consumers an authentic, immersive and human connection to the Nike Brand.” JANUARY/FEBRUARY 2019
SHOP TALK Trending Stores: Online lingerie brand Adore Me is moving into physical retail, with plans to open 300 stores during the next five years. The company debuted its store concept Adore Me in summer 2018, at Staten Island Mall, in the NYC borough of Staten Island, followed by a second location in the fall, at Bridgewater Commons, Bridgewater, N.J. Designed by Lawrence Group, Adore Me is awash in light pink hues, matching the brand’s online identity and features empowering quotes on walls and in fitting rooms. Slated to open in January is a 5,000-sq.-ft. location at Providence Place, Providence, R.I., and a 2,700-sq-ft. space at Willowbrook Mall, Wayne, N.J. … Japanese minimalist lifestyle brand Muji continues its U.S. expansion with the opening of its first location in the Pacific Northwest, in downtown Portland, Ore. The store offers a number of services, including onsite embroidery (customers can choose from more than 300 designs) and alterations, with same day pick-up. An in-store coffee stand features a rotating list of local coffee roasters. Designed by Japan’s Super Potato, the interior of the 11,000-sq.-ft. store reflects the design legacy of Muji while reflecting the landscape and creative community of Portland. The use of reclaimed wood from Oregon throughout the space gives it a Northwest feel. … Champion Athleticwear, the nearly 100-year-old athletic apparel brand, is making up for lost time. The company opened its first-ever U.S. store in April, in Los Angeles, followed by locations in New York, Chicago and, most recently, a 2,825-sq.-ft. outpost in Boston. The store offers on-site customization with both Champion and Boston-themed patches. Shoppers can also create their own made-to-order garments through embroidery. The interior brings the brand’s athletic DNA and heritage to life through a modern lifestyle lens. Design elements include such items as reclaimed basketball gym wood fixtures and historical wallpaper that features a compilation of vintage ads, catalogs and other imagery. … CoverGirl opened its first permanent retail store, a sleek, two level flagship in Manhattan’s Times Square. Designed to serve as the physical embodiment of CoverGirl’s “I Am What I Make Up” philosophy, the 10,000-sq.-ft. space offers shoppers an immersive experience in what is billed as an “experiential beauty playground.” Minimalist black and white décor with pops of vibrant color are the backdrop to an interior where shoppers are encouraged to tryon and experiment with CoverGirl products. The space offers a variety of digital experiences, including a virtual greeter and augmented reality “glam” stations where shoppers can virtually try on makeup and digitally share the virtual makeover with friends. A customization station allows shoppers to personalize lipsticks and makeup bags. CoverGirl was designed by Cover Girl FRCH Design Worldwide.
StoreSpaces e-newsletter The only industry newsletter dedicated to store planning & design, construction, and facilities management. Get the latest news on retailers’ expansion and remodeling programs, new store prototypes, green initiatives, facilities updates and more. Find out who’s opening stores and where. CSA StoreSpaces covers retail development and facilities management inside and out.
Sign up TODAY! www.chainstoreage.com/register
π DOES ULINE HAVE THE BOX SIZE I NEED? OVER 1,550 SIZES ALWAYS IN STOCK
ORDER BY 6 PM FOR SAME DAY SHIPPING
CHAINSTOREAGE.COM JANUARY/FEBRUARY 2019 Untitled-2 1
12/3/2018 4:43:37 PM
ON THE LEVEL
When Retail Worlds Collide The internet competitors that traditional retailers blame for decreased traffic are quickly becoming the competitors next door at malls, shopping centers, and mixed-use projects. A few months ago, JLL conducted a study of more than a hundred digital retailers and learned that the majority of them had brick and mortar expansion plans in place. Together, they would account for more than 800 new store openings over the next few years. It’s no secret that, for years, retailers have been talking a good game of omnichannel while struggling to bring winning omnichannel businesses to the marketplace. If it’s any consolation, Macy’s and Sears, omnichannel is proving to be as big a challenge — if not bigger — to the clicks-to-bricks set. At the ICSC’s New York Deal Making Show in December, our talks with the leading retail re-developers of our time — people like CBL’s Stephen Lebovitz, PREIT’s Joe Coradino, and Starwood’s Jeff Zeigler — all boiled down to a common theme. Yes, they were excited about filling empty department store boxes with hundred-thousand-squarefoot food and entertainment concepts and inline spaces with crossovers from the digital marketplace. At the same time, they were worried about how much time and money it was going to cost them to help newcomers assimilate to the physical world and become successful. Digital Age entrepreneurs are an intelligent and amazing bunch, with creative
new ideas, well-crafted and researched business plans, and eager and wellcapitalized backers. Their concepts can be ephemeral, though, here today and obsoleted tomorrow. I covered digital marketing in my last job, and I had a source who was one of those tech investors. I asked him how it was possible that a startup with nothing but a concept and a business plan and little or no experience in a business could get tens of millions of dollars thrown its way. He told me that if just one of every 10 of his investments turned out to be a Salesforce or an Adobe or an Uber, it more than covered all of his other nine bets and would pay for the next 10. He said that was the game that most tech investors played That’s the world digital people live in. It’s not the world that retail real estate people inhabit. As eager as mall owners are to start collecting real rents for all that vacated Sears, Penney’s, and Macy’s space, they are in trepidation of how long the investment cycle will have to run for them to show a profit. Interesting yet untested concepts come calling on them weekly. Many are well-capitalized and seem good bets to succeed, but have no stores yet in operation. If they take a chance on them, how much will the buildout cost? How long should the leases run and what new terms should be included? How much time, money, and infrastructure should they spend helping the newbies succeed, and how many old-line tenants will survive the transition? As mall owners struggle to make their buildings relevant to 21st Century consumers, “T” and “I” will be the letters that will continually haunt them. They stand for tenant improvement allowances, and negotiating them with retail’s new tenants will become a learned art.
Al Urbanski firstname.lastname@example.org @AlUrbanski (Twitter) JANUARY/FEBRUARY 2019 CHAINSTOREAGE.COM
Tops of the Props 2019
The retail revolution will be played out in a number of exciting new and renovated venues sure to charge retailers’ creative batteries. By Al Urbanski
Miami Worldcenter, Miami
Location: Park West Retail GLA: 140,000 sq. ft. in phase one, 300,000 sq. ft. upon completion Retail tenants: None announced at presstime Completion date: Q4 2019 for phase one
The second largest urban development under construction behind Hudson Yards, Worldcenter’s 27 acres span 10 city blocks and include luxury apartment towers, a 1,700-room Marriott Marquis Hotel, and a promised 300,000 sq. ft. of open-air retail, dining, and entertainment. The location adjoins downtown Miami’s new Brightline rail station, a central hub forTri-Rail, Metrorail, and Metromover. Hines is building the project’s Class AA office tower that it says will be the biggest to go up in Miami in a decade. Taubman and The Forbes Company, developers of The Mall at Short Hills in New Jersey and The Beverly Center in Los Angeles, are handling the retail component.
Hudson Yards, New York City
Location: Between 10th and 12th Avenues from West 30th to West 34th Streets Retail GLA: 1 million sq. ft. Retail tenants: Include Neiman Marcus, Banana Republic, Coach, Lululemon, Zara, Banana Republic, Kiehl’s, Stuart Weitzman, Van Cleef & Arpels, Aritzia, Cartier, H&M, Patek Philippe, and Tory Burch Completion date: March 2019
Retailers attending ICSC’s Deal Making show in New York in December were astounded to find an Oz-like city had sprung up across from Javits Center. Hudson Yards — at $25 billion the single most expensive private real estate development in the history of the United Sates — will add 18 million-plus sq. ft. of residential and office space to a Manhattan backwater once populated by warehouses. New York’s first-ever Neiman-Marcus store will lead a collection of more than 100 luxury-leaning shops. A bevy of chefdriven restaurants, an 1,100-foot-high observation deck at 30 Hudson Yards, and Vessel, the beehive-like centerpiece of the project, ensure busloads, trainloads, and cabloads of traffic for decades to come. 32
Fashion District, Philadelphia
Location: Center City Retail GLA: 838,000 sq. ft. Retail tenants: Include AMC Theatres, City Winery, H&M, Forever 21, Zumiez, Asics, Zales, Guess, Columbia, francesca’s, Levi’s, Skechers, Chickie’s & Pete’s, Chick-fil-A, Oath Pizza, Burger Fi, Pei Wei, Freshii,and la Madeleine Completion date: September 2019
Philadelphia’s hot! Billion-dollar projects abound. The skyline-altering Comcast Technology Center is the city’s first supertall building at 1,121 feet. Some 8 million sq. ft. of new construction have gone up in Center City in 2018 alone, and the keystone retail portion is Fashion District. PREIT and Macerich bought The Gallery on Market Street with an eye toward bringing millennially relevant retail to a Philly crossroads. Fashion District is close by the town’s popular historic district and is connected to Reading Terminal, the Pennsylvania Convention Center, and SEPTA’s Jefferson Station. JANUARY/FEBRUARY 2019
The Dayton’s Project, Minneapolis
Location: Nicollet Mall & South 8th Street Retail GLA: 240,000 sq. ft. Retail tenants: The Dayton’s Food Hall & Market, which takes up 45,000 sq. ft., is the only announced tenant Completion date: Portions opening fall 2019
After Macy’s closed shop in what was Dayton’s first store in 2017, a group of companies including United Properties and Transwestern stepped in to continue the historic building’s century-long run as a retail landmark. The famed Dayton’s window displays presented scenes of aspiration for generations of shoppers, and now it endeavors to do the same for a new generation with restaurants, fitness centers, and highfashion shops. The heart of the redevelopment will be the food hall and market curated by Andrew Zimmern and operated by Robert Montwaid of Gansevoort Market in New York. The department store interior has been gutted to feature open mezzanines and a well-lit and spacious bazaar. Leasing is being handled by Mid-America Real Estate-Minnesota.
The Hub on Causeway, Boston
The Shops at Willow Bend, Plano
Sports-minded tourists may drift here merely to roam the same real estate as did Bill Russell, Larry Bird, Bobby Orr, and Phil Esposito. The Hub is built on the site of the old Boston Garden (and next door to the new one) where the Celtics and the Bruins made history. Entry points to the property include a new glass-topped entry for TD Garden off Causeway Street for the two million people who attend events there annually, an entrance from North Station accessible to 50,000 daily commuters, and an underground tunnel from the T subway. The retail portion of The Hub isn’t slated to open until the latter part of this year, but its highlight will be a 60,000-sq.-ft. Star Market, downtown Boston’s biggest grocery store. “The Hub will connect the West End and North End neighborhoods,” said Bryan Koop, executive VP of Boston Properties, which is co-developing the project with Delaware North, owner of both TD Garden and the Bruins.
Willow Bend could be a poster child for the plight of the enclosed mall. Long the go-to center in North Dallas, situated in a desirable and thriving suburb, the property lost Saks Fifth Avenue and Lord & Taylor in one fell swoop in 2010 and has suffered since. But owner Starwood has refused to surrender the real estate. It carved itself a new entrance for Willow Bend off the tollway that leads to The District, a modern upscaling of the food court with a band of eight distinct restaurants led by chef John Tesar’s Knife steakhouse. The reinvented center deftly plays the experiential game with a Crayola Experience and Children’s Playhouse installed, leaving affluent parents free to explore their newly renovated old favorite. And they can do it with a bottle of beer or glass of wine in their hands. Shoppers 21 and over can sign up to purchase and carry drinks anywhere on the property.
Location: Causeway Street near TD Garden Retail GLA: 210,000 sq. ft. Retail tenants: Includes Star Market, ArcLight Boston Cinema, a hotel, and a food court Completion date: Portions opened fall 2018
CHAINSTOREAGE.COM JANUARY/FEBRUARY 2019
Location: Dallas North Tollway and West Park Boulevard Retail GLA: 1,200,000 sq. ft. Retail tenants: Equinox, Luxury Cinema, Crayola Experience, Plano’s Children’s Theatre and The District restaurant complex plus two class A office towers, a hotel, and residential space Completion date: Fall 2019
RPAI’s The Shops at Legacy.
Dallas/ Fort Worth
Retail is prime for a rip-roarin’ time in North Texas. By Al Urbanski
More jobs mean more people and more rooftops, and jobs have been moving to Dallas/Fort Worth in big bunches in recent years. Toyota left Los Angeles to open its new U.S. headquarters in Plano last year. The nation’s largest distributor of pharmaceuticals, McKesson, announced in December it would abandon its longtime home in San Francisco set up its new base in Irving. Thanks in large part to corporate migrations such as these, Marcus & Millichap predicts that the Dallas/Forth Worth metro will be the home of nearly threequarters of a million more people by 2022. 4.8 million sq. ft. of new retail space was completed in the metro area last year, one-quarter of it in suburban Fort Worth extending west to Weatherford, south to Forney, and close to Denton in the north. This represented a decrease from 2017, when retail deliveries reached 5.5 million. Increased interest in the area from both national and regional retailers has developers struggling to keep pace with demand, according to Marcus & Millichap. Some 22 million sq. ft. of retail space was completed in the past five years, a time during which retailers absorbed more than 29 million sq. ft. The vacancy rate has fallen by 160 basis points as a result. 34
Everything’s big in Texas, as the saying goes, and that includes retail stores. In The Colony on Lewisville Lake northeast of Plano, Nebraska Furniture Mart is answering the needs of all the new households moving to the area with a 560,000-sq.-ft. store that makes the average IKEA appear understocked. But mixed-use centers like RPAI’s The Shops at Legacy that cater to an affluent, urbane population are what will more likely begin dotting the area. Tenants at The Shops include Bluemercury, Kendra Scott, The Impeccable Pig, and Urban Outfitters in a town center layout drawing steady traffic with bars and eateries such as Henry’s Tavern, Del Frisco’s Grille, Benihana, and Chipotle. Average household income within a three-mile radius of The Shops is $138,000, according to RPAI. That’s not to say necessity-based shopping centers will fade from the North Texas landscape. Hardly, according to Marcus & Millichap, which reports high demand for unanchored strip centers. Vacancy rates within the Dallas/Fort Worth metro are at their lowest in outlying towns east of Dallas and in central Dallas. Retail space is more readily available in central Fort Worth and southwest and north central Dallas.
dallas/fort worth By The Numbers
million sq. ft. retail GLA completed in 2018
average asking rent per sq. ft. downtown
increase in asking rent over previous year
718,300 population increase forecast 2017-2022
monthly retail purchases per household Source: Marcus & Millichap JANUARY/FEBRUARY 2019
CBRE Omnichannel Real Estate is future-proofing the real estate that supports todayâ&#x20AC;&#x2122;s dynamic commerce models. Leveraging the industryâ&#x20AC;&#x2122;s leading Retail and Industrial & Logistics platforms, we deliver an integrated suite of advisory, transaction and outsourcing retail logistics services that enable portfolios to thrive in the experience economy. How can we help you transform your real estate into real advantage?