CSA - May/June 2020

May/June 2020

Five Steps to Safeguard Businesses Tips for Healthy Buildings Readers Rate Grocery Centers

SHOPPING CENTERS

TAKE ON COVID-19 The industry weighs in on the pandemic that shut down most of retail

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from the editor’s desk

38

20

tech viewpoint: a retail tech column

On the Level: A real estate column

Contents VOL. 96 MAY/JUNE NO. 3

COVER STORY

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Shopping Centers Take On COVID-19 The industry weighs in on the pandemic that shuttered centers and how they think the next few months will play out.

14

Five steps retailers should take to safeguard their businesses and position themselves for post-pandemic success.

16

What to expect from holiday 2020 — and how to start preparing for it

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From online ordering to curbside pickup, the pandemic has accelerated many trends that were already revolutionizing retail.

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 $125 per year. $190 per year for Canadian subscribers; $275 per year for foreign subscribers, air-mail only. Single-copy price: $20. Periodicals postage paid at Chicago, IL and additional mailing offices. P ­ OSTMASTER: Please send address changes to CSA, Circulation Fulfillment Director, P.O. Box 3200, Northbrook, IL 60065-3200. Subscription changes may also be emailed to chainstoreage@omeda.com, 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. 96, No. 3, May/June 2020. Copyright ©2020 by EnsembleIQ. All rights reserved.

CHAINSTOREAGE.COM MAY/JUNE 2020

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Contents VOL. 96 MAY/APRIL NO. 3

42

REAL ESTATE

22

Trader Joe’s and Kimco Top CSA’s Grocery-Anchored Poll In a year when supermarkets have been retail’s star performers, CSA readers named Trader Joe’s the grocer they’d most like to co-tenant with in centers.

28

Post COVID-19: The Long-Term Impacts Experiential retail has been all about gathering spaces and dining halls. Does that plan have to be altered post-pandemic?

CBRE’s research chief Meghann Martindale takes on that and other serious new questions.

30

10 Under 40 Rising Stars of Real Estate “I fell in love with it. You see something created from nothing,” said one of this years’s 10 Under 40 honorees. It turns out to be a common feeling among these builders of the future of physical retail.

STORE SPACES

32

Retail design experts look at how store environments are likely to change as a result of the recent crisis.

33

Recommendations on what retailers can do now to make shoppers feel more comfortable

4

TECH

34

40

36

42

Vendor Q&A: As facilities management moves to the forefront of retail ops, NEST’s Michael Toth discusses how retailers can optimize their FM programs.

Trending Topics: Tips for healthy buildings

How fastgrowing specialty retailer Kendra Scott fast tracked curbside pickup

Tech solutions to help ensure success during, after COVID-19.

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FROM THE EDITOR’S DESK

A New Playbook — at least for now Fitting rooms by appointment-only.

Contactless payment options. Low-touch, high-tech display technologies. Plexiglass partitions at checkouts. Reconfigured layouts. One-way aisles. And more sanitizing — a lot more sanitizing.

These are just some of the measures that stores are rolling out (or have already implemented) in a marketplace upended by the COVID-19 pandemic. Some industry experts say that COVID-19’s impact on consumer behavior — particularly shopping — will last well beyond the end of the crisis and be forever changed.

Maybe. But I’ve always been a bit wary of overarching forecasts. Some of the early predictions that followed the 9/11 attacks, such as people refusing to work on top floors of big buildings, never came to pass.

Others, such as stringent safety measures at airports, became routine. I think a similar scenario will eventually play out in retail.

For the short term, however, the experience is anything but business as usual.

The situation is particularly tricky for apparel retailers, a high-touch and often high-service sector. Sixty-five percent of women said they would not feel comfortable trying on clothes in fitting rooms, according to a survey conducted in late April by retail predictive analytics company First Insight. And 66% said they would not feel safe working with a sales associate.

(There were generational differences, with only 49% of millennials saying they would not feel safe trying on clothes in dressing rooms versus 71% of baby boomers.)

“The Coronavirus has moved the industry away from high-touch to low-touch,” said Greg Petro, CEO of First Insight.

The ‘new normal’ for retailers will be to work with shoppers in a hands-free way to help them find what they need while also

CHAIN STORE AGE

giving them the space to feel comfortable, particularly with high-risk groups like baby boomers.”

Some retailers are already doing just that — and getting pretty creative about it, often with the help of technology. Suitsupply is a global menswear brand known for its on-site alterations and custommade suiting. As part of its new store safety plan, the digitally native retailer has installed free-standing transparent partitions that allow for up-close — and safe —interaction during tailoring sessions.

The sales associate can reach through the partition to take measurements while having minimal contact with the customer.

Suitsupply is also offering a guided virtual experience on its web site that helps customers pre-select items for store visits through co-browsing sessions with live style experts. Customers are guaranteed their selections will be waiting when they arrive at the store. An optional online tool allows customers to reserve prepared fitting rooms and private shopping suites.

Another digital native, Warby Parker, has also gotten creative — or more creative in this case. Developers for the eyewear retailer have built an app that allows store employees to measure the distance between the customer’s pupils — an important metric in eyeglass fit — on an iPad or iPhone, without having to touch the customer’s face.

The next few months are likely to be tough for retailers as they work to keep up with an ever-evolving landscape. But I have every confidence they will rise to the challenge as they have done so many others. Let’s end on an upbeat note, with some insights from Justin Hill, principal, MG2, on what retailers can do now to make customers feel safe.

“Focus on making shopping fun,” he said. “The messaging should be in your [brand] voice, not simply clinical instructions. Graphics and signage can be encouraging while also being informative.

Look to create smiles and surprises along the journey.”

Marianne Wilson mwilson@chainstoreage.com

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COVER STORY

SHOPPING CENTERS

TAKE ON COVID-19 The industry weighs in on the pandemic that shut down most of retail

By Al Urbanski

I

n the second week of March 2020, all non-essential retail stores were shut down in 40 states. COVID-19 had flipped the switch on America’s three-trillion-dollar brick-and-mortar machine.

Here are what some of the nation’s top operators of retail centers were thinking and doing when their worlds came to a grinding halt. And how they think the next few months might play out. (At press time, shopping centers in certain parts of the country were gradually reopening their doors.)

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MAY/JUNE 2020 CHAINSTOREAGE.COM

“What’s it going to look like when it’s done?

Tenants will have fewer stores.

Landlords will have fewer properties and be operating in a different way.”

— Joe Coradino, PREIT

Joe Coradino

Adam Ifshin

Liquidation is all part of our long-term thinking. Keep cash in. We renegotiated our bank line and we looked to gain savings from both capital and operating perspectives. We went to all the municipalities for tax abatements. It gave us some dry powder to operate through this to the other side.

We’re now thinking about what the other side looks like. It becomes almost a military operation. On the one hand you have sort of a traditional approach: Here’s what I think is going to happen. But if you’re wrong you have to work with multiple possibilities. You can’t rely on one scenario.

Like Mike Tyson said: “Everybody has a plan until you get punched in the face.”

What’s it going to look like when it’s done? Tenants will have fewer stores.

Landlords will have fewer properties and be operating in a different way. One thing for sure is that people will be more aware of the cleanliness of the environment.

But my opinion is that Americans will forget this more quickly than we think.

People want to commune and we need to do our part to give people safe environments in which to shop, dine, be entertained, work out.

When I was a kid I played ball on a team called The Mikes. One night one parent said to the coach, “You think you’re going to win tonight?” And the coach said, “If I didn’t think I was going to win I wouldn’t play.”

The single most important thing on my mind was taking care of my team. They are what have kept us so successful. I take ideas from 24-year-olds who’ve been here for six months. There are no voices too small to be heard in this situation.

We went 100% remote on March 13, and that hurt. It was hard. We were in uncharted waters. But we got it together quickly and the executive team meets daily at 7:00 or 8:00 in the morning.

Our next biggest mission was making sure we could operate our properties. We have lots of essential businesses like supermarkets and urgent care in our centers that are operating 24/7 now. If you’re a big national tenant, we understand you’re closed, but if your lease warrants you to pay your rent, we expect you to pay. We have mortgages that we have to pay and we have an obligation to collect the rent.

One thing we’re seeing here is a willingness on the part of the government to rethink what its obligation is to support the economy. We’ve received an unprecedented stimulus. And if there’s no second wave of the pandemic, I think we might be pleasantly surprised by holiday 2020. There will be huge pent-up demand.

The real winners at the end of this will be stores, I think. I was talking with someone whose wife tried to order diapers on Amazon and couldn’t get delivery for two weeks. So she tried Walmart.com and

Chairman & CEO, PREIT

CHAINSTOREAGE.COM MAY/JUNE 2020

CEO, DLC Management Corp.

was able to pick them up in three days. The capabilities of brick-and-mortar stores will be more appreciated.

Yaromir Steiner

CEO, Steiner + Associates My first worry was about our employees. Who gets furloughed? Who stays? We made sure that everybody got the same percentage of income, whether furloughed, working, or terminated. Once that was done, we jumped on the default notices and started to renegotiate leases. We had about 250 leases to renegotiate.

The story was basically the same all over.

“I’m a retailer. I don’t do sales, I cannot pay rent.” I understand they can’t pay rent, so we’ve had to make concessions and we asked for some things in return. Part of the calculus for owners and retailers alike is to assess that cash on hand, consider the burn rate, and make decisions accordingly. Ultimately, reality will prevail, and this will be settled through negotiations. Everyone will assume some of the burden based on their true capacity to do so.

The process of shutting down Easton Town Center safely is enormously complex. There’s no telling what the weeks and months ahead will bring. But if you are a developer, you have to assume that many tenants, legitimately or not, are going to default at some point.

Working with hundreds of tenants to navigate that process is, as you can imagine, no small undertaking.

Retailers and owners alike need to be making plans now to account for what will be a makeor-break season for many. Consumers will 9

COVER STORY

“This was the first time I’d been exposed to a Black Swan event. It’s like someone woke you up and said, “Next week, you’ll have no revenue.”

— Don Casto, CASTO

still be buying. The question is who will be selling, and how? Now is the time to invest in your online sales platforms, easy pick-up services, and other non-traditional options.

Don Casto

Partner, CASTO I’ve been at this for well over 40 years. I’ve been through hyperinflation, deflation, and the 2008 crash. But this was the first time I’d been exposed to a Black Swan event. It’s like someone woke you up and said, “Next week, you’ll have no revenue.”

My first thought was, “Well, my obligations haven’t gone away. I have to pay taxes and salaries.” But the government came in with the PPP program, and we have a great relationship with our bank. They called me to let me know that they were part of the problem in 2008 and that they wanted to be part of the solution now.

My biggest worry was payroll. We have spent 45 years building this organization and the foundation is people. The original eight partners are still together. We now fill a board of directors’ role, but a new generation of strong people have built this company and we did not want to furlough any of them.

We had 600 requests for rent relief and we’ve been happy to work with all the tenants, but what we don’t want to do is default on a loan. Long before this hit we reacted to the changing retail environment by focusing on retail entertainment — restaurants, grocery stores, theaters. That’s 10

a nice mix for the future — unless people remain afraid to get together.

Deborah Butler

President, Butler Enterprises We experienced dramatic extremes between stores that are completely closed or doing takeout only. Our grocery stores — we have eight of them in our complex — have long lines and out of stocks. It’s a new experience, and we are reacting to changes daily.

We formed a lease compliance committee that meets three times a week. Our tenants and leases are different — some are new, some are 30 years old. We have loans and operating obligations, so have to be realistic as we consider who can pay rent right now.

We carefully weighed the cost of replacing tenants versus assisting current operators as much we can.

We relaxed parking and signage restrictions to help tenants offer things like curbside service and pickup. My dad did curbside service at his supermarket back in the 40s, and this is a welcome comeback. I think this will stick more than ordering online nationally. People like ordering locally for same-day pickup, and that has staying power.

Gene Spiegelman

Vice Chairman, RIPCO I’ve been in this business since ’86 and been through every financial and social event since then — the savings and loan crisis, the dot.com bubble bust and the 2008 financial crisis. I grew up watching Vietnam on TV and went through

10 days without electric during Hurricane Sandy.

But we’ve not had anything in our lifetime like this, something that’s affected every real estate sector. Not since World War II, perhaps.

What this is most akin to, I think, is the ’08-’09 recession. It took until ’09 to understand the implications, and then retailers and landlords began restructuring leases because unemployment shot up to 10%. That’s how we negotiate deals — we establish a baseline and we move on from there.

I’m hoping that by the end of June the virus has died off. Then social distancing can be relaxed. Gateway cities like New York, Los Angeles, and Miami rely on a heavy dose of international tourism, and they’re going to suffer because that will be truncated. But I think that by Black Friday, stores and restaurants will be open again and people are going to shop and buy.

Francis Greenburger CEO, Time Equities, Inc.

The perception that the landlord takes all the rent and jams it in his pocket is as untrue as it can possibly be. So where we do make accommodations, we have been asking for things back — a lease extension, for instance. Our bandwidth to make accommodations for tenants is limited by our financial obligations.

What I’m suggesting is that governments offer some insurance to lenders, so that they can give owners a 90-day period without having to make principal payments. The bank doesn’t lose anything. The principal payments will just be delayed a bit.

MAY/JUNE 2020 CHAINSTOREAGE.COM

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COVER STORY I was around for the savings and loan collapse, the 19% prime rate, and the financial collapse of 2008. But the scale of this pandemic is incredible; virtually everyone is affected.

This is everybody’s problem and that’s why everybody has to step up.

Ophir Sternberg

CEO, Lionheart Capital This was a Black Swan event that no one could have anticipated. Strong stances were being taken — landlords demanding that rents be fully paid and national tenants saying they’re not going to pay. So in our Out of the Box Ventures retail unit, we said, “Let’s come up with a fair formula to use over the first few months.”

All the tenants that were shut down were asked to pay CAM charges and property taxes.

Rent was forgiven entirely for April and May. We just thought this was the right thing to do, but we got very much a mixed bag of reactions — to my surprise, actually. The national tenants mostly responded with letters from their attorneys. I guess it was because, though we forgave rent, we were still asking them to pay something.

The local tenants, the mom and pops, were more appreciative. We got a lot of nice letters — things like “We appreciate this so much that we intend to renew later this year.”

We acquired our retail portfolio with plans to repurpose and redevelop. We’ve spent a lot of time looking at our master plans and thinking about who will be our next tenants. So this crisis is quickening a shift that was already

happening, where outdated brands will fall to the sidelines and new businesses that make sense will thrive.

Ralph Conti

Principal, RaCo Advisors I’m a consultant, but in the case of Celebration Pointe in Gainesville, I have a slightly deeper involvement. My partner is one of the owners.

Like every other owner, the first thing we had to deal with was the tenants. Regular calls with many of them on a daily basis, trying to be problem solvers and not a problem creators.

I’m a real estate developer, so I look out of rose-colored glasses. Obviously this stay-athome thing will go away. So you can get in your car and go shopping, but do you feel comfortable doing it? I don’t think we’re going to get back to life as it was instantaneously.

People in this country are kind of aggressive, kind of like to push the envelope. I think people are going to come out of this fairly quickly.

If the pocketbook stays strong, everything is going to be fine, but if the economy doesn’t recover quickly, it might take all summer.

You’ve got brilliant people in this business, but it’s all about the consumer mindset and the consumer pocketbook.

Michael Powers

Senior VP, Tuscan Village, Salem, N.H. The monumental, negative impact on the retail and restaurant industry is enormous.

There’s no escaping it. Banks, landlords, retailers, restaurant operators and employees are all suffering. Depending upon how long this

lasts, we could likely see a dramatic, permanent change in retail real estate.

I don’t subscribe to the notion that this pandemic will forever change our purchasing habits. We are social creatures who thrive on personal interaction daily. It’s pretty clear to me that if you are selling a commodity product, your best distribution channel is online. Food and beverage socialization, fashion, and entertainment can’t be delivered to your door.

The hope is that this passes relatively quickly, allowing all parties to regroup, rehire, and straighten out their inventories. This would set the table for a strong holiday shopping season.

But if this drags on there could be many bankruptcies. There are some very fragile landlords and retailers out there.

Issie Shait

Executive VP, New England Development We’re focusing on promoting tenants that are currently open, like restaurants for takeout and grocery stores and more. Centers will likely be on different timetables for reopening, depending upon location. There will always be a place for brick-and-mortar retail, and we feel optimistic that shoppers will return to stores once the restrictions have been relaxed. People are looking forward to re-engaging with others and retailers will have excess inventory. There will be plenty of discounts and plenty of shoppers.

I think that holiday 2020 will focus on giving back. As a society, we have been through a trying and difficult period, and we’ll have to continue to provide assistance to those in need in our communities.

“The real winners at the end of this will be stores, I think. The capabilities of brick-and-mortar stores will be more appreciated.”

— Adam Ifshin, DLC

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EXPERT ANALYSIS

Positioning for Success Post-Pandemic Five key actions to take now

By Antony Karabus and Farla Efros, HRC Advisory Stores are reopening their doors in a landscape that will be changed forever. There will be a greater gulf between the winners and losers. HRC recommended five steps retailers should take to help best position themselves for success.

Malls and stores are slowly starting to reopen as governments remove COVID-19 shelter-in-place measures. However, the environment in which stores will reopen will be far from business as usual. Total consumer demand for “non-essential” items will likely be reduced as much as 50% for the next quarter and as much as 20-30% in the crucial holiday quarter. We also anticipate that some retailers with highly leveraged balance sheets will file for creditor protection.

Retailer profitability had already been in gradual decline due to the shift of store sales to their digital channels and the ongoing transfer of market share to online-only retailers. Many have seen their earnings decline and are now struggling to service debt and fund capital improvements. Many of these struggling retailers will not survive in their current form.

HRC also predicts the following: • Digital channel sales penetration will increase to at or above 30% of total sales for many retailers and up to 40% for retailers serving digitally enabled demographics.

• The weakest and most heavily indebted retailers will file for bankruptcy and either liquidate or restructure, while closing a significant number of stores.

• “Non-essential” retailers that are the “authority” in their sectors will gain significant market share from the struggling retailers.

• Store operating costs will rise to serve customers safely.

We’ve developed a five-step rapid response program for retailers to safeguard their businesses and position them to be the winners.

HRC recommends retailers take the following five actions.

1

Reinforce and Strengthen Liquidity Position: The single most important factor for retailers to transform their business is liquidity.

Immediately enact robust 13-week rolling cash flows to determine and take action on reducing the “cash burn” until consumer demand recovers.

Cancel or defer all non-essential uses of capital that do not produce, at most, a twoor three-year payback. Cancel share buybacks and dividends. Defer non-essential store remodels. Negotiate with all vendors to develop deferred payment terms on all outstanding payables. Explore alternative lease mitigation strategies to conserve cash.

2

Assess Inventory Position and Develop Effective Disposition Strategy: Virtually all retailers have stores with too much seasonal inventory that is unsaleable without major markdowns. Determine inventory composition and ensure a strong omni-channel capability so stranded in-store inventory can fulfill digital orders.

Determine how much inventory can be packed away versus what needs to be cleared to make room for fall. To create cash now, consider the possibility of using a liquidator.

For retailers who are funding their inventory through asset-based secured lenders, HRC predicts, the inventory value will be re-appraised downwards, increasing risk of covenant breach. This will strengthen the case for more effective life-cycle management to minimize margin erosion

3

Realistically Forecast Customer Demand and Build Digital Capability: Establish realistic consumer demand forecasts by quarter, from now to 2022 to

14

guide merchandise buyers in planning for holiday 2020 and 2021 cash flow.

Based on the likely shift to digital, this will help direct investments to the right capabilities to allow demand to be effectively serviced.

Right-Size the Store Fleet: Use the customer demand forecast to create a bottom-up store-level profit contribution analysis to determine viability. Based on lease expiry, consider having those stores serve as a digital and omni channel fulfillment center.

Consider withholding or delaying rent payment on weaker stores to conserve cash. However, real estate mitigation strategies come with a risk of landlords placing tenants in default. It’s advisable to retain a lease mitigation professional to explore options.

Right-Size the Business Model and Cost Infrastructure: Based on the new consumer demand forecasts, re-cast the P&L and determine the cash burn and profitability gap by quarter to determine the cost efficiency take-out requirements.

Assess all costs and determine the necessity of each investment in enabling important digital and other capabilities.

Defer discretionary expenses without clear payback. Balance sheet restructuring is not enough for survival. Without transforming the operational business model, a retailer is only buying time without long-term sustainability.

— Antony Karabus, CEO, and Farla Efros, president, HRC Advisory have worked extensively with more than 100 retail chains to help improve their profitability and liquidity. HRC has a reputation for agility, speed and sense of urgency.

MAY/JUNE 2020 CHAINSTOREAGE.COM

EXPERT ANALYSIS

Big Ideas for Holiday 2020

By Mike Matacunas

In less than six months we will be deep into the holidays. We will still be social distancing and avoiding large crowds. We will have had to rethink back-to-school, Halloween and Thanksgiving. All of these changes will have an impact on retail.

With the global nature of our supply chains, you’ve already made the majority of your purchases and commitments for the back half of 2020. You have forecasts, plans, budgets, etc. I appreciate that an optimist would now say “We’ll bounce back.”

This may be true, but you’re not going to fully bounce back by the holidays this year.

You’re still going to be dealing with inventory, labor, pricing and P&L challenges.

This kind of financial shock to consumers will take time to pass. This will be compounded by high unemployment, likely to be above 8% in the fourth quarter, low consumer confidence and stock markets that remain fragile. This will not be a spending year.

The one bright spot will be online. According to a Quantum Metrics study, online shopping increased 52% between the end of January and end of February 2020. The study also uncovered an 8.8% increase in conversion rates for visitors to sites. If you’ve been in retail, these findings are not a surprise. The consumer has been moving online for BIG IDEA:

New Delivery Partnerships

We are going to leapfrog buy-online- pickup- in-store as a critical capability. You need a partnership to deliver product direct to the consumer. UPS and the large shipping companies are going to be tested and you need a place in line. Get this worked out NOW.

the past 10 years. The implication, however, is that any remaining hesitation on the part of the consumer to shop online is gone. This outbreak will be a tipping point for stores.

Get Your Online Plan Together Most retailers have the ability to sell online.

We have been making this transition for years. For 2020, you’ve bought to sell across channels, you have call center teams to facilitate the sale and, in most cases, you have third-party agreements to step in as capacity exceeds your resources. The question now is, how big is this part of your business going to be this holiday season?

You need to solve for problems such as, “What would happen if 25%-40% of our store business moved online?” and “What role can our stores play in supporting greater online sales?” or “Do we have the resources to pick, pack and ship online sales that grow by 100%?”

Plan for Soft Store Comps The National Retail Federation stated that 2019 holiday sales were up 4.1%. This was double the 2.1% reported for 2018. In short, we had a great holiday season last year as retailers.

Consumer confidence was high and spending was strong.

It seems unlikely either of these two things will be true this year.

As you built your budget for 2020, I expect you had positive comps from your store base as well as

16

BIG IDEA:

Reorganize the Company

For years, retailers have divided their organizations and then divided them again based on some new idea. Since you have probably had to reduce the workforce, take this opportunity to reorganize and focus on the most important tasks: finding great product, connecting with your customers, creating value for your shareholders. strong growth in your online business built into the numbers. It probably also had capital expenditures to build new stores or renovate an aggressive number of locations.

Along with ambitiously rethinking your online plans for the holidays, now is the time to reset your comparable sales expectations, budgets and capital plans. At least two of the months this holiday period will be soft comps.

But which two depends on your merchandise segment. If you carry more consumables, November and December will be your softest months. If you carry more discretionary, including apparel and fashion, October and November will be your softest.

This doesn’t mean you won’t be able to sell product. You might be able to sell a great deal of product, but if you drive top line, you’ll most likely lose it in margin. A cautious consumer will bargain shop and hesitate.

This will be a holiday season that will test all of your retail experience. You’ll have soft store comps, lower margins, a surging online business and less traffic.

There is an expression, “never waste a crisis.”

If you see the COVID-19 quarantine and store closures as a temporary issue, then I expect you will have a difficult 18-24 months ahead.

This is a change to our ecosystem as retailers.

Great leaders will recognize this and seize the opportunity.

—Mike Matacunas is a 30-plus year veteran of the retail industry. He was most recently the chief administrative officer of Dollar Tree and Family Dollar where he led the acquisition and integration of Family Dollar. Prior, he was the CEO of The Parker Avery Group. He is currently CEO of Five Hill (mike. matacunas@fivehillservices.com) MAY/JUNE 2020 CHAINSTOREAGE.COM

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EXPERT ANALYSIS

Retailers Embrace a Brave New Industry Pandemic accelerates many trends that were already in motion

By Jill Standish COVID-19 is altering consumer behaviors and many of these shifts could be permanent.

Online ordering, curbside pickup and home delivery may have been growing in popularity before the coronavirus pandemic began, but they weren’t yet the norm. They soon could be, because once people realize the benefits of digital commerce, they are unlikely to abandon it altogether.

New Accenture research found one in five respondents who said their most-recent grocery purchase was done online were first-time online grocery shoppers. And while 32% of current purchases of all products and services have been online, that figure is expected to rise to 37% going forward.

These developments present a doubleedged sword for retailers: There is a clear opportunity here to grow the business through digital commerce, but this opportunity brings with it a higher operating cost structure, which can impact margin.

Think of the grocers, pharmacists, specialinterest stores and discount chains that consumers typically visit in person. Before the outbreak, these brands may have been developing their own digital shopping platforms, but none could have expected demand for them to grow so quickly.

If these retailers can come to grips with digital commerce, they face a huge opportunity. But making the leap isn’t easy. Many generate the bulk of their revenues through their stores, so they will need to revise their operating model. Moreover, launching a new service requires a higher operating cost structure, while anticipating future demand is extremely difficult when the course of the crisis remains unknown.

Retailers can, however, take immediate steps to ensure their businesses are getting ready for the shift to digital commerce.

This means taking a careful look at five core capabilities — marketing, digital ecosystem, product line, supply chain network and stores

— and assessing each for its strengths and areas for improvement.

With that in mind, we recommend five questions that brands could ask themselves as they assess these capabilities and provide a flavor of what “best in class” looks like for each.

How strong is our digital commerce marketing strategy?

Retailers that are optimized for digital commerce have an integrated, customercentric approach to marketing that is seen as a strategic growth driver and strives to create a seamless customer journey. Over time, the business can dial up or dial down marketing activity as required, drawing on automation and AI to deliver hyperrelevant campaigns across channels.

Are our digital touchpoints configured to support increased volume?

In the retail industry of tomorrow, digital is an integral part of a brand’s mix of consumer touchpoints to drive customer lifetime value. Leading brands configure their mobile channels, social channels, visual search and voice-shopping to deliver an intuitive and seamless experience.

Is our product range “liquid”?

Omnichannel merchandising and assortment planning is managed by a single team. Retailers need to have insight into product availability across channels. To do so, they increasingly draw on a diversified supplier network and use advanced analytics to identify demand, build a 360-degree picture of customer needs, and tailor assortments to individual customer segments.

Meanwhile, advanced demand forecasting and technology helps manage demand and inventory across channels and locations.

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Does our supply chain support our target digital service and increased profitability?

Retailers implement a multichannel supply chain network with different facilities based on product segmentation, including regional centers, metro hubs and third-party solutions depending on market needs.

They should aim for a last-mile delivery platform that enhances delivery routing, provides real-time tracking and enables redirection capability.

Are our stores prepared to play a new role in order fulfillment?

Digital fulfillment capabilities are integrated across the store network, with dark stores leveraged to facilitate curbside pick-up and other fulfillment options. Retailers need to think how advanced analytics and AI can help them optimize resource allocation across these facilities. They also need strategic partnerships in place with third parties and other retailers to satisfy shifts in demand.

The Post-Crisis Normal The immediate focus for retailers should be to leverage digital commerce to drive sales and ensure customer and employee safety. Longer term, we can expect permanent shifts in demand. All retailers will need to adapt and efficiently manage digital platforms to serve their communities.

This doesn’t mean that stores are going to disappear. But brick-and-mortar premises — even in the grocery, discount and specialty segments — will never be the same. As with the other changes described above, the realignment is part of an exciting trend that is already in motion. The only difference is that it’s happening much faster than any of us were expecting.

— Jill Standish is senior managing director and head of retail at Accenture MAY/JUNE 2020 CHAINSTOREAGE.COM

ON THE LEVEL

The Upside of Shutdowns The last Saturday in April, spring arrived in New York in a big way. Sunny. Low 70s. Certainly not a COVID lockdown day. Not a day to pull the blinds down on the glorious sunshine and bingewatch Bosch on Amazon. No, this was a day to escape flu prison.

My girlfriend Debby and I were both two weeks over our cases of COVID-19.

Aside from completely losing my senses of taste and smell, neither of us had suffered serious complications. We decided we’d lam out and take a quick ride up to Rye Playland. The world’s oldest operative amusement park has a nice little wooded trail that runs alongside Long Island Sound, and hiking is a natural medium for social distancing. I called my son Roman to convince him to end his apartment self-exile in the Bronx and join us, assuring him there wouldn’t be that many people around.

Wrong. A mid-July-like line of cars queued into the Playland parking lot, which was packed. One group of millennials had backed their Jeeps and SUVs into a socially distanced vehicle circle, each of them perched on their tailgates sipping beers and chatting merrily. The nature trail, usually empty when the roller coaster is in service, was chocked with more people than I’d ever seen before.

It was all so clear. It was the acting out of a human impulse as familiar and as natural as hunger and greed. Tell someone they can’t have something, can’t do something, and they must have and do it. Tell them not to scratch that annoy

ing itch and they aren’t able to get it off their minds.

In preparing this month’s cover story, I spoke to some of the most experienced retail real estate developers in the nation and asked them how they had reacted to a singular event in the history of commerce — if not the history of the world.

All were bedeviled by its uncertainties, its lack of a configured timeline. This wasn’t 2008. No horrific economic decline brought this on, but an act of God or nature. Not one of them would venture when it might end, though all believed that the rigors of coronavirus would speed up fundamental changes in the retail business.

“There are tenants that won’t survive.

This crisis will create more vacancies that will force the landlords to redevelop the properties,” said Ophir Sternberg of Lionheart Capital. “This is quickening a shift that was already happening, where some of the outdated spaces will fall to the sidelines and be replaced by new businesses that make sense.”

When it’s over, the pandemic will have done brick-and-mortar a big favor, I think. Its drastic interruption of routine provided a raw demonstration of how important physical retail and shopping centers are to people’s daily lives. And it’s done it in a way that national retail chains and mall owner could never do.

They’d have had to shut themselves down, to go on strike and say to America, “Go ahead, get all your stuff through the mail. See how that works for you.”

The days that the malls and shopping centers and stores all open up again will be big events in each and every locality.

They will be different. Some familiar stores will be gone. But the people who fill them will be smiling and talking and eating and drinking like those young folks in that circle of cars on that sunny day at Rye Playland. They’ll feel they have gotten their world back.

Al Urbanski aurbanski@chainstoreage.com @AlUrbanski (Twitter) MAY/JUNE 2020 CHAINSTOREAGE.COM

lifestyle grocer mixed-use development

REAL ESTATE

Retailers’ Favorite Outdoor Center Partners: Trader Joe’s and Kimco And the Southeast is the hottest region for expansion in Chain Store Age’s readers’ poll on grocery-anchored shopping centers

By Al Urbanski Anyone who’s ever wondered about the level of need people feel for necessity-based shopping centers learned how high it was during the COVID-19 shutdowns. In coronavirus hotspots like New York City, people were still waiting in lines to get into supermarkets as calendars turned to May. “Sales at supermarkets in our centers went up 30 to 50 percent in the first few weeks of the crisis. Parking lots were crammed,” said Richard Dube, president of groceryanchored center owner Tri-Land Properties.

The chief executive officer of the groceryanchored center owner ranked No. 1 by Chain Store Age readers in this year’s survey — Kimco — felt that if there was one shin-

ing light beckoning Americans during the pandemic, it was the local supermarket.

“Grocery stores have proved today that they have never been more critical to our ecosystem,” said Conor Flynn, whose company was named as one of the best groceryanchored center operators by 54% of survey respondents.

“I loved seeing how our supermarkets responded so quickly to people’s needs.

They dedicated hours to seniors. They put up coverings around registers to protect shoppers and workers. They created a level of safety that we had never seen before,” Flynn said.

All supermarkets have been operating at

WHAT IS CURRENTLY BEST REGION OF U.S. FOR EXPANSION IN GROCERY-ANCHORED CENTERS? Southeast

50%

Southwest

27%

Northeast

25%

Midwest

25% 20%

California

18%

Mid-Atlantic Northwest

14%

Plain States

14%

Mountain States

12% 0% 10% 20% 30% 40% 50%

SOURCE: CHAIN STORE AGE

22

high levels during the COVID-19 crisis, but we asked readers to name which banners they most like to put their stores next to in centers. More than half of survey respondents named Trader Joe’s, making it the most-desired grocery chain on our list.

The quirky supermarket with a selection of private label offerings ranging from snacks to coffee to ethnic dinners rose above Whole Foods, Walmart, Publix, and Kroger in our readers’ top five selections.

Dube, who started his career in the grocery business with Jewel and went on to become VP of real estate and construction at Loblaw, thought Trader Joe’s worthy of the praise.

“Trader Joe’s sales per square foot could be one of the highest in the country. They’ve just blown the doors off of other stores with a phenomenal business,” Dube said.

Flynn wasn’t surprised over Trader Joe’s placement in the survey, either.

“At one center where we had a major supermarket anchor, we had a grocery lease available and put Trader Joe’s in. The other supermarket complained at first, but then its traffic increased when Trader Joe’s opened,” Flynn said. “It says a lot about modern grocery shoppers. Ask them which supermarket they go to and they’ll name three or four. They’ll go to one for standard items, another for produce, and another for specialty items.”

Over the past five years, Kimco made a significant change in its investment and management philosophy. The 60-year-old company owns interests in more than 400 open-air shopping centers and mixed-use assets that hold in excess of 72 million sq. ft. of MAY/JUNE 2020 CHAINSTOREAGE.COM

SUPERMARKETS ARE MORE ESSENTIAL THAN EVER... ...and a key to successful retail redevelopment

Even in a disruptive pandemic, necessity-based, grocery-anchored shopping centers have proven their reliability to perform and generate sales.

More than 40 years ago, Tri-Land recognized the importance and durability of this retail segment in structuring its core redevelopment strategy, which is still successful today: ▼

Acquire distressed supermarket retail locations in underserved, high-density markets

▼

Focus on the fundamentals – market research, consumer trends, competitive forces and investment potential

▼

Renovate and revitalize underperforming properties into dynamic profit centers

▼

Build relationships with major grocery retailers – 90 percent of Tri-Land projects are grocery-anchored

▼

Create lasting value for consumer, tenant, investor and community stakeholders

Reach out to our acquisition, investment and leasing team to learn more about our unique redevelopment approach and investment opportunities.

THE CROSSINGS SHOPPING CENTER, SMYRNA, GEORGIA

Before

After

One E. Oak Hill Drive | Suite 302 | Westmont, IL 60559 | 800-441-7032 | trilandproperties.com CHICAGO, IL

▼

CONYERS & SMYRNA, GA

▼

INDIANAPOLIS & MERRILLVILLE, IN

▼

OVERLAND PARK, KS

REAL ESTATE

WHAT SUPERMARKET CHAIN WOULD YOU MOST LIKE ADJACENCY TO? Trader Joe’s

56%

Whole Foods

50%

Walmart

39% 35%

Publix Kroger

32% 30%

Wegmans 14%

Safeway

13%

Meijer Stop & Shop

11%

Giant

8%

HEB

8%

Shop-Rite

8% 6%

Hy-Vee

5%

WinCo

4%

Sprouts Aldi

2% 10%

OTHER:

0% 10% 20% 30% 40% 50% 60% SOURCE: CHAIN STORE AGE

WHAT BROKERS DO YOU FIND MOST ABLE IN SECURING SPACE IN GROCERY-ANCHORED CENTERS? CBRE

63%

Colliers

23%

Metro Commercial

17%

Chain Links

13%

Retail Brokers Network

11%

Capital Retail

10%

Avison Young

6%

Katz

6%

Levin

5%

X-Team

5%

EDGE

4%

Gordon Brothers

4%

SOURCE: CHAIN STORE AGE

0% 10% 20% 30% 40% 50% 60% 70%

29% named other brokers including FOGO Realty, H&R Retail, Madison Marquette, SRS, Newmark Knight Frank, Shopping Center Group, Trinity Commercial group, and local brokers.

24

leasable space. To create a branded identity, it has placed the Kimco name on all its properties and has trademarked the motto, “More than shopping — everyday living.”

“Putting our brand on our assets gave us the ability to have a pride of ownership unmatched by any of our competitors,” Flynn said.

Second on the list of favorite operators was Regency Centers, a company similar to Kimco with 400-plus mixed-use and outdoor centers. Grocery-anchored centers make up the majority, and Regency pushes the quality envelope by creating modern town centers such as Belmont Chase in Loudoun County, Virginia, and Northgate Marketplace (with a Trader Joe’s) in Oregon.

“I think our ranking in this poll is buoyed by a couple of important aspects of our operations. The first is our people.

Our team members truly care about our retailers and service providers and the communities they serve,” said Regency’s president and CEO Lisa Palmer.

“Our centers reflect our Fresh Look philosophy of a robust merchandising mix, quality place-making, and a connection to the surrounding neighborhood,” Palmer said.

Earlier this year Regency Centers was named to Newsweek’s inaugural America’s Most Responsible Companies 2020 list.

For the second consecutive year, the Southeast was named the hottest region of the country for grocery-anchored center expansion. Half of those surveyed said that’s where they saw the most opportunities. More than 20% named the Southwest, Northeast, Midwest, and California as hot-spots, as well.

Florida is accounting for much of the growth in the Southeast. The third most populous state after California and Texas, it has ridden a decade-long upswing in new residents, adding almost 3 million since 2010 to its current total of 21,478,000.

CBRE, perhaps the largest real estate services company in the world, was named by 63% of survey respondents as the most able broker in securing space in groceryanchored centers. It was followed by Colliers, Metro Commercial, Chain Links, and Retail Brokers Network.

MAY/JUNE 2020 CHAINSTOREAGE.COM

REAL ESTATE

Despite what our readers have to say about the most successful sector in retail real estate, 2020 will always be remembered as the year that grocery-anchored shopping centers became local outposts of sustenance and survival during a historic battle against sickness and distress.

“During the week of March 14, when the

crisis started to hit home, online grocery searches hit 360% of their average volume as consumers were seeking out how to find their essential needs,” said Regency’s Lisa Palmer. “These grocers have shown that they are a cornerstone in their communities and a place to find needs, but also a sense of normalcy during uncertainty.”

WHICH OF THESE OWNERS AND DEVELOPERS DO YOU RATE HIGHEST FOR THEIR GROCERY-ANCHORED CENTERS? Kimco

54% 43%

Regency Phillips Edison

26%

DDR

20%

Weingarten

17%

Inland

15%

Tri-Land InvenTrust

6% 4% 0% 10% 20% 30% 40% 50% 60%

15% named others including Brixmor, Federal Realty, Nuveen, ROIC, CenterCal Properties, Morgan Properties, and Harbor Retail Partners.

SOURCE: CHAIN STORE AGE

CATEGORIES OF NON-GROCERY RETAIL YOU MOST DESIRE ADJACENCY TO IN THESE CENTERS: Coffee shop

65%

Fast-casual restaurant

61%

QSR restaurant

49% 45%

Fitness center Bank branch

40%

Liquor store

27% 20%

Hair salon/Barber shop Dry cleaner Nail salons Ice cream shop

17% 13% 10% 0% 10% 20% 30% 40% 50% 60% 70%

SOURCE: CHAIN STORE AGE

26

THE BEST PLACE FOR A GROCERY-ANCHORED CENTER

By Richard F. Dube

Chain Store Age readers identified the Southeast and the Southwest as prime regions to open new grocery-anchored shopping centers, and I don’t disagree. But the truth of the matter is that the best place to open a new grocery-anchored center is in the neighborhood that needs one the most.

My company, Tri-Land Properties, is based in the Midwest. We operate centers in places like Milwaukee, Minneapolis, Chicago, and Kansas City and we are fill-in players. We do lots of research and look for areas of high density and high traffic, and when we find a center in which a grocer is not operating a contemporary facility, we will attempt to buy that center and upgrade the supermarket.

It makes no difference where in our great country a grocery-anchored shopping center is located. All tenants in all such centers want the same thing — a modern, highly competitive supermarket that they know is going to deliver volume to that center.

So, very often, the best place in which to add a new center is in a lot where a center already exists, but where you have an undersized, old, non-competitive supermarket. We may pay a little more for the land, because it’s harder to get into these markets. But once we get the right supermarket established there, providing the products and services local residents demand, it always pays off.

Richard Dube is the president of Westmont, Ill.-based Tri-Land Properties and was once the VP of real estate and construction for Loblaw.

MAY/JUNE 2020 CHAINSTOREAGE.COM

Untitled-

Untitled-1 1

2/7/2019 11:42:28 AM

REAL ESTATE

Post COVID-19: The Long-Term Impacts The pandemic will force a rethinking of the use of experiences, drinking, and dining in the transformation of retail centers.

By Meghann Martindale Dramatic shifts in the industry were already underway at the start of 2020 with changes ranging from e-commerce disruption and evolving store formats to new lease and capital structures. Now the world inconceivably grapples with COVID-19. Store closures, nonpayment of rent, sales declines, employee furloughs, and increased debt are the order of the day.

The pandemic accelerated the long-term trends we thought we had years to adapt to.

Now, however, issues such as accelerated e-commerce sales, department store failures and mall relevancy demand our immediate attention.

Rethinking experiential For the past 10 to 15 years, brick-and-mortar developers have used place-making and experiential attractions as chief weapons against the threat of e-commerce. Much of this was achieved through the socialization of properties and interaction with customers around food and beverage, entertainment, health and wellness, unique start-ups, and community events.

COVID-19, however, is antithetical to successful experiential retail. It’s sent consumers into hibernation through social distancing and lockdown measures that eradicate our ability to gather, dine out, work out, and use shopping as leisure.

Consumers are sure to re-emerge with pent-up retail demand and, when that happens, the retail industry must play an active role in helping consumers feel secure while displaying sensitivity to the trauma endured.

The gradual re-opening of retail in China through March and April serves as an instructive benchmark of what we expect to see in the United States when our quarantine restrictions are lifted. Practices that we

should prepare to embrace include controlling crowd density with ongoing social distancing, checkerboard seating in movie theaters, and taking temperatures upon store entry. It will be imperative to allay customer caution while we redefine experiential retail over the long-term.

Grocery grows online Grocery is relatively e-commerce proof.

Despite skinny margins and consolidation in the marketplace, grocery-anchored centers have been the most resilient segment in retail over the past several years. The recent months have reinforced its importance more than ever as one of few essential goods categories permitted to remain open during COVID-19 shutdowns.

An unprecedented migration to online shopping has been fueled in recent months with social distancing measures, causing a surge in demand that has led to empty shelves as consumers stockpiled. Many operators have seen double- and triple-digit sales growth amid the panic-buying spree, whereas they’re accustomed to accounting for just a fraction of the overall online sales.

The question remains how much of this crisis-driven e-commerce migration converts permanently as consumers adapt to purchasing groceries online.

Practices like curbside pickup and clickand-collect (ordering online and collecting at designated in-store locations) have become more popular. Operators hurriedly expanded these options to meet demand. As in China, we will likely see consumers wanting to resume in-store shopping when safe to do so to select fresh products, meats, and specialty items. However, it may be much more common in the future for households to order staples and dry goods online resulting in accelerated growth of online grocery sales.

28

Restaurant re-entry Food & beverage is the hardest hit of the retail categories. Tens, possibly hundreds of thousands of restaurants were forced to close dine-in service through mandated shutdowns nationwide. Some restaurants have been able to remain open during the pandemic with skeleton crews offering takeout and delivery services. However, restaurants often generate only 10% to 20% of sales from these practices.

Sales lost during COVID-19 related closures are permanent. Spending on meals cannot be deferred like apparel and other discretionary retail goods. With still so much uncertainty surrounding the depth and duration of the virus, we can’t predict when restaurants will re-open nor what the consumer appetite for dining out will be once the coast is clear. We can predict that a significant portion of food and beverage seating in the U.S. post-COVID-19 will be lost due to capacity reductions and permanently closed restaurants.

Restaurants require a more prolonged reentry phase than soft goods retail. Re-openings will be staggered so owners can re-hire furloughed staff, resurrect vendor accounts, restructure leases with landlords, and regain customers. If China is any indication of how food and beverage will reemerge in the U.S., we will see decreased seating capacities with greater distance between tables and bar stools, protective equipment and temperature checks for staff, limited hours of operation, and the possibility of dine-in service during the day and deliveryonly in the evening.

—Meghann Martindale is the global head of retail research at CBRE MAY/JUNE 2020 CHAINSTOREAGE.COM

REAL ESTATE

10 UNDER 40

Retail Real Estate’s Rising Stars

Some of CSA’s 2020 Rising Stars of real estate were interested in nothing else since childhood; others were introduced to the business by a friend or fell into it by complete accident. But all fell in love with the industry’s entrepreneurial nature and tangible rewards. Meet this year’s top ten below.

BY DEBBY GARBATO

CHRIS RESSA, 36

Executive VP and COO, DLC Management Corp.

Ressa grew up in a blue collar household and his goal was to “get to a different place” and not “bang a hammer like my father.” Ressa attended Rutgers University on a wrestling scholarship, earning an economics degree.

His first job was with Sherwin-Williams, where his team secured locations for stores, district offices, and paint manufacturing. “I had no previous real estate exposure. I wasn’t behind a desk 24 hours and was connecting with people. I was fascinated,” he said At DLC, Ressa moved to the landlord side. He oversees a $2.5 billion portfolio and is the topproducing leasing rep, all while overseeing four departments and about half of the company’s staff.

“If you aren’t efficient, you run in circles,” he said. “The best strategy involves combining diligent focus and effort with eating an elephant one bite at a time.”

COVID-19: “I don’t dwell on negative energy.

You must have thick skin to handle the coming blows. My dad put a lot of pressure on me and sports helped me develop a high stress tolerance.”

DAVID DALY, 36

Senior VP, CBRE As a child, Daly idolized his uncle, a developer who worked on projects with Target and Walgreens in Minneapolis. “He always had some cool business going on,” Daly said. So in college, Daly majored in real estate and did two internships. He has been in brokerage ever since.

“I had a very narrow focus,” he observed.

Since joining CBRE in 2013, Daly has closed

more than 275 transactions. Like his uncle, he has worked with Target, but also with Aldi, Caribou Coffee, Soul Cycle, AT&T, and more.

Creating the right team has been cruicial. “I partnered with two gentlemen, Matt Friday and Eric Sheaffer. We have the right chemistry and successfully make deals,” Daly said.

He enjoys working with creative, entrepreneurial concept developers. “I interact with them early and go and see new concepts. I’ve studied how retail modeling works and how they bring concepts to fruition. Sometimes, I think, `there’s no way this will work’ and it’s succesful,” he said.

COVID-19: “It’s all hands on deck for our team.

We’re talking to clients about lease structures and changing development plans. But it’s still early for retailers to put plans together and know how the dust will settle.”

NOAM BEN-ZVI, 36

CEO and co-founder, Placer.ai The CEO and co-founder of location intelligence platform Placer.ai, Ben -Zvi helps real estate entities identify opportunities and manage risk using real-time data analysis of traffic patterns.

“The excitement comes from seeing how much value companies can gain from reliable, objective data,” he said. “Real estate underpins much of the wider economy.”

Placer.ai’s ability to instantly analyze store traffic patterns earned it instant recognition from large mall and shopping center owners, as well as top retailers, and Ben-Zvi is elated when an idea evolves into a product these entites embrace.

“Real estate is filled with some of the smartest people I’ve met. Conversations and insights push you to take your product to new heights, and the high point gives you perspective,” he said. “It also makes it clear how much farther you must go.”

COVID-19: “The first thing you realize is that

30

you’re only as strong as those around you. The second step is to look for data to understand the problem and identify possible solutions. Both principles have guided our approach during this pandemic.”

IRYS CITKO, 32

Director of leasing, Brookfield Properties Referred by a friend, Citko knew little about real estate when she was hired by a local developer.

She had degree in finance and an MBA, but she soon found she was adept at developing relationships. Signing Crunch Fitness to a 20,000-sq.-ft. space in Richmond that had gone unleased for a decade showed her the impact that she could have.

“It was a big spend that moved the needle on the property and made it a destination,” Citko said.

In 2017, Citko received the Brookfield’s Top Deal Maker award — the first woman to do so. “Realestate isn’t as male dominated as other industries,” she said. “There are opportunities.”

COVID-19: “Many people in the centers I lease were very appreciative to receive a call from someone who listened to where they were and what they thought was best for their business.”

ANDREW MOTH, 29

Regional property manager, Poag Shopping Centers At 25, Moth became Poag’s youngest ever property manager. Today, he manages three lifestyle centers in Atlanta’s Marietta and Peachtree City suburbs totaling over 660,000 sq. ft..

“Watching empty spaces transform into a Sephora or Tropical smoothie is amazing. We have events for kids or you can grab a drink and hear live music. The community is engaged and taking ownership,” Moth said.

Nationwide, Moth has traveled to other Poag centers to train new property managers on everything from security and maintenance to tenant mix and daily operations. “The fact that they use my skills when there isn’t a set of rules is a high point. I may be asked ‘What do I do? We have a sink hole.’ I create a plan to help solve the problem and they’re grateful.”

COVID-19: “If you try to solve every problem, you get lost in the small stuff. You must take it one step at a time. We’re in this together. Tenants pay our bills and we must work with them. With common sense, there’s always an answer.”

MAY/JUNE 2020 CHAINSTOREAGE.COM

EHUD KUPPERMAN, 37

Senior VP of development, Urban Edge Properties In the early 2000s, the man known by friends as “Oody” was working for a dot.com. Then came the dot.com crash and unemployment. Needing work, he joined a real estate company doing technology-related project management, a job that involved daily work on construction sites.

“I fell in love with real estate. You see something created from nothing and the level of coordination and skill involved is underappreciated,” he observed. “It’s a tangible result.

Your ideas come together and there’s a building at the end.”

Career highpoints include Blumenfeld’s East River Plaza in Harlem, a mixed-use project with Manhattan’s first Target and its only Costco. At Equity One, he worked on Gallery at Westbury Plaza, which attracted The Container Store, Trader Joe’s, and Long Island’s first Shake Shack.

“When you see people starting jobs in the stores, you know you had a crucial hand in that,” he said.

COVID-19: “Many great people have taught me how to deal with problems. We’re not robots; we react emotionally. You have to acknowledge your emotions and process them.

Then you must move past that and you can find a pathway to a solution.”

SAM HEIDE, 38

Principal & president, Crawford Square Real Estate Advisors In his early 20s, Heide followed his father’s lead, entering pharmaceutical sales. He also began buying rental houses.

Preferring the latter, he earned a masters in real estate and, during 2007’s slumping economy, applied for “all kinds of real estate jobs.” In 2017, Heide joined Wicker Park Capital Management and one year later took the helm of its Crawford Square subsidiary, which leases and manages its own retail centers and those of other companies. Within 18 months, it was handling six million sq. ft..

He runs Crawford’s daily operations while managing Wicker’s portfolio and “scoping out” properties. He views shopping centers as “puzzles” with interlocking pieces.

“Each market has a different pulse. You must be intentional about which tenants you put where. Leasing apartments and office space is more of a commodity. Retail is very strategic,” Heide said.

COVID-19: “I’m an eternal optimist. As a leader, I must maintain a steady stance, not get excited or too down. I give myself little reminders and surround myself with positive people who put things in perspective.”

CLAY PICKERING, 36

VP finance, The Retail Connection Pickering was introduced to real estate by his father, a Dallas area land broker who deals in large-acre tracts and ranches. “I was intrigued, loved meeting people, and was naturally drawn to the industry,” he recalls.

Today, he works with developers and acquisitions executives to secure debt, equity, and new investment opportunities. In six years at TRC, Pickering has been involved in acquiring and financing 17 properties amounting to more than $500 million in debt and equity capital. One is TRC’s largest acquistion — Knox Street District, a mixeduse project spanning 14 blocks in Dallas.

“It’s an entrepreneurial culture. There’s no box we must stay in as an investment team.

We’re open to any opportunity large or small that makes money,” he observed. “We look at strip centers up to developments that are millions of dollars.”

COVID-19: “I’m a man of faith. That’s helped me stay level-headed and proactive.

I’m also a better listener than talker. That’s helped me build trusthworthy, transparent relationships. Hopefully, those relationships will help us through.”

CHRISTOPHER HAKE, 38

Senior VP & director of southwest region, Thompsom Thrift Retail Group Growing up, Hake swept floors and drove equipment at his parents’ construction and development company. “Real estate was the only thing I knew. After college, it was all I wanted to do,” he remembers.

For 10 years, Hake has been a top producer at TTRG. Following the 2008 economic

downturn, he generated revenue through third-party brokerage, REO dispositions, and fee development opportunities. In 2016, he launched as regional office in Phoenix.

“I assembled a team, hiring developers and leasing agents,” he said. The office’s pipeline now eclipses more than $225 million in development volume.

Hake is particularly proud of Fishers District in Fishers, Ind. It involves apartments, hotels, entertainment, retail, restaurants, and a culinary incubator for start-up chefs.

“It’s not typical for that area. It creates a sense of space and is walkable,” he said.

“When you add value and create amenities, it’s fulfilling.”

COVID-19: “It’s easy to be negative. My weekly team emails emphasize the positives that we can hang our hat on and say, ‘All things considered, we had a good week.’ This doesn’t mean you go home and scratch your head. You must lead by positive example.”

JOHN FEENEY, 31

Senior VP, The Boulder Group During his nine years at Boulder, Feeney has been involved in buying and selling roughly $2 billion in single-tenant properties. In addition to playing an advisory role, he oversees Boulder’s net lease research division. He has published more than 75 research reports on the singletenant net lease sector.

“You eat what you kill,” said Feeney in describing the entrepreneurial nature of retail real estate. “My dad spent 35 years at a Fortune 200 company. It was great for him and our family, but I wanted something where moving up doesn’t involve hoops and ladders.”

Feeney embraces retail real estate’s ever-changing nature. “Last year, I did 135 transactions, ranging from investors making their first acquisition up to Fortune 500 companies. It keeps things interesting and fun,” he said. “There’s times when things don’t go well. But working with repeat customers and helping them reach goals feels good.”

COVID-19: “What’s happening is unprecedented. There’s no indicators how leasing will rebound. Stick to things that got you to this point. Take care of clients. Have a long-term approach while being flexible and creative. It’s not every man for himself; everyone is trying to help.”

CHAINSTOREAGE.COM MAY/JUNE 2020

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STORE SPACES

Retail Design Looks to a New Era Open spaces, clean lines, new materials could mark stores of the future

By Marianne Wilson Trying to predict the future about anything retail related is always a bit risky, particularly now, when the rules of shopping — of retail itself — are changing at a quicksilver pace.

But while it’s impossible to predict exactly how COVID-19 will impact retail store design, there seems to be little doubt that it will have at least some long-lasting effects.

Chain Store Age asked several design experts for their opinions on how COVID-19 will shape in-store environments in the future. Their answers point to some dramatic changes. One constant, however, remains: The store experience, however altered, will remain crucial to consumers.

Melissa Gonzalez — CEO/ Founder, The Lionesque Group, and Partner/ Stakeholder MG2 We will see stores adapt to a more technologically advanced consumer base. Stores will need to seamlessly be able to serve numerous customer journeys — one that is more transaction based where the store serves as a fulfillment channel, one where the in-store experience is more experience-based and one that satisfies a unified commerce experience where a customer can easily transition from online and offline experiences.

The average front of house may decrease in square footage, while the average back of house will increase and logistical/operational planning will be even more important than it was before. The cash wrap experience will evolve as checkout becomes more mobile and aspects like augmented reality will be more widely integrated.

Jamie Cornelius — Executive Creative Director, ChangeUp I see two strategies moving forward — a stop-gap strategy to implement for the here and now [see sidebar] and one of innovating for the future.

Looking at the long-term, we will need to re-evaluate the moments along the customer journey and adapt to new consumer priorities, behaviors and expectations.

Consider how to use the outside space and entry point more effectively, or even bring the outside in with more natural cues to put shoppers at ease. If your business is (or is moving to) an appointment-based model, consider adding chairs for an outdoor waiting area. As a first impression, it will be more critical than ever.

Rethinking the drive-thru is also a prime improvement opportunity. There’s so much potential for efficiency, experience, contactless payment enhancements, but also drivethru only locations could unlock even more potential.

Bright lighting will be critical — primarily because dark, moody spaces have the perception of being unclean. Brightly lit areas will play a key role in creating open, more welcoming environments.

Also, expect a boom in post-pandemic materials and finishes born out of necessity.

There will be new takes on anti-microbial and hydrophobic surface finishes applied in new ways to new mediums. The key will be a balance of conveying to shoppers that they are in a pristine space, but without feeling sterile. Be intentional about where customers are placing their hands and rethink how those spaces might come to life with a focus on materiality.

Color and pattern always help bring people out of a funk. Use it to communicate the joy of shopping, infuse personality, and get shoppers out of the survivalist mindset.

Alastair Kean — Development Director, Dalziel & Pow There will be some practical elements that brands will need to consider in order to ease anxieties and safeguard the health of cus-

32

tomers and staff, and this may mean a more ‘hands-off’ shopping experience.

We may see contactless processes and technologies extended further, self-service wherever possible, the introduction of wider aisles, one-way systems and more curbside pick-up and return options. Touch-screen technology in stores is likely to be reconsidered, perhaps in favor of voice-activated experiences.

Brands will need to innovate and remain agile in order to serve in a safe and secure way, whilst still delivering the convenience and magic that consumers are after.

Having said that, consumers are likely to still want some element of a personal experience to contrast the loneliness of lockdown.

Having a friendly face to discuss requirements with will arguably be more important than ever, and experiences driven by some form of human connection — perhaps on an emotional, rather than a physical level — will be key.

Joseph Nevin — Senior VP, Development, Big Red Rooster (a JLL company) There are going to be dramatic changes — a result of overcompensating to accommodate immediate needs — that will overhaul current shopping environments and experiences. Some changes will be temporary, as society eventually adjusts to the most effective and intuitive systems, but the need for catering to customers’ sense of safety and comfort will likely remain.

Retailers must demonstrate and share their core values to empower both their shoppers and employees while appropriately addressing all touchpoints in the customer journey to ensure long-term future success.

Ken Nisch — Chairman, JGA I’ve heard many people say that COVID marks the end of the experience era. I would disagree. Yes, there will be more precautions.

Expectations will rise on operators, whether they be restaurants, museums, theme parks or cruises, to operate under a higher standard, which will increase operating costs.

Consumers will want to be reassured by the symbols, if not the realities of heightened care and responsibility.

MAY/JUNE 2020 CHAINSTOREAGE.COM

In the Short-Term…

From social distancing signs and one-way only aisles to plexiglass partitions at checkouts and closed fitting rooms, retailers have been quick to adapt their in-store environments in response to the crisis. Here are some recommendations on what other actions retailers can take now to inspire trust and confidence in shoppers.

Justin Hill — Principal, MG2 Focus on making shopping fun. Messaging should be in your voice, not simply clinical instructions. Graphics and signage can be encouraging while also informative. Look to create smiles and surprises along the journey.

Also, iron out the kinks in your BOPIS and curbside pick-up systems.

Joseph Nevin — Big Red Rooster Right now, it’s all about providing visual cues that reinforce retailers’ commitment to safe shopping environments. It’s not enough to tell shoppers what you’re doing — they need to see how the measures are actively being implemented in order to feel comfortable and develop a strong sense of loyalty.

Editing assortments and lightening the sales floor to provide an open, intuitive space will be key in retailers’ expressing their editorial point of view across the store environment, products, and experience to secure confidence and credibility with their customers.

• Look for high-impact areas within the store to transform through materials, fixtures and messaging. These smaller reinventions will still create a freshness that will leave a lasting impression on the customer.

Ken Nisch — JGA First, they need to take care of their staff and make sure they are healthy, equipped to stay healthy and help keep their guests healthy as staff confidence and satisfaction is the first line of communication to guests. Simple logistics such as flow control, distancing, and separation will be even more scrutinized by guests.

Emily Albright Miller — VP, Strategy & Insights, Big Red Rooster The most salient needs that retailers should adjust to now are the consumers’ need to protect their personal space and avoid unnecessary contact with people and things. This requires retailers to rethink traffic patterns inside and outside of their stores, to embrace outdoor spaces, and to optimize for a completely touch-free journey.

Through the implementation of any new solutions, it’s critical that retailers empower the consumer and make them feel in control. The more in control they feel the more likely they will be to spend again.

Melisssa Gonzalez — CEO/Founder, The Lionesque Group; Partner/Stakeholder, MG2 Utilize clear signage, but don’t forget about brand voice — layer in soothing and comforting tones and elements with instruction copy. Have a queuing management system in place (for both curbside and in-store transactions) and leverage technology to power touch-free interactions.

π SHIPPING SUPPL SPECIALISTS

Jamie Cornelius — ChangeUp In the short-term, look at the current design and rethink how to break down barriers to put shoppers at ease:

HUGE SELECTION OF MATS

•K eep the exterior and entry moment clean with clear messaging. This first impression will set the stage for the customer’s shopping experience.

•M ake the space feel larger and open. Take out fixtures and declutter, but also give shoppers signals of cleanliness — transform sanitizing from a must-do task for employees into a positive, memorable moment for the customer.

ORDER B SAME DA

M FOR HIPPING

• Use digital interactions to be transparent with customers about how busy the store is and great times to come in. Is there a way you can make your business more appointment-based?

• New in-store signage is going to be essential, but don’t become overly reliant on it. Be sure to not program shoppers to go on autopilot while in the store. Instead, make their experience a breath of fresh air and remind them of the joy of shopping.

COMPLETE CATALOG

1-800-295-5510 uline.com

CHAINSTOREAGE.COM MAY/JUNE 2020

STORE SPACES Q & A

FM Moves to the Forefront of Retail Amid COVID-19

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Facilities management — commonly referred to as FM — has long operated in the shadows of retail, too often ignored and/or misunderstood by those outside its specific discipline. But FM has been thrust into the spotlight as retailers evolve following the outbreak of COVID-19. Ensuring that stores maintain a clean and healthy environment has become absolutely paramount to sales, brand image and, most importantly, customer and employee safety, making FM a No. 1 priority across the board. Chain Store Age spoke with NEST’s Michael Toth about FM as retailers navigate today’s evolving landscape.

What impact will the Covid-19 crisis have on retail FM going forward?

Moving forward budgets will be scrutinized even more, and locations may be closed or consolidated. Also, we will have to look at installing new products such as touchless sinks and toilets that can help further promote clean hygiene. And we may now face new standards around procedures for ongoing cleaning programs, the chemicals to be used, and the processes for when an employee or customer tests positive for COVID-19.

With retailers now under increased pressure to reduce costs, how can FM best make its case for a continued level of spending and investment?

Facilities managers who are attuned to the daily challenges their teams, vendors and service providers face understand the need to adapt to the changes at hand. In order to make FM a priority, it’s up to facilities managers to speak up for their teams when necessary, and to suggest changes to the status quo that leadership may overlook.

In discussing this with upper management, they should use facts and data to support their case, and shouldn’t rely solely on the numbers.

Also, run the data and analytics on the previous year’s spend vs. COVID-19 impact and shutdown, and the potential spend reductions moving forward. And focus on your current FM needs, and tether them to the greater, overarching needs of your organization — how can this be handled with a reduced staff?

Finally, do your research before laying out potential solutions.

Many retailers slashed the size of their FM teams as stores closed. Do you think this is a temporary move?

Reducing FM teams was already a trend in retail prior to COVID-19 so, unfortunately, I do not think this is a temporary blip. Many retailers were already struggling financially. If they weren’t already considering this, I think we will see many take this step once they reopen.

What is your advice for facility managers who now have greatly reduced staffs?

Look for an integrated facilities management partner who can serve as an extension of their team — one who has the infrastructure and resources to help fill those gaps for your organization. An IFM partner has industry SMEs who help collaborate and share best practices in order to make the program and solution work for your organization, corporate teams, numbers of locations and so on. In addition, the quality assurance team works as boots on the ground throughout the country and can help fill the gap of having someone on location.

I would also tell them to make sure they are able to manage their budgets and expenses through reporting and tools that offer on-demand insights to their program.

This way they can pivot accordingly.

What services does Nest offer retailers?

NEST’s integrated facilities management solution is a strategic approach that transforms your facilities management program through clarity of your operations

34

and control of the budget and operating costs. It provides real-time data, reporting and analytics technology that empowers business leaders and FM teams with the informed insights that enable them to make smarter decisions. And with access to an extensive network of vetted independent service providers across the country, multi-site organizations can experience exceptional service regardless of where they are located.

How can NEST help retailers streamline their facilities management processes?

Many retailers have a very siloed, tactical approach to facilities management that includes managing hundreds of providers around the country — it’s very timeconsuming. NEST helps retailers elevate their teams to be more strategic while our internal infrastructure handles the daily program operations. We offer a work order platform with $0 based subscription fees and best-in-class reporting that gives program insights into financial statements, operational KPIs and ISP coverage.

Can NEST help retailers save costs?

Our integrated facilities management solution was developed to be a cost-savings initiative for retailers and any multi-site organization. An average cost model was designed to step away from traditional trip charges with hourly rates and overtime, to ultimately generate cost savings for better spend. Corporate users have on-demand access to real-time analytics that show in-depth program spend allowing them to make changes as needed.

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STORE SPACES

Trending Topics

By Marianne Wilson

UL: MAINTAIN RELATIVE HUMIDITY OF 40% TO 60% IN BUILDINGS A UL webinar that provided guidance on pandemic cleaning practices and building operations for the commercial space highlighted a factor that doesn’t get quite as much attention as other infectious control measures: the relationship between low relative humidity and the transmissibility of respiratory illnesses.

Managing the relative humidity of the air in a building can help reduce the amplification of airborne microbes, advised UL’s engineering manager Mike Carpenter, principal scientist Elliot Horner, and senior sales manager Sean McCrady, in a blog post on the Retail Industry Leaders Association (RILA) web site.

In atmospheres below 30% to 40% relative humidity, expelled droplets rapidly evaporate and remain airborne longer. However, in atmospheres above 40% relative humidity, water droplets not only fall faster but the dissolved salts create a hostile environment for the suspended microbes, decreasing their infectious nature.

Maintaining relative humidity in the 40% to 60% range also reduces stress on a person’s mucus membranes, potentially reducing a person’s susceptibility to airborne infection. Set your building’s relative humidity to fall within the range of 40% to 60% — or as close to that range as possible given system capabilities and other factors, according to UL. [Buildings can increase humidity via HVAC systems or by installing portable humidifiers throughout.]

CONSUMERS WANT TOUCHLESS FIXTURES IN RESTROOMS Americans have reordered their priorities as to how facilities should improve their restrooms.

According to a survey from Bradley Corp., 60% of Americans said that their preference for touchless handwashing fixtures in public restrooms has risen a great deal since the COVID-19 pandemic; 30% said their preference has increased somewhat. In addition, 91% of Americans said they believe it’s extremely or somewhat important that public restrooms are equipped with touchless fixtures.

“Making everything touchless is now the most-requested improvement,” says Jon Dommisse, director of strategy and corporate development for Bradley Corp. “Just months ago, in December 2019, the most desired upgrade was keeping restrooms cleaner and better stocked. In both cases, it’s clear that Americans have grown more averse to germ hot-spots in restrooms.”

The findings are from Bradley Corporation’s latest Healthy Hand Washing Survey, conducted in April to examine the impacts of the coronavirus on consumers’ hand hygiene behaviors and preferences, particularly in public restrooms. Retail stores give Americans the most trepidation about coming into contact with germs, followed by hospitals/health care facilities, restaurants and workplaces.

ASHRAE OFFERS GUIDANCE ON HVAC As stores reopen, and potentially face the risk of having to close and reopen at various times in the future, ASHRAE is providing guidance on the safe operation of HVAC systems.

“Key elements of a strategy to limit the spread of the COVID-19 virus are to perform needed heating, ventilating and air conditioning system maintenance, including filter changes, and to run HVAC equipment, prior to re-occupancy,” said Bill Bahnfleth, chair, ASHRAE Epidemic Task Force.

ASHRAE’s recommendations for reopening buildings include the following: • Review HVAC programming to provide flushing two hours before

RECOMMENDATIONS FOR HEALTHY BUILDINGS Healthy buildings play a central role in creating a healthy world by cutting down the risk of infection of viruses and other airborne diseases. The Center for Active Design is offering guidelines on how to optimize commercial buildings for COVID-19 prevention and reduce the risk of infection. The recommendations include strengthening cleaning protocols, posting educational handwashing signage and maintaining optimal humidity of 40 to 60%. The other two recommendations are outlined below.

• Increase ventilation: While recirculating air has become the default in buildings, ventilating with outdoor air is vital to diluting airborne contaminants and decreasing disease transmission rates. Another option is simply to open windows to let in more outdoor air.

• Filter indoor air. While changes to air filtration practices may take more time to implement, it is worth mentioning as this approach can help property managers, architects, and engineers plan for the future. Research suggests that filtration of recirculated air may be effective in reducing transmission of airborne infectious diseases.

When operating at their full potential high-efficiency particulate air (HEPA) filters can remove 99.97% of particles that are 0·3 microns or larger. These filters remove dust, vapors, bacteria, and fungi, and also effectively capture viral particles spread by droplet nuclei. Under certain conditions, using recirculated air with HEPA filters reduces particulate concentration for indoor air similar to full outside air systems, the research suggests.

and post occupancies. This includes operating the exhaust fans as well as opening the outside air dampers.

For buildings without the capacity to treat large quantities of outside air and when outside air conditions are moderate, open all windows for a minimum of two hours before reoccupation.

• Ensure that custodial scope includes proper cleaning procedures built from EPA and CDC guidance on approved products and methods.

• Disinfect high-touch areas of HVAC and other building service systems (e.g. on/off switches, thermostats).

• Disinfect the interior of refrigerated devices, e.g. refrigerators, where the virus can potentially survive for long periods of time.

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TECH VIEWPOINT especially in the department store, apparel and luxury sectors — have struggled.

Large grocers, drug and convenience retailers and home improvement retailers, as well as a few specialty big box chains, should also fare well post-pandemic based on their performance during the outbreak. However, retailers that sell products such as clothing, accessories, jewelry, home goods, kitchen appliances, and furniture may discover their customers will continue to visit the omnichannel mass merchandisers who have been dominating these categories during We are watching the COVID-19 pandemic the pandemic once it has passed. throw retail into disarray, but who might come This potential retail homogenization and conout ahead? solidation will leave a gap for consumers seeking Inevitably, COVID-19 will fade and life (and niche products. These could include goods with a business) will resume. Already, many states specific ethnic or cultural significance, craft items are beginning the early phases of reopening only available from independent suppliers, profesnon-essential businesses and a number of well- sional products, rare imports, collectibles and known retail chains are bringing select stores products requiring a high degree of customization.

Basically, retailers that please everyone and back online.

However, a return to business does not neces- retailers that only please a select few will find a lot to like in the new normal. There will also be sarily mean a return to business as usual. Initial store reopening plans involve some combination an ancillary group of retail industry participants who benefit from the post-virus paradigm shift of protective gear, social distancing, one-way — with an important caveat. aisles, temperature checks, and frequent sanitization protocols. Even once the day comes we E-commerce marketplaces and platforms have the coronavirus under control and these restrictions are lifted, experts generally agree (that aren’t Amazon and Walmart) there will be a “new normal” where things won’t Amazon and Walmart’s third-party online marquite be the same as they were pre-outbreak. ketplaces are doing and will continue to do just Nobody can say for certain exactly what this fine, thank you. But niche retailers capitalizing new normal will entail for retailers. How, when on the new normal may find these platforms’ and where customers shop, and for what prodemphasis on high-volume products and domiucts, may permanently shift as a result of their nance by established brands, as well as possible experiences during the COVID-19 crisis. Howcompetitive issues with Amazon, dissuading. ever, I expect two broad classifications of retailer Google, which recently started opening its — mass merchandisers and targeted niche opera- Google Shopping online marketplace to free tors — to find themselves especially well-suited product listings, will probably hold some appeal for the post-pandemic shopping landscape. for niche retailers that are often smaller enterprises.

In addition, the personal convenience and E-commerce platforms like Shopify and BigComsafety online and omnichannel shopping has afmerce, which enable retailers of all sizes to quickly forded customers will most likely result in a per- launch online stores, should also pick up business manently heightened demand for e-commerce. from retailers selling highly specialized products.

This should mean a higher profile for third-party And of course, eBay and Etsy will continue serving digital marketplaces, and not necessarily the ones as popular online retail forums for these retailers. you would expect.

In addition, automated workforce management Let’s take a closer look at who some of the solutions reduce the need to physically gather large “winners” of the post-COVID-19 retail landnumber of employees in one place to perform scape will likely prove to be. tasks such as onboarding or training, which helps reduce potential virus exposure among your staff.

The mass and the niche Many mass merchandise retailers — such as Walmart, Amazon, Target and Costco — have seen sales continue to surge during the panDan Berthiaume demic. Meanwhile, a number of other retailers — dberthiaume@chainstoreage.com

Two types of retailers that will thrive post-COVID-19

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TECH

Ensuring Success During and After COVID-19

By Dan Berthiaume

By responding effectively to the challenges of COVID-19 with leading-edge strategies and solutions, retailers will receive benefits even after the pandemic has passed.

Chain Store Age hosted two webinars, “Minding the Store: Ensuring Secure Brick-and-Mortar Operations During the COVID-19 Pandemic and Beyond,” and “Don’t Go Home — Go Omnichannel — Digital Retail Strategies to Survive and Thrive During the COVID-19 Pandemic,” which analyzed how retailers can ensure the success of their in-store and online enterprises in these trying times and afterward.

The panelists — Brian Kilcourse, managing partner, RSR Research LLC; Shelley E. Kohan, CEO/founder, Shelmark Consulting Inc.; Gaurav Pant, chief insights officer, Incisiv; and Jim Barnes, CEO, enVista — shared insights into how retailers can leverage a broad range of technologies and workflows to respond to the unique issues created by COVID-19.

The general consensus was that the same solutions retailers apply to challenges such as social distancing, hygienic customer interactions, maintaining inventory levels, and keeping pace with surging volumes of online transactions and deliveries also hold the potential to provide continuing value once the pandemic subsides.

During the webinars, the panelists explained how retailers can prepare for continued success in the areas of mobility/ mobile checkout, buy online pickup in store (BOPIS), e-commerce, store navigation and delivery. Some of their comments are below.

Mobility/Mobile Checkout “There is a large community of unbanked consumers who need merchandise and are used to paying with cash. You need to help them with mobile payment.” — Jim Barnes “Mobile is the first touchpoint. Experience is critical — not commerce but content.” — Gaurav Pant “Mobile influences customer purchase decisions in the store. Make sure you have the right network capabilities. Many retailers have primitive in-store WiFi capabilities.” — Brian Kilcourse “For some types of merchandise, like groceries, you still need someone to bag the items and bring them to the customer’s car.

You might eliminate the wrap stand at a fashion retailer.” — Brian Kilcourse Buy Online Pickup in Store (BOPIS) “Retailers were concerned about BOPIS taking business away from the store, but due to the convenience of online pickup, a lot of retailers are seeing an uptick in frequency of store visits and also customers are spending more in the store.”

— Shelley E. Kohan E-commerce “The underlying issue is that retailers must resolve inventory visibility and customer experience visibility.” — Brian Kilcourse

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“Brick-and-mortar and digital channels must have one cohesive demand signal. It’s a positioning problem.” — Jim Barnes “Retailers must also connect their e-commerce systems to emerging social platforms, such as Instagram, that are becoming increasingly important as online sales and promotional tools.” — Gaurav Pant Store Navigation “You need beacons and geofencing coupled with a store map. “Walmart has done a good job of geofencing all their 4,000-plus stores in the U.S.” — Shelley E. Kohan “Research shows customer attitudes about browsing the store have changed. Customers are much more direct about where they want to go. They don’t want to spend time in a 60,000-sq.-ft. box. Provide them with a store map.” — Brian Kilcourse “Retailers need a real-time or near-realtime understanding of what’s happening in the store, especially with social distancing and occupancy rules. They need to use geolocation data to educate consumers on the busiest times to help avoid crowds and smooth out peaks and valleys.” — Shelley E. Kohan Delivery “It is important to deliver in a manner that is safe, with products that are wiped down and safe packaging. You also must ensure the safety of store associates and delivery people.” — Gaurav Pant “Segment inventory for [a dark] store.

You’re not competing for fluid in-store traffic. Reslot not by category, but by velocity.

It’s a chance to get rid of distressed or nonproductive inventory.” — Jim Barnes “There is a greenfield opportunity for logistics companies to use a lot of the new data being generated by technologies like geolocation to help make the last mile as efficient as possible.” — Brian Kilcourse MAY/JUNE 2020 CHAINSTOREAGE.COM

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Curbside Pickup Spreads to Specialty Retail Kendra Scott pivots to curbside in nine days

By Dan Berthiaume A fast-growing specialty jewelry retailer is integrating omnichannel transactions into its order management system for efficient curbside pickup.

The service, a variant of buy-online, pick up in-store (BOPIS), had been growing in popularity as an omnichannel option in the grocery and discount verticals even before the arrival of COVID-19. Since the pandemic broke out in early March, however, curbside pickup has become more common not only in these verticals, but in other niches such as specialty, as retailers deal with restricted store operations and customer desire to minimize interpersonal contact.

Chain Store Age recently interviewed Jim Dunlap, CIO of Kendra Scott, about the retailer’s efforts to quickly implement a curbside pickup program as its stores closed during the COVID-19 pandemic.

Why did Kendra Scott decide to implement curbside pickup?

Our brick-and-mortar locations are an incredibly pivotal part of our business, not just from a transaction side but from the engagement side. Following the ripple effects of COVID-19, Kendra Scott transitioned to more digital interactions with customers, launching new virtual activations to maintain engagement and philanthropic connection with its large customer base.

This led us to the curbside pick-up and the buy-online, pickup-in-store offering.

The newest initiative we fast-tracked dem-

onstrates Kendra Scott’s commitment to its customers and community, allowing us to get closer to the customer during a time when they can’t shop us in-store as they traditionally would. Especially ahead of Mother’s Day, an important peak period for us, we wanted to give our customers an option that was quick and convenient for their shopping needs.

What was your next step?

In August 2019, we launched Manhattan Associates’ order management system for its robust omnichannel capabilities that gives us the flexibility to quickly respond and scale our business in response to customer demands. The system orchestrates and executes the complete fulfillment lifecycle for customer orders from any channel — which is an important need in our business going forward.

If COVID-19 has taught us anything, it’s that retailers need true omnichannel systems that are easily adaptable, enabling the fluid shift of inventory and orders between channels.

What type of back-end realignment was needed to support curbside on the customer side?

To improve the customer shopper experience when enabling curbside, BOPIS and in-store traffic, the OMS required additional information, such as store sales, to be able to interact

"If COVID-19 has taught us anything, it’s that retailers need true omnichannel systems that are easily adaptable, enabling the fluid shift of inventory and orders between channels.” —Jim Dunlap, CIO of Kendra Scott

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with the ecommerce website and give the customer the best view of products available to purchase.

Because its store order fulfillment capabilities allow the same picking process for curbside and ship-from-store on the same solution, this also eases any change management and training for the store associates to be able to complete fulfillment.

How were you able to achieve rollout at eight stores in nine days?

We could not have rolled out ship-fromstore and curbside pick-up in nine days if we did not have the new OMS integrated and our 3PL running. The OMS delivers inventory visibility and enables reallocation, which allows us to shift order volume when turning on ship-from-store, curbside or BOPIS. When our Austin [Texas] distribution center switched to minimum basic operations as a result of COVID-19, we quickly huddled our team with Manhattan Associates to find a solution that we could implement immediately and landed on ship-from-store.

From there, we worked quickly to get select stores set up for fulfillment, which included manually loading store inventory.

We started piloting orders within days and successfully went live at eight stores. Since then, we have quickly expanded fulfillment to other stores and introduced curbside pick-up in all 23 Kendra Scott Texas stores and beyond as new local and state ordinances shift.

What are your future plans for curbside?

We’ve been very pleased with the response from our customers on curbside pick-up and along with rolling that out to other locations, we’re looking forward to launching buy online, pick-up in store in select locations starting next week.

We’re working very carefully to make sure all of these offerings follow recommended state guidelines for health and safety precautions of our customers and employees and plan to continue to expand to new stores as it’s safe to do so.

MAY/JUNE 2020 CHAINSTOREAGE.COM

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