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34

from the editor’s desk

tech viewpoint: a retail tech column

Contents VOL. 97 SEPTEMBER/OCTOBER NO. 5

STORE SPACES

.

18 20 21

Bonus programs for lighting rebates at record high

Aldi’s carbon reduction strategy includes phasing out harmful refrigerants.

Update on construction costs finds most costs still rising.

22

Vendor Q&A: ZipWall Dust Barrier System’s Jeff Whittemore discusses how retailers can safety keep stores open during remodel and renovation activities.

24

Shop Talk highlights include new Express Edit format and Nike’s newest retail concept.

24

COVER STORY

8

TOP 100 U.S. RETAILERS

Walmart and Amazon take the top spots in Chain Store Age’s annual ranking of the 100 U.S. retailers based on annual revenue.

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 non-qualified in the United States: $80 one year; $155 two year; $14 single issue copy; Canada and Mexico: $105 one year; $185 two year; $16 single issue copy; Foreign: $115 one year; $215 two year; $16 single issue copy. Digital edition subscription: $55 one year digital; $105 two year digital. Periodicals postage paid at Chicago, IL and additional mailing offices. ­POSTMASTER: Please send address changes to CSA, Circulation Fulfillment Director, 8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631. Subscription changes may also be emailed to contact@chainstoreage.com, or call 1-877-687-7321. Vol. 97, No. 5, September/October 2022. Copyright ©2022

by EnsembleIQ. All rights reserved.

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Contents VOL. 97 SEPTEMBER/OCTOBER NO. 5

25

REAL ESTATE

TECH

25

33

How Malls Will Survive CEOs from the nation’s most successful owner-operators of enclosed shopping centers tell what they must do—and must not do—to keep malls in the mainstream of a fast-changing consumer culture.

A look at how machine learning technology can benefit retailers

4

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33

SEPTEMBER/OCTOBER 2022

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FROM THE EDITOR’S DESK

Store Expansion Ramps Up — in some sectors The tide has turned when it comes to store openings versus closings.

As of August, U.S. retailers had announced 4,432 store openings and 1,954 store closings, resulting in a net of 2,478 openings, according to a recent report from BDO. That’s the largest number of openings in the past five years. (The report cited store data from Coresight Research.)

From 2017 to 2020, annual store closures exceeded store openings. The trend intensified in 2020 when the COVID-19 pandemic hit, sending the most distressed retailers into bankruptcy. At the same time, many stable retailers sought to right-size their footprint in the wake of economic uncertainty and evolving consumer behaviors. But things started to turn around last year, BDO noted, as store openings exceeded closings for the first time since 2016.

That’s not to say that store expansion is spread out across all sectors of the industry. The majority of 2022 store openings have been in the discount, dollar and off-price retail segments. (Fast-casual restaurant growth also remains bullish.)

Dollar General and Family Dollar both have extremely aggressive expansion plans. Tween and teen favorite Five Below is on track to open 160 stores this year, with plans to add another 200-plus locations in 2023. TJX Cos. and Ross Stores, along with discount grocers Aldi and Lidl, continue to grow their brick-andmortar footprints. And Nike is planning to open 150 to 200 smaller-footprint U.S. outposts.

At the opposite end of the spectrum are luxury retailers, which are ramping up

CHAIN STORE AGE

their expansion in the United States, according to JLL’s recent report, “For the love of luxury: The Renaissance of Luxury Retail in the United States.”

“With both sales and foot traffic returning to pre-pandemic levels, luxury retailers are focusing their energy and new capital on their bread and butter: physical storefronts,” the report said.

When deciding where to open stores in the U.S., luxury brands are still largely targeting the large urban markets that have long made up the bulk of their business here, but they are expanding their horizons to “ancillary corridors” in those cities, such as the Gold Coast in Chicago, and Williamsburg in New York City, JLL said. They are also setting their sights on smaller but growing markets such as Austin, Texas, and Nashville, Tenn.

The data supports the growth.

Luxury sales in the U.S. rose by 8.5% in 2021 to more than $64.1 billion and are forecast to eclipse pre-pandemic levels by the end of 2022.

High-end European legacy brands such as Chanel, Gucci, Hermès and Dior are leading much of the recent growth. But American companies are also getting in the act. Ralph Lauren Corp. plans to open about 250 stores during the next three years as it continues to emphasize its direct-to-consumer business.

Of the 30 markets the company has marked for expansion, 14 are in North America. At its Investor Day meeting, Bob Ranftl, regional CEO of North America, said that Ralph Lauren is still “significantly underpenetrated in many cities in North America.”

Most luxury brands are bullish on expansion — and with good reason.

Despite potential headwinds from inflation, the luxury retail industry in the United States is poised for further growth, with forecasts estimating nearly $80 billion in sales by 2025, according to JLL.

An EnsembleIQ Publication

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TOP D

Annual ranking of nation’s largest retailers by revenue

U.S. RETAILERS

By Marianne Wilson

espite supply chain pressures, lingering pandemic disruptions, shifts in consumer behavior, rising prices and labor problems, the U.S. retail industry continues to prove its resilience, as is made clear in Chain Store Age’s annual ranking of the top 100 U.S. retailers.

The list is a guide to the 100 largest retailers based on net revenue for their most recently completed fiscal year (for most companies, this translates to 2021).

Apart from a few exceptions due mainly to mergers/acquisitions and bankruptcies, the retailers that make up the top 100 have remained very consistent in recent years.

One thing that has changed: The point of entry onto this year’s list was, for the first time, $5 billion in annual sales.

Walmart: As it has for the past 20-plus years, Walmart took the No.1 spot on the CSA list. The retail giant, which is also the nation’s largest private employer, saw its fiscal 2022 revenue (for the year ended 1/31/2022) rise 2.4% to $572.75 billion.

Net sales at Walmart U.S. climbed 6.3%.

In addition to ongoing investments in technology and omnichannel capabilities, Walmart’s investments during its last fiscal year ranged from chartering ships to raising employee wages multiple times to developing alternative streams of revenue, such as its delivery-as-a-service platform, Walmart GoLocal.

The company also has big plans for its Walmart Connect retail media business, which generated $2.1 billion in sales in 2022, with a goal of it eventually becoming a top 10 advertising platform. For the time being, Walmart’s ad business is still outdistanced by rival Amazon, which generated $31 billion in ad revenue in 2021.

Amazon ranked No. 2 on the list for the sixth consecutive year, but it is inching 8

08-17-CSA_TOP100.indd 8

closer to the top spot. A recent report from Edge by Ascential forecasts that the top three retailers in the United States by 2026 will be Amazon, Walmart and Costco, with 14.9%, 12.7% and 4.4% of the retailer market share, respectively.

The Home Depot and The Kroger Co. round out the top five.

Amazon’s total revenue grew by 22% to $469. 8 billion in 2021 as it continued to build out its sprawling fulfillment network and and expand its physical store footprint, with an emphasis on its “Just Walk Out” system. The company’s cloud-computing business, Amazon Web Services, continued to generate strong results amid a steady stream of new customers, with revenue of $62.2 billion.

Diversify: Diversification has become a common theme among many of the top retailers as companies seek revenue streams outside of their core business.

Four of the top 10 companies have made significant investments in health care during the past couple of years.

The deep dive into health care shows no signs of slowing down. In September, Walmart announced a 10-year partnership with UnitedHealth Group to, among other things, offer

virtual health care services, starting with seniors. As for Amazon, it entered into an agreement in July to acquire One Medical, a membership-based primary health care provider, for $3.9 billion.

Meanwhile, the nation’s two largest pharmacy chains also continue to expand beyond their retail roots. CVS Health is planning to acquire health-care company Signify Health in a deal valued at at about $8 billion.

Rival Walgreens has become the majority owner of VillageMD, and plans to open hundreds of primary care Village Medical practices at Walgreen locations. The company recently announced it is buying the remaining 30% stake in specialty pharmacy company Shields Health Solutions that it doesn’t already own for an estimated $1.37 billion.

The overall retail industry has emerged remarkably healthy two-and-a-half years after the pandemic, one of the most disruptive and challenging events in world history — one that forced retailers to reexamine and, and in some cases, reinvent strategies, formats and ways of doing business that had been standard practice for years.

For the top 100 retailers, innovation has become table stakes in meeting the challenge of a transformed retail landscape.

About the Rankings

Chain Store Age’s Top 100 ranks retail companies by net revenues in the firm’s most recently completed fiscal year (as of press time.)

For retailers based in North America, the data reflects the company’s total global store count (except as otherwise noted). For foreign-based companies, such as Ikea, only the figures related to the company’s North American division are provided (except as otherwise noted.)

The ranking contains a number of privately owned companies that do not release annual reports, financial statements or basic details related to their operations. The metrics for these companies, which are highlighted in the listing with an E, are based on public and private reports and independent research (compiled by contributing editor Debra Hazel.) For foreign companies, the currency was exchanged into U.S. dollars as of the last date of the fiscal year.

SEPTEMBER/OCTOBER 2022

CHAINSTOREAGE.COM

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Fiscal Yearend

1

Walmart Inc.

Bentonville, Ark.

2

Amazon

3

CVS Health Corp.

4

Costco Wholesale Corp.

5

Apple (E,S)

6

The Home Depot, Inc.

7

The Kroger Co.

8

Walgreens Boots Alliance

9

Target Corp.

10

Lowe’s Cos.

11

Albertsons Companies

12

Alimentation Couche-Tard

13

Ahold Delhaize (US only)

14

7-Eleven (E, U.S. and Canada)

Seattle

Woonsocket, R.I. Issaquah, Wash.

Cupertino, Calif.

Atlanta

Cincinnati

Deerfield, Ill. Minneapolis

Mooresville, N.C. Boise, Idaho

Laval, Quebec

2021 Revenue [000]

2020 Revenue [000]

2021 Store Count

2020 Store Count

1/31/2022

572,754,000

559,151,000

10,593

11,443

12/31/2021

469,822,000

386,064,000

679

618

12/31/2021

292,111,000

268,706,000

9,939

9,962

8/29/2021

192,052,000

163,220,000

815

795

9/25/2021

153,306,000

124,556,000

512

500-plus

1/30/2022

151,157,000

132,110,000

2,317

2,296

1/29/2021

137,888,000

132,498,000

2,726

2,742

8/31/2021

132,509,000

121,982,000

13,000

21,000

1/29/2022

104,611,000

92,400,000

1,926

1,897

1/28/2022

96,250,000

89,597,000

1,971

1,974

2/26/2021

71,887,000

69,690,400

2,276

2,277

62,809,900

45,760,100

14,008

14,222

12/31/2021

53,700,000

51,838,000

2,048

1,970

Dallas

2/28/2022

52,074,450

48,311,952

9,511

12.973

15

Best Buy Co. Richfield, Minn.

1/29/2022

51,761,000

47,262,000

1,144

1,159

16

The TJX Cos.

1/29/2022

48,549,982

32,136,962

4,689

4,572

17

Publix Super Markets

12/25/2021

47,996,551

44,863,507

1,293

1,264

18

Dollar General Corp.

1/28/2022

34,220,400

33,746,800

18,130

17,177

19

H-E-B (E)

10/31/2021

34,000,000

36,816,000

420

354

20

C&S Wholesale Grocers, Inc.

12/31/2021

33,032,000

31,450,000

7,700

7,700

Framingham, Mass.

Lakeland, Fla.

Goodlettsville, Tenn.

San Antonio, Texas Keene, N.H.

Source: Company reports unless otherwise noted E: Estimate, NA: Not applicable, R: Retail operations only, S: Total Americas sales.

CHAINSTOREAGE.COM

08-17-CSA_TOP100.indd 9

6% 8%, and

totaling $4.86 trillion to $4.95 trillion, with some of the gains coming from higher prices due to inflation.

Source: National Retail Federation

67%

of retailers plan to offer more discounts for the 2022 holiday shopping season.

Source: RetailMeNot

4/25/2021

Chantilly, Va.

Core retail sales in 2022 will grow between

SEPTEMBER/OCTOBER 2022

By 2026, the top three retailers in the U.S. will be Amazon, Walmart and Costco, with

14.9%, 12.7% 4.4% and

of the retail market share, repectively.

Source: Edge by Ascential 2022 United States Retail Landscape and Go-to-Market Planning Report

9

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TOP 21

Starbucks Corp.

Seattle

Fiscal Yearend

2021 Revenue [000]

2020 Revenue [000]

2021 Store Count

2020 Store Count

10/3/2021

29,060,600

23,518,000

33,833

32,660

1/29/2022

26,321,900

25,509,300

16,077

15,685

12/31/2021

26,000,000

29,500,000

800

950

2/1/2021

25,457,000

24,157,000

258

256

2/26/2022

24,568,255

24,043,240

2,450

2,510

1/29/22

24,460,000

17,346,000

787

789

5/7/2022

23,424,120

22,996,262

1,500

1,500

12/31/2021

23,164,000

18,420,000

1,500

1,600

12/31/2021

21,636,830

17,053,350

10,660

8,939

12/31/2021

20,660,000

17,020,000

1,580

1,880

22

Dollar Tree

23

Pilot Co. (E)

24

Meijer (E)

25

Rite Aid Corp.

26

Macy’s

27

Empire Company Ltd (Sobey’s)

28

Verizon Communications Inc. (E,R)

29

Essilor Luxottica Group

30

AT&T Inc. (E,R)

31

The Sherwin-Williams Co.

32

Ross Stores

33

Kohl’s Corp.

34

Aldi Inc. (E)

35

Wakefern Food Corp.

36

Gap Inc.

37

BJ’s Wholesale Club

38

Trader Joe’s (E)

39

AutoZone

40

Nordstrom

Chesapeake, Va. Knoxville, Tenn.

Grand Rapids, Mich.

Camp Hill, Pa.

Cincinnati, Ohio Stellarton, Novia Scotia, Canada Basking Ridge, N.J.

Charenton-Le-Pont, France Dallas

Cleveland

Dublin, Calif.

Menomonee Falls, Wis. Batavia, Ill.

Keasbey, N.J.

San Francisco Westborough, Mass.

Monrovia, Calif.

Memphis, Tenn.

Seattle

U.S. RETAILERS

Year-over-year sales will increase

4% 6%, to

with total sales of $1.45 to $1.47 trillion, during the 2022 holiday period (November 2021 to January 2022).

E-commerce holiday sales will increase

12.8% 14.3%. to

Source: Deloitte’s Annual Holiday Forecast

12/31/2021

19,944,600

18,361,700

4,859

4,774

1/29/2022

18,916,244

12,531,565

1,923

1,859

1/29/2022

18,471,000

15,031,000

1,165

1,162

12/31/2021

18,200,000

17,056,000

2,166

2,080

10/2/2021

17,800,000

18,300,000

362

359

1/29/2022

16,670,000

13,800,000

3,399

3,715

1/29/2022

16,306,365

15,096,913

226

221

6/30/2021

14,900,000

14,100,000

530

530

8/28/2021

14,629,585

12,631,967

6,767

6,549

1/29/2022

14,402,000

10,357,000

367

369

Online consumer spending in the U.S. will pass the $1 trillion mark for the first time ever this year.

Source: Adobe

Retail shrink as a percentage of total retail sales accounted for $94.5 billion in losses in 2021, up from $90.8 billion in 2020.

Source: National Retail Federation 2022 National Retail Security Survey

Source: Company reports unless otherwise noted E: Estimate, NA: Not applicable, R: Retail operations only.

10

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TOP 41

Qurate Retail, Inc.

West Chester, Pa.

42

Wayfair Inc.

43

Etsy

44

O’Reilly Automotive

45

Menards (E)

46

Casey’s General Stores

47

Tractor Supply Co.

48

Hy-Vee (E)

49

Dick’s Sporting Goods

50

EG America

51

Wawa (E)

52

Wegmans Food Markets

53

Quik Trip (E)

54

Advance Auto Parts

Boston

New York City Springfield, Mo. Eau Claire, Wis. Ankeny, Iowa

Brentwood, Tenn.

West Des Moines, Iowa Coraopolis, Pa.

Framingham, Mass.

Wawa, Pa.

Rochester, N.Y. Tulsa, Okla.

Roanoke, Va.

55

eBay Inc.

56

Associated Wholesale Grocers

57

Giant Eagle Inc. (E)

58

T-Mobile (E)

59

ODP Corp. (Office Depot)

60

Racetrac Petroleum (E)

San Jose, Calif.

Kansas City, Kan. Pittsburgh

Bellevue, Wash.

Boca Raton, Fla. Atlanta

U.S. RETAILERS

Fiscal Yearend

2021 Revenue [000]

2020 Revenue [000]

2021 Store Count

2020 Store Count

12/31/2021

14,044,000

14,177,000

25

24

12/31/2021

13,708,000

14,145,156

1

2

12/31/2021

13,491,828

10,281,101

NA

NA

12/31/2021

13,327,563

11,604,493

5,784

5,616

12/31/2021

13,140,000

12,800,000

328

323

4/30/2022

12,952,594

8,707,189

2,452

2,243

12/25/2021

12,731,105

10,620,352

2,181

2,105

9/30/2021

12,300,000

11,150,000

285

275

1/29/2022

12,293,368

9,584,019

861

854

12/31/2021

12,254,000

11,425,000

1,698

1,634

12/31/2021

11,900,000

10,568,000

965

901

12/31/21

11,230,000

10,800,000

106

106

4/30/2021

11,300,000

10,709,920

922

882

1/1/2022

10,998,000

10,106,300

4,706

4,976

12/31/2021

10,998,000

10,271,000

NA

NA

12/26/2021

10,812,782

10,634,379

3,200

3,200

6/30/2021

10,600,000

9,850,000

488

488

12/31/2021

9,733,000

9,421,000

3,868

3,400

12/25/2021

9,667,000

9,710,000

1,038

1,154

12/31/2021

9,600,000

5,484,700

566

552

The U.S. secondhand market for apparel and accessories is expected to more than double by 2026, reaching $82 billion and growing 16 times faster than the broader retail clothing sector;

52%

of retail executives say offering resale is becoming table stakes for retailers.

Source: ThredUp 2022 Resale Report

Consumers rank YouTube, Facebook and Instagram as the most trusted U.S. platforms for social commerce.

Source: Insider Intelligence

Trader Joe’s has the best reputation in the U.S., followed

by Wegmans Food Markets, Patagonia and the Hershey Company.

Source: 23rd annual Axios-Harris Poll 100.

V

Exc

Source: Company reports unless otherwise noted E: Estimate, NA: Not applicable, R: Retail operations only.

12

08-17-CSA_TOP100.indd 12

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TOP 61

Southeastern Grocers (E)

Jacksonville, Fla.

Fiscal Yearend

2021 Revenue [000]

2021 Store Count

2020 Store Count

12/31/2021

9,600,000

8,033,000

419

419

1/29/2022

9,306,549

5,751,541

840

761

1/29/2022

8,958,000

7,548,000

2,858

2,998

2/2/2022

8,940,000

7,480,000

669

650

1/1/2022

8,931,039

9,348,485

145

156

9/30/2021

8,660,000

8,450,000

2,360

2,377

1/29/2022

8,630,889

6,151,953

1,308

1,264

12/28/2021

18.9 billion

17.1 billion

5,500

5,400

1/30/2022

8,245,936

6,783,189

544

581

2/1/2022

8,200,000

7,500,000

4,330

4,900

3/31/2021

8,100,000

7,795,000

131

131

1/29/2022

7,882,000

6,434,000

1,755

1,736

2/26/2022

7,867,800

9,233,028

953

1,020

1/29/2022

7,826,000

5,226,900

2,854

2,833

1/31/2022

7,420,000

13,180,000

1,566

1,156

9/30/2021

7,200,000

7,532,720

630

616

12/31/2021

6,930,000

6,800,000

154

152

12/31/2021

6,913,754

5,446,591

187

171

8/31/2021

6,790,000

6,573,350

70

66

1/29/2022

6,785,000

5,413,000

899

933

62

Burlington Stores

63

Foot Locker

64

J.C. Penney Co. (E)

65

SpartanNash Companies

66

Good Neighbor Pharmacy (E)

67

Ulta Beauty

68

Ace Hardware

69

Williams-Sonoma

70

Army & Airforce Exchange Service

71

WinCo Foods (E)

72

Bath & Body Works Columbus

73

Bed Bath & Beyond Inc.

74

Signet Jewelers Ltd.

75

PetSmart (E)

76

Sheetz (E)

77

Bass Pro Shops (E)

78

Camping World

79

Ikea North America (E)

80

Victoria’s Secret & Co.

Burlington, N.J. New York City Plano, Texas

Grand Rapids, Mich.

Chesterbrook, Pa. Bolingbrook, Ill. Oak Brook, Ill.

San Francisco Dallas

Boise, Idaho

Columbus, Ohio Union, N.J.

Hamilton, Bermuda Phoenix

Altoona, Pa.

Springfield, Mo. Lincolnshire, Ill.

Conshohocken, Pa.

Reynoldsburg, Ohio

U.S. RETAILERS

(domestic only)

2020 Revenue [000]

(domestic only)

65%

of consumers visit Walmart to make everyday purchases. Other popular retailers for everyday items are Amazon

(43%), (34%) (31%), (30%).

Dollar Tree

Dollar General and Target

Source: Engine Insights’ “Pulse of the American Consumer”

Two-thirds

(64%)

of respondents already purchased a virtual good or taken part in a virtual experience or service in the past year, with the figure expected to rise;

83%

showed interest in making purchases via the metaverse.

Source: Accenture

Source: Company reports unless otherwise noted E: Estimate, NA: Not applicable, R: Retail operations only.

14

08-17-CSA_TOP100.indd 14

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9/29/22 11:40 AM

TOP 81

Academy Sports + Outdoors

San Antonio

82

The Raley’s Companies

83

Tapestry

84

AVB Brandsource (E)

85

Dillard’s

86

Staples (E)

87

Hobby Lobby (E)

88

Demoulas Supermarkets (E)

89

Big Lots Inc.

90

Sprouts Farmers Market

91

GameStop Corp.

92

Sephora Americas (E)

93

Petco Health and Wellness Co.

94

Under Armour

95

Save Mart Supermarkets (E)

96

Tiffany & Co. (E)

97

Discount Tire (E)

98

American Eagle Outfitters

99

Michaels Stores (E)

100

West Sacramento, Calif.

New York City Nashville

Little Rock, Ark. Framingham, Mass.

Oklahoma City

Tewksbury, Mass.

Columbus, Ohio

San Bernardino, Calif.

Grapevine, Texas New York City San Diego Baltimore

Modesto, Calif.

New York City

Scottsdale, Ariz.

Pittsburgh, Pa. Irving, Texas

Total Wine & More (E) Bethesda, Md.

U.S. RETAILERS

Fiscal Yearend

2021 Revenue [000]

2020 Revenue [000]

2021 Store Count

2020 Store Count

1/29/2022

6,773,128

5,689,233

259

259

12/31/2021

6,750,000

3,975,000

242

124

7/2/2022

6,684,500

5,746,300

1,443

1,450

12/31/2021

6,540,000

6,280,000

4,500

4,500

1/29/2022

6,493,000

4,300,895

280

282

1/31/2022

6,400,000

8,670,000

1,040

1,071

12/31/2021

6,270,000

4,790,000

1,001

919

1/2/2022

6,200,000

5,600,000

87

84

1/29/2022

6,150,603

6,199,186

1,431

1,408

1/2/2022

6,099,869

6,468,759

374

362

1/29/2022

6,010,700

5,089,800

4,573

4,816

12/31/2021

6,010,000

5,010,000

508

1,124

1/29/2022

5,807,149

4,920,202

1,433

1,454

12/31/2021

5,683,466

4,474,667

422

439

6/30/2021

5,600,000

5,250,000

204

206

1/31/2021

5,600,000

4,400,000

326

326

12/31/2021

5,200,000

5,150,000

1,087

1,078

1/29/2022

5,010,785

3,759,113

1,133

1,078

1/31/2022

5,010,000

5,280,000

1,140

1,120

12/31/2021

5,000,000

4,310,000

233

226

Online retail sales in the U.S. will grow

10%

annually during the next five years to account for

30%

of the market by 2027; offline will account for

70%

of total retail sales. U.S. total retail sales will reach $5.5 trillion and online retail sales will reach $1.6 trillion by 2027.

Source: Forrester’s 2022 Online Retail Sales Forecast, U.S.

Online returns cost retailers an average

21%

of order value.

Source: Pitney Bowes BOXpoll survey

For the 11th consecutive year, Nike is teens’ No.1 favored clothing brand, followed

by American Eagle Outfitters, Lululemon, H&M and Adidas.

Source: Piper Sandler Companies’ 43rd annual semi-annual “Taking Stock With Teens” survey.

Source: Company reports unless otherwise noted E: Estimate, NA: Not applicable, R: Retail operations only.

16

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STORE SPACES

Lighting Rebate Update Bonus programs at record high

By Marianne Wilson A new report has good news for retailers who are updating to more efficient lighting.

Currently, 77% of the United States has an active commercial lighting rebate program, with 22% having a bonus program available as of mid-September, which is the highest BriteSwitch has seen seen it began tracking commercial lighting rebates 14 years ago. (The Princeton, N.J.-based company helps businesses find and take advantage of rebates and incentive programs that exist across the United States and Canada.)

A bonus program is when rebate organizations offer increased incentives for the existing rebate measures for a set period of time. The value of the bonus varies depending on the utility.

Here is a look from BriteSwitch at the most common types of bonus programs: • Bonus on specific products: Rebate programs may offer additional incentives on certain product categories to help increase participation. For example, it may be a particular product type, such as a 4’ LED tube, or a whole category, such as outdoor lighting. The bonus never specifies a specific brand or model.

• Bonus on certain customer categories: If a specific market segment seems to be particularly reluctant to upgrade its lighting, programs may offer a bonus for those customers.

• Across the line bonus: This type gives an additional rebate for any project, regardless of the application

or product. For example, a program may offer an extra 20% for any lighting rebate it provides for the next 60 days • Trade ally bonus: Some programs find that it’s more effective to incentivize the person selling the lighting instead of the end user. To receive these incentives, you typically must be a trade ally with a program. Since these bonuses go directly to the distributor, contractor or ESCO, they instantly increase the vendor’s margins.

BriteSwitch warned that bonus programs are usually sudden and short-lived, with many having specific rules and requirements. They may have strict pre-approval or final approval dates.

“Pay attention to all the fine print and deadlines, or you will miss out,” the company said.

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STORE SPACES

Keeping Things Cool — And Green

By Marianne Wilson Aldi is taking steps towards a smaller carbon footprint.

close to zero as possible. More than 500 Aldi stores have been certified, which is more than all other grocery retailers in the nation combined.)

Transitioning to refrigerants that have near-zero global warming potential is only part of Aldi’s blueprint for achieving a smaller carbon footprint. Other steps include: • Installing rooftop solar panels that produce green electricity in 120 stores and 12 distribution centers (with plans to add 60 new stores and one new distribution center this year);

• Using environmentally friendly building materials and energy-efficient appliances in new and remodeled stores; and • Making green electricity purchases to offset 100% of any energy used that Aldi hasn’t produced itself via its on-site solar and wind.

In addition, Aldi is testing a smart building automation system to minimize wasted energy with the lowest possible emissions.

“We’re working to decrease our overall impact on the climate more and more each day, with each step bringing us that much closer to becoming ‘real zero,’ or completely emissions-free,” said Dan Gavin, VP of national real estate at Aldi. “This is just the beginning. We plan on remaining at the forefront of sustainability and have some promising ideas on how we can keep reducing our environmental impact even further.”

S TA N F O R D B A S S B I O LO G Y C A F E

Fast-growing Aldi isn’t letting its expansion get in the way of its commitment to the environment.

The discount grocer, which is on track to become the third-largest grocery chain in the United States by yearend, has set aggressive sustainability goals, one of which is focused on reducing its greenhouse gas emissions by 26% by 2025. Phasing out harmful refrigerants is part of that strategy.

For the fourth consecutive year, the Environmental Protection Agency’s GreenChill program recognized Aldi with its Store Certification Excellence Award for having the most GreenChill-certified stores of any food retail company. (The certification is awarded to stores that replace standard commercial refrigerants with environmentally friendlier ones that keep their greenhouse gas emissions as

20

20-CSA_Aldi.indd 20

SEPTEMBER/OCTOBER 2022

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STORE SPACES

Construction Costs Update

By Marianne Wilson There is some light at the end of the tunnel when it comes to rising construction costs. But it’s still a ways out.

Construction costs are forecast to rise 14.1% this year due to rising prices for labor and materials, according to CBRE’s U.S. Construction Cost Trends report. Annual increases, however, should return to the historical average of between 2% and 4% in 2023 and 2024. Overall cost inflation for materials is expected to begin easing by the end of 2022 and largely return to typical levels by mid-2023.

Supply chain-related disruptions should also begin to ease, but ongoing labor and component shortages will impair production and logistics capacity, CBRE said. As a result, long lead times and material shortages will likely

continue in the short term.

Nonresidential construction input prices in August (the latest data available as of press time) were up 16.3% from a year ago, according to an analysis of U.S. Bureau of Labor Statistics Producer Price Index data by the Associated Builders and Contractors, a national construction industry trade association.

On a year-over-year basis, input prices were up in all but two of 11 subcategories, including natural gas (up 38.8%), fabricated structural metal products (up 17.7%), concrete products (up 14.3%), softwood lumber (up 14.8%), plumbing fixtures and fittings (up 10.9%) and prepared asphalt, tar roofing and siding products (up 15.2%).

On the positive side, nonresidential construction input prices decreased

1.4% in August compared to the previous month.

Labor: In addition to higher costs, the construction industry faces numerous labor challenges, including a smaller talent pool, competition from other industries and an aging workforce — one in five construction workers is currently older than 55. In 2023, the industry will need to bring in nearly 590,000 new workers on top of normal hiring to meet industry demand, according to the ABC. The scarcity of qualified skilled workers is an even more pressing issue, noted ABC Chief Economist Anirban Basu.

“More than 40% of construction workforce growth over the past decade is comprised of low-skilled construction laborers, who represent just 19% of the workforce,” he said.

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STORE SPACES Q & A

Keeping Stores Open For Business During Renovations With awareness of indoor air quality at an all-time high, ZipWall Dust Barrier System’s Jeff Whittemore talked with Chain Store Age about how retailers can keep stores open for business safely during a renovation while also speeding up the process.

Jeff Whittemore is the founder and president, of ZipWall Dust Barrier System.

Why is controlling dust during a remodel so important in the retail and restaurant spaces?

Remodeling dust is a nuisance at best — or it can be an outright health hazard.

Minimizing exposure to it protects both employees and customers. For restaurants, protecting food preparation and service areas is critical. For retailers, there is an added financial benefit to protecting merchandise and displays.

What trends are you seeing in retail construction and remodeling activity?

We are seeing an uptick in the use of the ZipWall Dust Barrier System during store renovations as awareness of interior air quality is higher than ever before.

We are also seeing an overall increase in hospitality and retail renovations as many hotels and restaurants update their interior and stores transform post-pandemic. We are also noticing an increasing number of retail chains that require their contractors to use ZipWall barriers chainwide.

What are some of the challenges stores and restaurants face when updating their interiors?

Many interior retail spaces have large, open floor plans with high drop-ceilings. The ZipWall Dust Barrier System is uniquely suited for this environment. ZipWall dust barrier poles extend as high as 20 feet and work well with most ceiling types, including drop-ceilings. ZipWall barriers can be placed anywhere to section off parts of the store. They can be extended as needed by simply adding more poles.

How can ZipWall help help retailers keep stores open during renovations?

ZipWall barriers minimize disruption to the business during renovations. Isolating the work area allows the store to remain open throughout the remodel. Opaque plastic, or the white ZipWall reusable barrier, conceals the construction site and keeps the retail space clean and professional. The barrier also keeps hazardous jobsite items like tools and loose nails away from customers and employees.

The speed of set up and removal of a ZipWall barrier allows for rolling construction, where specific areas can be renovated one at a time. It also permits overnight construction. A ZipWall barrier can be set up after hours for noisy and messy work, such as demolition, and taken down by morning in time for the store to reopen.

What exactly is the ZipWall Dust Barrier System?

The ZipWall Dust Barrier System was invented about twenty years ago. The core of the system is made up spring-loaded, telescoping poles that let contractors set up temporary barriers up to 20 feet high in minutes.

The system includes self-adhesive zippers to create entries in the barrier, selfclosing magnetic doors, various kits for sealing off rooms, special rails for tightly sealing a barrier, sticky mats for preventing dust from tracking out of the work area, a negative air attachment and other accessories for addressing just about any dust containment challenge.

Prior to ZipWall, what other options did retailers have for isolating work areas?

There were various makeshift solutions,

22

22-23-CSA_SS QA.indd 22

including building temporary walls with 2x4s, using ceiling hangers and taping plastic sheeting. These methods are all time consuming and difficult to set up. They also damage existing surfaces and require repair after the job is finished. The ZipWall system was specifically designed to address these issues and offer a reliable barrier that is quick and easy to set up and does not damage surfaces.

How complicated is the set-up?

Setting up a ZipWall barrier is very easy — the system does not require ladders or other tools. One person can set up a barrier in minutes. There is a handy Job Planner on zipwall.com to help with planning a dust barrier. For large, complex barriers, a consultation with a technical ZipWall expert is available.

Tell us about ZipWall’s ZipDoor Magnetic Door Kit The new, reusable ZipDoor Magnetic is perfect for both covering a doorway and creating an entry anywhere in a plastic barrier. Self-closing magnets provide easy hands-free access to the jobsite while ensuring the barrier remains sealed. Installation is easy with ZipWall double-sided tape.

Beyond renovations and remodels, how else ZipWall help businesses?

ZipWall barriers can be used for concealing a mess, keeping customers away from an area or covering an in-progress display. Retailers can also use ZipWall poles for creative projects such as impromptu photoshoot backgrounds, room dividers or hanging displays.

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Get the latest news on retailers’ expansion and remodeling programs, new store prototypes, green initiatives, facilities updates and more. Find out who’s opening stores and where.

CSA Store Spaces covers retail development and facilities management inside and out.

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SHOP TALK

Express Edit

TRENDING STORES: Express is doubling down on its smaller store, off-mall Edit format. The apparel retailer is opening six new Express Edit stores (including two in New York City and two in Miami), for a total of 11 outposts by yearend. Averaging under 4,000 sq. ft. and situated in high-traffic locations, the stores feature curated and localized product assortments, with enhanced customer services. … Fast Retailing, parent of Uniqlo, is exporting

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another of its banners stateside. The Japanese apparel retailer is set to open the first U.S. location of its GU brand in downtown Manhattan. GU specializes in low-priced, trend-driven fashions for young men and women. …

Printemps, the 150-year-old, iconic French department store, will open its first U.S. location in 2024, a two-level, 54,365-sq.-ft. store in Manhattan’s Financial District.

Parisian interior designer Laura Gonzalez will be the project architect, creating a “Paris meets New York” twist on the design. … Terez, the women’s and girls’ activewear brand best known for its signature printed leggings, has opened its first permanent store. Located in Manhattan, the 1,600-sq.-ft. shop is colorful and inviting, with hot pink accent walls, a checkboard floor and a glass ballloon ceiling installation. Shoppers can personalize their purchases with crystals and embroidery. … Planet Hollywood, whose Big Apple outpost went dark during the pandemic, will open a new location in Times Square in May 2023.

Designed by api(+), the eatery said it will offer an immersive, three-story experience that surrounds customers with the culture, sights and sounds of Hollywood and favorite celebrities. … Lids has opened its largest location to date, a two-story, 12,000-sq.-ft. flagship on the Las Vegas Strip. The store boasts shop-in-shops from a variety of sports leagues and two large-scale LED screens designed to showcase prime time games. … The world’s first Nike Style store has opened in Seoul, South Korea, with a second one set to open in Shanghai. Following the initial doors, Nike plans to expand the concept to other countries. Blurring the lines between physical shopping and digital, Nike Style also blurs the lines between the sexes, with gender-free lifestyle product zones for certain items, including fleece and tops. Throughout the space, QR codes offer augmented reality experiences related to Nike product innovations and surrounding art installations. The store also features a studio where local creatives, product experts and shoppers can create content for their social media channels with customizable backdrops.

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REAL ESTATE

How Malls

WILL SURVIVE F

or more than 50 years these roofed successors to downtowns defined the nation’s consumerism, culture, and Christmases. Now at a crossroads, malls must make the correct turns in a fast-changing marketplace to keep their concourses open.

Chain Store Age asked some of the United States’ leading mall managers to lay out some of the dos and don’ts they are adhering to on the rough retail road ahead.

By Al Urbanski

STEVEN LEVIN

CEO, Centennial

DO… …change the experience that’s been in existence for 30 or 40 years and doesn’t work anymore. Create an open, activated plaza experience.

Create a sense of place.

So take down that empty department store box and use that space to create the experience you need today. People want to take their kids and grandkids out and listen to music, sit on a patio and have dinner. But malls don’t have the open space needed to do that, so you take that box down and bring in the types of businesses—entertainment and food and beverage

“Take down that empty department store box and use that space to create the experience you need today. The problem is that most mall owners aren’t in a position to make these kinds of investments.”

—Centennial CEO Steven Levin

CHAINSTOREAGE.COM

25-32-CSA_MALLS.indd 25

and experiential retailers—that people want today. That’s today’s anchor.

The problem is that most mall owners aren’t in a position to make these kinds of investments. Their locations are fabulous, but the malls are too big and they have too much debt to do what needs to be done. What we did was look at removing some of the GLA in the shop space. In order to re-merchandise and obtain the true value of your real estate, you have to change the physical plant.

DON’T… …do nothing. You shouldn’t believe the mall will get better without you doing something about it. You’ve got to have a totally open vision and say the past is the past. The last thing you want to do is stay locked into the same footprint you had. You need to open your eyes and say, “I need to change what’s here,” not “I need to continue what was.”

JOE CORADINO

CEO, PREIT

DO… …analyze the property’s underlying demographics, competitive landscape, and results and determine if it has a future or if it’s headed for obsolescence. We did this and sold off 19 malls--almost half of our portfolio.

One that we thought still had a life ahead of it was Moorestown Mall, which is just four miles away from Cherry Hill Mall, our top performer. To distinguish it from Cherry Hill, we began looking at new tenants that were not typical mall tenants… medical, dining, residential. We used to have tenants that were common in both. Now that’s by the wayside. We brought in HomeSense, Sierra, Five Below and Michaels. When we lost Sears, we bought the building back, and sold it to Cooper University Healthcare, which is investing $100 million in it and should drive additional customers to our doorstep. More recently, we executed a transaction with a multifamily developer that’s under construction for 375 residential units on the property. We believe this sort of creativity is the future for many malls.

SEPTEMBER/OCTOBER 2022

25

9/29/22 8:42 AM

REAL ESTATE

DON’T… …try to prolong a mall’s life when it can’t be one anymore.

Get creative and innovative. One thing’s for sure, malls are well-located. But there comes a time when you have to abandon the traditional mall approach and start coming up with a list of new possibilities.

STEVEN CONGEL

CEO, Pyramid

DO… …be willing to reinvest in your properties constantly. Your center has to look healthy and vital. Simply put, your center must have new appeal to people every time they travel or visit, and that takes a lot of imagination, resilience, hard work and money.

Malls are a unique type of commercial real estate. They’re living things that are complex and made up of many different parts, and each needs to be approached separately. New enhancements or transformations that are done take a lot of thought because they’ll ultimately change and enhance the perception of what that mall is.

When we built the on-site Embassy Suites Hotel at Destiny USA in Syracuse, the center became something different, transforming it into an international travel and tourism destination.

The hotel provided us with unique opportunities to offer guests special “Shop & Stay” and “Stay & Play” packages, along with a premium “Shop & Drop” shopping bag delivery program for hotel guests. Almost immediately, the perception of the property changed. That allowed us to broaden our appeal and attract exciting new tenants to the property in entertainment and food and beverage.

DON’T… ...rest on your laurels and stop reinvesting in your shopping centers. Once you do those two things, it’s game over. Malls are incredibly dynamic. They’re not like office or residential. Office

“Malls can grow stale. You could have a 100%-leased mall and I guarantee you it will get stale after a few years.”

—Pyramid CEO Steven Congel

26

25-32-CSA_MALLS.indd 26

Ever hear the one about three anchors closing and giving new life to a mall?

By Joseph F. Coradino

A

nchor closings aren’t always a bad thing.

Though Moorestown Mall in the New Jersey suburbs of Philadelphia sits just 4 miles from PREIT’s top mall in Cherry Hill, it serves a different customer base and we decided to keep it.

We at PREIT evaluate our properties on the competitive landscape and the demographics and psychographics as well as their locations. In the case of Moorestown, this assessment led us down the path of bringing in traditionally open-air tenants. Ours was a location far superior to that of a power center along a local road on the other side of the mall.

The redevelopment required some perseverance, however.

First Macy’s closed and, in that space, we put the region’s first HomeSense and Sierra stores, along with Five Below and Michael’s. Cooper University Healthcare had earlier approached us about a location at Cherry Hill Mall, but we didn’t have the exposure they were seeking.

Then Sears announced it would close its Moorestown store— ideally situated along Rte. 38—and immediately we had a solution. We acquired the Sears box and sold it to Cooper.

The third anchor at Moorestown Mall was Lord & Taylor, which liquidated and left its space. The irony is that this space is now much more marketable as a result of the successful re-tenanting of the first two fallen anchors.

Years before, PREIT recognized that the value of its real estate would not be maximized unless we densified our assets. We evaluated each of our markets for potential new uses and identified the opportunity to add over 3,000 apartment units to our suburban assets—one of which was Moorestown.

In seeking to differentiate Moorestown from Cherry Hill, we took steps to ensure minimal tenant overlap. Cherry Hill Mall has widely been hailed as the fashion destination of South Jersey— even attracting Center City Philadelphia residents. So at Moorestown, we pivoted away from traditional full-price retail and leaned heavily into off-price retail, multifamily residential, hotels, entertainment, and small businesses.

Three anchors fall and a revitalized mall finds new legs.

— Joseph F. Coradino is Chairman and Chief Executive Officer of Philadelphia-based PREIT.

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Inventive Design Accretive Merchandising Engaging Placemaking Innovative Technology What makes us different is what makes our properties great.

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space becomes like a coupon clipper. You can keep them going for long periods of time with three people and a calculator.

However, malls can grow stale. You could have a 100%-leased mall and I guarantee you it will get stale after a few years. People are always looking for what’s new and what’s fresh, so change and an evolution of the experience is a very good thing.

“Don’t rush. We’ve looked at some of the things that we did just five years ago and said we’d probably do it differently today.

—CBL CEO Stephen Lebovitz

STEPHEN LEBOVITZ

CEO, CBL Properties

DO… …explore possibilities that you might never not have considered before. Initially, we were a little nervous about the prospect of adding casinos at two of our malls, but the additions have far surpassed our expectations and have given us double-digit-plus traffic lifts at those locations.

We felt that the casinos needed to be integrated with the mall to allow for a crossflow of traffic with the mall. We also wanted the casinos to offer more than gambling--like good restaurants and entertainment, and they’ve done that.

There were some security concerns, but they’ve been managed.

The casinos are open 24/7, and we just close access to the mall when it closes. Their restaurants have had a very positive effect on building traffic with new customers. The casino has widened our market areas considerably at both locations.

Live!, which is part of the Cordish Company, also made a lot of improvements to the property. They’ve added signage, parking, and physical upgrades. Having great entertainment as a part of your mix is a must today, and Cordish understands entertainment.

DON’T … …. ignore your market. The mall business is not cookie cutter anymore, so use all the customer data intelligence and other data that is available today. At the same time, don’t rush. A lot of the things we’re trying today are new, and once you do it you can’t un-do it. We’ve looked at some of the things that we did just five years ago and said we’d probably do it differently today.

Centennial-Bayer: A merger for the times

A

s today’s shopping centers age, Steven Levin, CEO of Centennial, says one of malls’ biggest problems is that they have too much parking and not enough park.

In August, Centennial, an owner-operator of prominent shopping centers like MainPlace in California and Fox Valley in Illinois, made a bold move to change that by purchasing Bayer Properties, a best-in-class open-air real estate operating company.

The marriage of the two firms expanded Centennial’s portfolio to 23 million sq. ft. of managed properties in 18 states.

More importantly, it shined a spotlight on the combined firms’ vision for the future of retail real estate: creating mixed-use destinations with green space; luxury apartment communities and independent living residences; hotels and offices, and unrivaled dining and entertainment options that complement existing retail.

Barely two months post-acquisition, the combined teams have already sparked new

and inventive ideas.

“Our head of mixed-use design recently held a number of conversations with the Bayer team yielding a wealth of ideas that will greatly benefit our properties,” said Centennial’s president, Whitney Livingston.

Centennial will retain its Dallas headquarters and employ a combined staff of 300-plus employees. Bayer’s Birmingham headquarters will become a regional office for Centennial, which will maintain other regional offices in Philadelphia, Chicago, Orange County, and Lexington, making Centennial a truly nationwide organization.

“We now have a coast-to-coast platform with greater geographic reach and a wider array of properties giving our tenants access to some of the best real estate in the country,” said Bayer’s former president and CFO Jami Wadkins, who now serves as Centennial’s COO. Livingston agrees.

“Through this acquisition, we have an in-

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O p t

J o c

Jami Wadkins and Whitney Livingston

credible opportunity to expand our shared vision for open-air, mixed-use destinations,” she said. “This will create more value for our properties, partners and investors.”

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F d v

One-of-a-kind properties tailored to each community.

Join our portfolio as we re-define the future of the mall, creating one-stop destinations for communities to shop, live, play, dine, stay and work.

For more information or to get more detail about our portfolio of properties, visit us at preit.com.

FOLLOW US:

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GEOFF MASON

Executive VP of Development, Unibail-Rodamco-Westfield

DO… …pay attention to what consumers are looking for. They want everything at their fingertips--food, entertainment, luxury goods, fitness, and wellness. They want it 24 hours a day. And they don’t want to commute all over town to get it. So you want to create a city within a city.

What we did at Westfield UTC in San Diego is a good example. We switched Nordstrom to another box to optimize its location and create future development opportunities. We changed the tenant mix. We brought in Hermès, Louis Vuitton, Soul Cycle, top restaurants and wine bars. We repurposed an underutilized portion of land to build a luxury high-rise residential building.

Younger people, whenever they’re going to leave their homes, are going to do shopping along with a lot of other things.

Physicality and social interaction will be important for a long time to come.

DON’T … …stay stuck in the past. Don’t focus only on long-term leases, because consumers always want more options and we have to focus on the consumer. Consumers don’t want to spend their whole day in a mall that’s 90% fashion. Online shopping gave them a far more convenient way to discover what’s new. So what we need to do is provide them that same ability to explore and try new and different things in the physical space. We constantly have to be searching out new retailers, new food and beverage experiences, new entertainment, and fulfill other critical needs like convenient housing, offices, and hospitality.

ADAM TRITT

Brookfield, Chief Development Officer DO… …remember why we were here in the first place—to drive traffic to places where people want to be. Brookfield Properties does this by bringing relevance to a broader trade area. We must be 30

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Home is where the amenities are

By Stephen J. Congel

I

recently watched an episode of the Netflix show “Stranger Things,” which is set in the Eighties, and a scene took place in a mall. I thought to myself, “That was every mall back then.” Indeed, mall properties became homogenous to the point where you couldn’t tell one from another.

In fact, there once were more than 1,000 malls in the United States. Now we find ourselves in a sped-up evolutionary phase that will end with more than half of them gone. Big changes are being made, and one that we think will be found in many of the malls that survive are residential components.

Earlier this year our company, Pyramid Management Group, welcomed its first residents to a 282-unit Trammel Crow multifamily development next to our Kingston Collection mixed-use complex in Kingston, Mass. It is market-rate rental housing that is in high demand in that area.

In Walkill, N.Y., the Eliviat Group will erect a 224-unit residential property called The Galleria Residences across from our Galleria at Crystal Run. We’re looking at a June 2024 completion date.

We began talking about residential development 10 years ago, but we weren’t sure the market was there. Without question, we also would have gotten a lot of push-back from our anchors, lenders, and community leaders had we gone forth with a residential plan then.

That’s gone now. In fact, today they’re encouraging us to build residential.

It makes sense now because people have less time in their schedules. They want convenient access to food and beverage options, entertainment, medical attention, and personal services.

Millennials and Gen Yers are getting older and want to move into apartments in places that offer them these kinds of amenities.

Empty-nesters, too.

Therefore, we at Pyramid are considering densification projects at nearly every one of our retail properties as the popularity of live-work-play destinations continues to increase among the U.S. population. In Albany, we recently received approval for a new apartment development and intend to break ground this fall.

More will soon follow.

The world has changed, and the mall must change, too.

— Stephen J. Congel is the Chief Executive Officer of Pyramid Management Group, based in Syracuse, N.Y.

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REAL ESTATE

quick to detect changes in the community.

Since the pandemic, we’ve definitely leaned harder on data to determine the where and why of traffic patterns. An example where we made a positive change is in San Francisco at our Stonetown Galleria. We added a Whole Foods and a new theater in a former department store space that changed the way the traffic flowed. We look at densification opportunities where appropriate, but we want that strong retail core that survives and thrives.

“For years developers have been fighting online shopping. Now we know that omnichannel is the ultimate channel.” ‚—Trademark CEO Terry Montesi

DON’T… ... lose sight of the broader community. There are big populations that have a lot of moving demographics. As we look at younger generations, we’re able to interact with them more directly. Where we used to do focus groups, we now do town halls and social media. Looking back at the beginnings of our industry, we had a tried-and-true model. We are now on a mission to discover what’s the next generation of tried-and-true.

a fashion store sold the same fashions every year? We are in the daily-monthly-annual transformation business.

Customers have high expectations. and they should. Your outlet has to be an omnichannel-worthy location and it has to be aligned with the behavior of your shopper. If you don’t want your mall to die, you have to have a stewardship that’s going to evolve. Invest in and make the changes that will allow it to live on.

CHRIS WEILMINSTER

EVP & COO, Urban Edge Properties

DO…

TERRY MONTESI

CEO, Trademark

DO… …listen, research, and learn. You can’t go to different communities with standard formats that you try to fit in anywhere. Involve the community and give the community ownership of the place.

And do make your place more relevant to omnichannel.

Increase the levels of service. For years developers have been fighting online shopping. Now we know that omnichannel is the ultimate channel. All the major online retailers need brickand-mortar stores. Provide in-store pick-up, curbside delivery, home delivery. Use technology to give shoppers access to your property and its merchants online. We’re doing that at Galleria Dallas today.

DON’T... …do nothing. Evolve or die. If you’ve got a dated mall that hasn’t been transformed or rethought in the last 10 years, it’s going to become less relevant every day. Evolve or die. What if 32

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…break away from what malls were in the past and offer new uses that satisfy people’s needs, including a diverse tenant mix with ancillary services. Bergen Town Center in Paramus, New Jersey, for example, is an assemblage of essential uses that people need for their daily lives, including grocery, pharmacy, cosmetics, food, fitness, and retail, all wrapped into one experience. We created a super-regional anchor mix that includes Target, Whole Foods, Saks Off 5th and Nike Factory Store—plus a wide diversity of dining options – where most of our tenants have outdoor entrances. Plus, Bergen Town Center’s value-retail niche distinguishes it from the other full-price malls in Paramus. Next up is a state-of-the-art medical facility that we’re starting construction on in November for Hackensack Meridian Health.

DON’T… …get it in your head that you’re going to be successful without anchors, but also consider what type of anchors make sense for the surrounding community. Anchors can be residential towers, offices, hotels, etcetera, that add a unique element to the retail mix and build the repeat visits that are critical for a successful shopping destination. Don’t miss the opportunity to shake up your anchor strategy to create a dynamic place for people to live, work and play.

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TECH

Machine Learning Update Artificial intelligence learns on the job

By Dan Berthiaume Retailers are finding machine learning technology to be highly applicable to current business issues.

Machine learning(ML), a subset of artificial intelligence that analyzes patterns in data to “learn” and adapt in a manner similar to humans, is reaching an inflection point in retail. This once bleeding-edge technology may not yet be a routine retail solution, but is popping up more frequently in the retailer enterprise.

Here are a few reasons why an ever-growing number of retailers are studying up on the benefits of ML: • Better reactions In the past few years, retail has found itself facing a number of high-impact events that even the best currently available AIbased predictive systems could not foresee. These include the COVID-19 pandemic, global supply chain disruption and an ongoing labor shortage.

ML technology provides two key advantages in dealing with this type of unpredictable disruption. First, as soon as an event like a pandemic occurs, ML solutions can begin detecting and analyzing data patterns to recommend responses that are much more constructive than reactions based on human intuition alone.

Second, once an “unpredictable” event such as COVID-19 or global supply chain disruption has occurred, ML technology can recognize otherwise undetectable data patterns to sense when a similar situation may be developing. And even if something like a pandemic re-occurs without advance notice, ML systems can rely on previous learnings to provide retailers with a much stronger initial response.

• Generation gap, part 2 When the baby boomers came of age in the turbulent 1960s, the massive disconnect between the behaviors, attitudes and desires of that emerging cohort compared to their parents was dubbed the “Generation Gap.” Conventional wisdom holds that as boomers maintained a young, progressive outlook on life, this gap largely disappeared as Gen X and millennials grew up with little to rebel against.

Guess what? Gen Z has arrived as arguably the most important generation of consumers, and there is a significant gap between how they live their lives and how older consumers do. This gap is predicated not so much on sex, drugs and rock n roll, but on how they use technology.

For example, a recent consumer survey from Morning Consult indicates that 42% of respondents across all generations have used mobile wallet payments. However, this figure includes only 21% of baby boomers and 36% of Gen Xers who have paid CHAINSTOREAGE.COM

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via mobile wallet solutions. These percentages rise much higher among millennials (53%), and especially, among Gen Zers (62%).

It’s no surprise that a generation that played with toy smartphones as toddlers and came of age in the era of pandemicinspired touchless commerce would gravitate toward mobile wallet payments. Gen Z consumers are also much more likely to rely on social media influencers and consider a retailer’s sustainability when making purchase decisions.

Properly meeting the needs of Gen Z customers at every touchpoint goes far beyond having a mobile and social presence, or hosting young shopper market research panels. ML technology enables retailers to effectively sense and respond to demand signals they may not fully understand.

• Automation requires humanity Finally, as automation spreads across the enterprise, ML is playing a crucial role in ensuring that processes continue to become more effective and efficient, just as they do when humans manually performing them learn on the job.

For example, in the case of case of Just Walk Out frictionless shopping technology, Amazon deploys sensors, optics and ML algorithms. As a result, the company has reduced the number of cameras required in stores enabled with this solution to make them more cost-effective, smaller and capable of running deep networks locally. Just Walk Out sensors and algorithms have also evolved to detect a broad range of products and differences in shopping behavior in full-sized grocery stores.

Also, consider how Walgreens is leveraging the ML capabilities of Blue Yonder’s inventory management technology to improve the accuracy of inventory, shrink and shipping. The drugstore giant uses ML to see what the probable fulfillment rate is, as well as to support the sustained increase in customer usage of omnichannel shopping features, such as buy-online-pickup-instore (BOPIS), curbside pickup and same-day delivery, which began during the COVID-19 pandemic.

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Reduce Shrink With Enterprise AI Solutions

By Dan Berthiaume

Losses from retail shrink are on the rise.

As revealed in the recent 2022 National Retail Security Survey from the National Retail Federation, when taken as a percentage of total retail sales in 2021, retail shrink accounted for $94.5 billion in losses last year, up from $90.8 billion in 2020.

While any retailer’s loss prevention strategy should include dedicated shrink detection and prevention technology, other solutions used in different areas of the enterprise can also provide anti-shrink benefits. Retailers should not overlook the role that artificial intelligence-based retail enterprise technologies can play in helping loss prevention efforts.

Here are a few to consider.

Frictionless shopping True frictionless shopping, where customers digitally announce their presence in a store, take the items they want, and then leave with automatic debit or credit payment for their purchase, is growing in popularity in the grocery and convenience verticals.

One of the best-known examples is Amazon’s “Just Walk Out” technology, which is designed to offer customers a quick shopping experience to pick up grab-and-go food, snacks and beverage items, and a few everyday essentials.

Just Walk Out leverages a combination of computer vision, sensor fusion and deep learning that enables shoppers to shop the store, pick out what they want and skip the checkout when they’re done. When shoppers arrive, they open the Amazon app, tap “In-Store Code,” and scan in with the QR code presented.

The frictionless retail model relies on

sophisticated, artificial intelligence-based cameras and shelf sensors to track every item each individual customer picks up and puts back — in real time. While frictionless shopping does not eliminate shoplifting, its very nature makes detecting theft before an offender can leave the store much easier.

The true frictionless model, which eliminates in-store checkout altogether, serves as the best shrink reducer. Wegmans Food Markets is ending its app-based self-checkout program, which involves stopping at a self-checkout register and applying payment before leaving, due to high loss rates. Self-checkout solutions typically do not feature quite as much intensive, real-time product and shopper tracking, opening more possibility for abuse by shoplifters.

Automated shelf tracking Technology that applies AI and machine learning to detect low or empty stock levels can also serve as a real-time loss prevention system. For example, Walmart Canada is rolling out a computer vision AI solution from Focal Systems that uses cameras to automate out-of-stock detection.

The solution, which is integrated with the retailer’s existing inventory systems, automatically detects real-time availability concerns, such as out-of-stock or lowstock products on shelves, and directs store associates to replenish them.

This type of system generates historical data that can be analyzed for inventory patterns that suggest nefarious activity.

It can also send real-time alerts to store managers or company loss prevention experts who can pick up on shrinkage signals that associates might miss.

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Robotic solutions, such as the multipurpose Badger Technologies autonomous robots that regional home improvement retailer Busy Beaver Building Centers uses to more closely monitor in-store inventory, traffic and buying trends, can also serve this dual shrink reduction purpose.

Enterprise order management Solutions that provide retailers realtime visibility into the position of stock, across every channel and touchpoint in their enterprise, can also provide crucial insight into shrink issues that may exist throughout the supply chain. Mulberry, a U.K.-based designer and manufacturer of luxury leather goods, is rolling out the Aptos order management solution.

Mulberry is implementing the Aptos system across its stores and e-commerce operation as it continues to expand operations internationally. The company recognized the need to establish a unified view of inventory, so it would know whether stock was positioned in stores, distribution centers, or elsewhere in its demand chain.

By obtaining a unified, omnichannel view of stock location, Mulberry increases its ability to meet customer expectations for a seamless experience across all channels, as well as for faster delivery and heightened convenience. In addition, Mulberry gains immediate insight into any unusual movements or disappearances of stock, when and where it occurs.

Dan Berthiaume dberthiaume@chainstoreage.com

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