November/December 2019
ICSC New York Show Scoop Puma Goes High-Tech Retail Disruption: Fighting Back
LOOKING AHEAD TO
Issues, trends and insights for the coming year
Gaylord Texan, Dallas March 15-17, 2020
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buildingforthefuture UPGRADING PROPERTIES IN QUALITY MARKETS PREIT is at the forefront of modern placemaking — combining a diverse anchor mix with the best retail brands, destination dining and unique entertainment experiences. Meet PREIT at ICSC NY and learn about our transformative redevelopment projects in top US markets. FASHION DISTRICT Philadelphia, PA
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Philadelphia, PA
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from the editor’s desk
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tech viewpoint: a retail tech column
On the Level: A real estate column
Contents VOL. 95 NOVEMBER/DECEMBER NO. 6
NEW YORK
SHOW SCOOP • Julie Swinehart on financing today’s new projects
COVER STORY
• Adam Ifshin on leasing trends
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• Joe Coradino on building for the future • Ezra Stark on outlasting the trends • Willie Hoag on the spread of ‘medtail’ • Meghann Martindale on the risk in restaurants
RETAIL 2020: THE YEAR AHEAD A special section on what retailers can expect in 2020, with insights on brick-andmortar, legislative developments, the economy and technology.
• Don M. Casto on change and growth • Jeff Edison on the new groceryanchored center • Steven Lebovitz on transforming the enclosed mall
COVER STORY
DEBORAH BUTLER
on relevant redevelopment
• Tom McGuinness on the evolving neighborhood center
ALSO
• Booth Highlights 19
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New York Show Scoop For readers who can’t make it to the ICSC’S big New York show, we bring you in-depth commentary on the state of the physical marketplace from the people who know it best — developer CEOs and senior management. Topics covered include: • What’s behind the increase in rents? • Financing complicated mixeduse projects • “Medtail” and its increasing presence in outdoor centers
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• The risks and rewards of restaurant tenants Expert Opinion: Tips on how to manage the shift to a successful omnichannel strategy.
• The importance of relevant redevelopment
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. 95, No. 6, November/December 2019. Copyright ©2019 by EnsembleIQ. All rights reserved.
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Contents VOL. 95 NOVEMBER/DECEMBER NO. 6
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STORE SPACES
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Chain Store Age’s annual X/SPECS event put the spotlight on store design, construction and facilities management — and business networking.
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Update on lighting rebates finds that some of the highest incentives are in the Midwest and Northwest regions.
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Q&A: MaintenX’s Bill Schaphorst talks about the biggest challenge facing retail facility managers.
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J.P. Penney seeks to break from the past with a new store format.
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Shoptalk: Update on trending stores Nordstrom’s NYC flagship and REI’s new concept.
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Q&A: Brian Dennis of SMG discusses how retailers can deliver the type of experience that keep omnichannel shoppers coming back.
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Puma flagship brings products to life with digitization.
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Fast-fashion giant H&M downsizes in new local store concept
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CHAIN STORE AGE
FROM THE EDITOR’S DESK
NYC Best Bets
It was some year. From the opening of the largest mixed-use private real estate venture in U.S. history to the long-awaited debut of a department store icon, the New York retail marketplace was alive with fresh concepts and new takes by familiar players. Here’s my annual recap of the some of the most buzzed about entries: • Hudson Yards: The massive development that is remaking the city’s West Side includes 1 million sq. ft. of retail and dining space. The tenant mix is designed to appeal to high-end customers and just regular folks, with a blend of experiential retail concepts, DTC brands, global luxury players and mass-market chains across nearly every category. And be sure the check out the city’s first Neiman Marcus. (Between 10th and 12th Avenues from West 30th to West 34th Streets) • Ikea Planning Center: The first U.S. location of Ikea’s new downsized urban format, the three-level, 17,350-sq.-ft. store is focused on city-living solutions and provides personalized project planning and design services. There’s a variety of vignettes, including a tiny studio apartment. No need for shopping bags — goods are ordered online (in-store or at home) with free delivery. (999 3rd Ave.) • Nordstrom: Spanning seven floors and 320,000 sq. ft., the sprawling Nordstrom flagship is lavish and service intense. The open floor plan showcases an eclectic mix of curated women’s fashions from familiar brands, up-and-comers and local designers. Many brands have their own pop-ups or in-store shops. The two-level beauty department houses more than 100 brands, 16 shop concepts and a full-service spa. There are seven food and beverage outposts, including a fancy cocktail bar in the middle of the shoe floor. (235 W. 57 St.) • Puma: The technology-infused, two-level 18,000-sq.-ft. store offers an immersive shopping experience, with sports
“engagement” zones, a customization studio and an array of dazzling digitally connected offerings. “Magic mirrors,” tied into RFID, allow shoppers to view products in alternate colors and styles and browse inventory. (609 5th Ave.) • Showfields: Showfields is part retail pop-up, part art exhibit and part community space. The four-level, 14,707-sq.-ft. store makes it easy for emerging brands to interact with customers in a physical setting without taking on the risks that come with opening a full-blown store. A brand selects a space, which is then customized, fitted out and staffed by Showfields. Product sales go directly to the brand, which pays Showfields a monthly fee. The rotating line-up includes about 40 curated brands. (11 Bond St.) • Starbucks Pickup: The coffee giant’s first-of-its-kind location is designed for customers on-the-go. Dedicated exclusively to mobile orders, the store uses the mobile order & pay feature on the Starbucks app as the primary ordering and payment method. Customers can track the progress of their order on a digital board. (242 W. 34th St. at Penn Plaza) • The North Face: A new format designed to spotlight the brand’s outdoor heritage and sustainable ethos, this 8,000-sq.-ft. space is part store, part base camp and part archive. It has museumstyled displays of North Face-sponsored athlete expeditions and an experiential “campfire” area where shoppers can get product and trip options for local adventures. The interior was created using materials and products that are long-lasting, avoiding the need for refurbishing in a few years. (584 Broadway). • Third Love: The fast-growing online intimates brand known for its inclusive sizing and advocacy makes its brickand-mortar debut with a inviting space designed to make women feel comfortable and relaxed.The fitting rooms are painted in skin flattering tones of mauve and muted pinks and outfitted with adjustable lighting. (347 W. Broadway)
Marianne Wilson mwilson@chainstoreage.com
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Vice President, Group Publisher, CSA, SPECS Chairman Gary Esposito (212) 756-5118, gesposito@chainstoreage.com
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Publishers of Chain Store Age, Hardware + Building Supply Dealer and Drug Store News. Subscriptions/Customer Service: For subscription problems, call (847) 564-1468, email chainstoreage@omeda.com or mail us full details, including the mailing label from the last copy you received, along with your telephone number. Write to CSA, Subscription Department, P.O. Box 3200, Northbrook, IL 60076-3200. Address changes can be made online at chainstoreage.com/subscribe. Single-copy price: $20. Reprints: To order reprints contact Wright’s Media at EnsembleIQ at wrightsmedia. com or (877)652-5295. Minimum: 100 copies. Permissions: Materials in this publication may not be reproduced in any form without written permission. Direct permission requests to Gary Esposito, Publisher, Chain Store Age, 11-43 Raymond Plaza West, 16th Floor, Newark, NJ 07102. Contact Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 646-2600 or (855) 239-3415, or on the Web at copyright.com for immediate authorization to photocopy from Chain Store Age (ISSN 0193-1199). Editorial Calendars: chainstoreage.com. Back issues: (813) 627-6707. News Tips: Call Marianne Wilson at (212) 756-5261 or e-mail: mwilson@ chainstoreage.com. Letters to the Editor: Must include name, address and daytime phone number for confirmation. We reserve the right to edit correspondence for clarity and space. Send via e-mail: mwilson@chainstoreage.com or via mail: Marianne Wilson, Editor, Chain Store Age, 11-43 Raymond Plaza West, 16th Floor, Newark, NJ 07102
Corporate Officers Chief Executive Officer Jennifer Litterick Chief Financial Officer Dan McCarthy Chief Innovation Officer Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conference Ed Several
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COVER STORY
Focus On Brick & Mortar By Mark Hamstra
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The Year Ahead For retailers, the overall forecast for 2020 is more of the same — more disruption, more change, more innovation. And with a big election looming, it’s a year in which economic concerns and regulatory issues are sure to take center stage. In this special section, Chain Store Age looks at what’s in store and what are likely to be the biggest issues in 2020 for brickand-mortar stores, the economy, the legislative agenda and retail technology.
here is no question that physical retail continued to have its share of challenges in 2019. But the good news is that industry experts now see an end to the shakeout of brick-and-mortar retailing on the horizon. “I think retail closings peaked in 2019, and going forward we are going to see less of that,” said Naveen Jaggi, global head of retail brokerage at real estate advisory firm JLL. “We are looking at the endgame of what was basically a 10-year process.” Massive store closings announced this year from retailers including Sears, Payless ShoeSource and Gymboree mark the winding down of a decade of such activity in the wake of the recession of 2008-2009, he said. “I don’t see that pace continuing,” said Jaggi, although “there are some retailers out there that will still not survive.” He estimates that 80% or more of the retailers operating today will continue to thrive in the near term, in part because of the ongoing economic expansion and in part because retailers have adapted to the new, digitally driven operating environment. “Retailers that are doing a good job creating a seamless experience between digital and store, retailers that are making the experience within the store positive, and retailers that have a very clear value offering for their customers will be the ones to survive and do very well going forward,” Jaggi explained. “If you have clear messaging and a clear value prop, you will do well.” Neil Stern, senior partner at Chicago-based retail consulting firm McMillanDoolittle, said he sees three buckets of brick-and-mortar retail attributes that will prevail going forward: • Value-driven retail, which includes discount grocers such as Aldi and Lidl, small-box general merchandise stores such as Dollar General and off-price giants such as T.J. Maxx. • Experiential retail, such as Lululemon Athletica, which offers high levels of service, an on-trend product assortment and amenities such as in-store yoga classes. The brand’s new Chicago flagship includes three studio spaces.
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The men’s and women’s locker rooms are complete with changing areas and showers. Experiential retail also increasingly includes a foodservice component — Lululemon, for example, recently opened a mini-restaurant inside its Chicago store, and Nordstrom’s new, seven-story location in midtown Manhattan includes 10 food-and-beverage destinations, ranging from plush restaurants to a coffee bar. Upscale home furnishings retailer RH is big on hospitality, incorporating varied food and beverage elements ranging from a coffee bar to a sophisticated restaurant into its newest locations. Its just-opened store in Edina, Minn., includes a glass-encased full-service rooftop restaurant and a wine and barista bar that open onto a landscaped park. • Convenient retail that makes it easy to get in and out of the store quickly, using such technology as self-checkout or automated stores. “We are going to continue to see the envelope being pushed to make it easier to transact,” said Stern.
Clicks to Bricks Another type of physical store expected to gain traction in the coming years is “clicksto-bricks” retail — the opening of brickand-mortar stores by e-commerce retailers, said Jaggi of JLL, citing planned store openings from “digital native” brands including Casper, Everlane, Allbirds and Untuckit, among others. JLL predicts that 850 or more such locations could open in the next five years. “Clicks-to-bricks will be a significant part of openings in the next few years,” Jaggi said. Lori Zumwinkle, managing director at Accenture and leader of its retail practice in North America, agreed. “We believe physical retail will still play an important role in the future and is enjoying a quiet renaissance on the opposite end of the spectrum,” she said. “A cadre of digitalfirst brands have started leveraging technology to bring the convenient, personalized and intuitive nature of online shopping directly in-store.”
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The trend is illustrative of a more seamless omnichannel experience that is emerging across the retail landscape. Leading retailers, Zumwinkle said, are identifying how physical stores can be used to solve a range of consumers’ needs. “The fastest growing trend is e-commerce sales bolstered by brick-and-mortar stores that enable shoppers to explore and test the merchandise, check sizes and quality, click and collect, and avoid delivery fees for returns,” she said. “If executed well it is a symbiotic relationship, with e-commerce generating a halo effect for physical stores and vice versa.” Omnichannel Challenges Antony Karabus, CEO of HRC Retail Advisory, agreed that providing an engaging in-store experience will be crucial for brick-and-mortar retailers going forward, and noted that retailers’ ability to provide opportunities for either delivery or in-store pickup also gives them an advantage over pure-play e-commerce retailers. “Buy online and pick up in-store is some-
thing the cyber guys cannot do,” he said. Karabus cautioned that many retailers are discovering, however, that adding an online infrastructure to their retail stores adds significant costs, without a significant increase in revenues. Inventory management also becomes an issue as retailers struggle to ensure they have the right products in the right locations to meet both online and instore demands. Retailers need to reassess their customer demographics for each location, he said, and invest in the appropriate level of customer experience for stores that will remain open while considering other uses, such as online fulfillment centers, for others. “And of course,” said Karabus, “brick-andmortar retailers must implement the right tools, processes, infrastructure and organization for the greatest chance of success in this new digital environment.” When gauging the impact of digital commerce on brick-and-mortar retail, Stern of McMillanDoolittle said he looks to what he calls his “20 percent rule,” which
A REIMAGINED STORE MODEL
Discount grocer Aldi continues to expand rapidly in the U.S.
posits that the economics of individual retail categories tend to change significantly when e-commerce sales reach about 20% of total category sales. “That’s happened already in electronics, and books and media, and it’s happened in toys, and sporting goods,” he said. “Apparel is there now at around 25%. On the other hand, there’s food, where we’re at 3%, so even if food [e-commerce] grows, it’s got a long way to go before it starts to materially impact the economics of the store.”
By Marianne Wilson
A new format is looking to upend the traditional store model by making it easy for emerging brands to interact with customers in a dedicated physical space without taking on the risks and costs associated with opening a full-blown store. Retail start-up b8ta, founded in 2015, helped pioneer the trend. The company operates 20 flagship locations that feature a rotating assortment of high-tech and electronics devices, mostly from brands new to physical retail. Under b8ta’s “retail-as-a-service” model brands keep 100% of their sales and pay the company a monthly subscription fee determined by square footage and services. The stores are powered by b8ta’s Ark software platform which, among other features, gives the brands insights into critical real-time selling metrics, from dwell time to conversion rates. B8ta is launching a new store concept, Forum, that will operate similar to its flagships but feature fashion and lifestyle brands. It also is partnering with Tru Kids to open two Toys “R” Us stores by yearend. The stores will operate the same as B8ta’s branded stores — the brands will pay for shelf space, with all sales revenue going back to the brand. (Tru Kids bought the intellectual property of Toys “R” Us, including its brand names, after the chain’s bankruptcy filing and liquidation last year.) “Stores today are serving as story telling platforms for brands rather than sales channels,” said Vibhu Norby, co-
founder and CEO of b8ta. “Product discovery and sales happen in different places. We are at the very beginning of the age of experiential retail, a post e-commerce era that will change the way we all shop for decades to come.” Newer companies in the space include Showfields and Neighborhood Goods, both of which offer brands the opportunity to create experiences as opposed to just shelf space and both of which are packed with Instagrammable moments. Located in downtown New York City, Showfield’s 14,707-sq.-ft. store offers food and beverages, art exhibits and event programming along with a changing lineup of lifestyle and home brands. Similar to b8ta, Showfields makes it easy for newbie brands to set up shop: The brand selects a space, which is then customized, fitted out (with everything from fixtures to technology) and staffed by Showfields. Product sales go directly to the brand, which pays Showfields a monthly membership fee. Neighborhood Goods, in Plano, Texas, and set to open in Manhattan, bills itself as “modern alternative” to the traditional department store.” Similar to Showfields, the 14,000-sq.-ft. store houses a rotating lineup of brands that cover a wide range of categories, from fashion and accessories to beauty and home décor. Neighborhood Goods offers brands a variety of leasing and space options. Some brands lease space for a flat monthly fee, and others pay less rent plus a percentage of sales.
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COVER STORY: THE YEAR AHEAD
Legislative and Regulatory Outlook Expect the real action to play out at state and local levels By Joe Kefauver
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or better or worse, most of the legislative and regulatory issues important to the retail community will be addressed (or not) through the lens of the 2020 presidential election cycle. Whether it’s trade, immigration or data privacy, the issues will unfortunately be merely a vehicle to play to various voter constituencies, with employers and retailers likely near the bottom of that priority list. As far as legislative outcomes, 2020 will likely look eerily similar to 2019 with slightly more polarization. A divided Congress, much more focused on either impeaching or protecting an embattled president heading into reelection, will likely produce few if any substantive policy outcomes. But the state level, and increasingly the local level, may be where the real action is for employers. Here are some of the key issues to pay attention to in 2020: • Data Privacy: 2020 will likely see little federal action on data privacy. Essentially, House Speaker Nancy Pelosi is not going allow passage of any legislation that preempts California or any other state with data privacy laws on the books and the Republicans won’t support any bill that doesn’t have preemption. As businesses adjust their models to comply with California and increasingly other states, the urgency of a federal solution will diminish. At the state level, look for employers to escalate a burgeoning skirmish between those that want to collect data to sell and those that collect it for targeted consumer offerings. • Trade: It remains unclear if and how the ongoing trade war with China will get resolved. Because at its heart, the trade war is much more of a political exercise than an economic one, the definition of what is a “win” and a “loss” is very malleable. The president’s insistence on fighting simulta-
neous trade wars on multiple fronts with multiple countries has left China less alienated than normal and thus more empowered. By next summer, expect the president to cut some sort of a deal, declare a big victory and celebrate with his supporters. At that point, retail operators can hopefully remove some of the uncertainty surrounding their supply chains going forward. • Paid Leave: At the state level, and increasingly in Congress, the issue of paid leave is quickly becoming resolved — i.e. both parties overwhelmingly believe in some level of paid leave benefit. The issue is now more of a “how and how much?” question. There is still a strong disparity in how both parties address the issue, but we are largely past the point of “should we?” In fact most employers, in an effort to attract and retain the workers they need in an era of such low unemployment, have rolled out paid leave policies in excess of what most legislators are discussing. Save for California and a few other blue states, the marketplace is driving the issue faster than the politicians. While there will be some additional bill introductions in Congress, and a few of them even bi-partisan, nothing palatable to Democrats in the House would ever pass the Senate and vice-versa. The action will be at the state and local level as more jurisdictions pass laws and those with existing laws will work to make those even more generous. • Minimum Wage: As predicted, the Democratic House passed a national $15 per hour wage bill and also as predicted, that legislation has been dead on arrival in the Senate. While many in the business community may be of a mind to compromise for a lower wage level coupled with possible concessions on joint employer, tips or other labor issues, any movement
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in Congress either this year or next seems highly unlikely. But at the state level look for continued pushes in blue states with new majorities, especially in the West and Northeast. Additionally, 2020 brings opportunity for state ballot initiatives to increase the minimum wage which almost always pass. Florida is at the top of the list of states with a $15/hr wage on the 2020 ballot. • Overtime: Now that the labor department has settled on a new federal overtime standard, it is likely that many states will address the issue and set their own standards in excess of the federal threshold. Look for activity in Michigan, Pennsylvania, Maine, Massachusetts and other heavily Democratic states. • Restrictive Scheduling: No federal action is likely in 2020, but look for states and localities to continue pursuing restrictive scheduling legislation across the country. Pay particularly close attention to New Jersey, Illinois and Washington. Many of these bills call for two to three weeks advance posting of schedules, penalty pay when an employer changes a schedule and restrictions on hours between shifts. Also, some call for the offering of additional hours to existing workers before additional workers can be hired. — Joe Kefauver is managing partner of Align Public Strategies, a full-service public affairs and creative firm that helps corporate brands, governments and nonprofits navigate the outside world and inform their internal decision-making. NOVEMBER/DECEMBER 2019
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COVER STORY: THE YEAR AHEAD
Economic Forecast Slowing growth likely in the year ahead By Phillip M. Perry
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ull employment. A strong housing market. Low interest rates. And happy shoppers. Despite those favorable economic conditions that marked late fall, retailers are expected to encounter a challenging operating environment over the next 12 months. “We expect core retail sales to grow at a modest 2.3% pace in 2020,” said Scott Hoyt, senior director of consumer economics for Moody’s Analytics, a research firm based in West Chester, Pa. (Core retail sales exclude the volatile auto and gasoline industry segments.) The 2020 forecast represents a slowdown from the 4.0% jump anticipated when 2019 retail numbers are finally tallied. A contributing factor is a change in the employment picture. “A deceleration of job growth in 2020 should mean fewer new people entering the ranks of active shoppers,” explained Hoyt. “And that will exert some downward pressure on retail sales growth that may more than offset the positive effect of the higher wages (and thus the greater disposable income) characteristic of a tightening labor market.” Slowing economy Consumers have other reasons for moderating their shopping activity. These include worries and uncertainties about a shaky stock market, a pending presidential election and Brexit, along with recession rumors and an ongoing trade war. All of these phenomena are expected to contribute to a deceleration of overall business momentum. “We look for the economy to grow below its potential in 2020,” said Sophia Koropeckyj, managing director of industry economics at Moody’s Analytics. The increase in the nation’s gross national product (GNP) is expected to slow to 1.7% in 2020, down from a more normal 2.3%
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Higher costs of
the level many econoanticipated when imported goods can mists specify as “full 2019 numbers are only contribute to employment.” finally tallied. The an ongoing problem: The good news 2019 performance The inability of is that economists is itself a decline retailers to raise expect the jobs picture from the 2.9% prices without to remain bright, growth clocked the despite a bit of erosion previous year. (The losing sales. due to growing business GNP, the total of the uncertainty. “Unemploygoods and services proment is expected to edge slightly duced by a nation, is the most higher to 3.9% by the end of 2020, due commonly accepted measure of ecolargely to a deceleration of job growth,” nomic growth.) said Koropeckyj. “We expect job growth to Retailers are especially concerned about steadily decelerate and cease altogether in ongoing tariff battles that cause disruptions the second half of the year.” in manufacturers’ complex supply chains, leading to increases in the component costs The road ahead of imported goods — and thus merchanExpect, then, a bit of an economic slowdise sticker prices. down in 2020. But how about a downright “The top-of-mind concern for retailers reversal? Two-thirds of the nation’s chief is the trade war, and how much more that financial officers expect the United States will end up costing them in terms of goods to tip into a recession (loosely defined as coming from overseas,” said Hoyt. a drop in economic activity lasting more The higher costs of imported goods can than a few months) by the third quarter of only contribute to an ongoing problem: 2020, according to a Duke University/CFO The inability of retailers to raise prices Global Business Outlook survey. without losing sales. Recessions are famously difficult to “Pricing power for retailers has been poor predict, but economists suggest keeping for the last four or five years,” added Hoyt. an eye out for some likely leading indica“It has deteriorated recently, partly because tors. One is an increase in stock volatility; the strength of the dollar has to some another is inversion of the Treasury yield degree offset the effects of tariffs by putcurve when — short-term rates are higher ting downward pressure on import prices. than long-term ones. But perhaps the most Another reason is intense competition in reliable indicator is a downturn in the jobs the retail industry and the rapid growth picture. of online shopping. As for 2020, the best Rising unemployment, according to retailers can hope for is a modest improveKoropeckyj, will result in a decline in the ment in pricing power.” consumer spending that has been the driving gear of a healthy retail machine. Healthy employment “Once unemployment starts rising, we Despite such worries, consumers are for are either already in a recession or will be the most part happy. People who want jobs in one very soon,” she said. can get them — and that means pockets filled with spending money. The unemployment rate was running at an enviable — Philip Perry is a New York-based business writer. 3.7% toward the end of 2019, well below NOVEMBER/DECEMBER 2019
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COVER STORY: THE YEAR AHEAD
IoT Tech to Explode Expect widespread disruption across store ops By Dan Berthiaume
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he concept of “constant connectivity” in retail will expand beyond people equipped with mobile devices in 2020. “Everything in the store is wired and communicating,” said Ken Morris, an independent retail analyst with 40 years of industry experience. “Electronic devices, lights, freezers – but there has been no product to listen to all of these devices.” According to Morris, in 2020, retailers will start listening to their store equipment using Internet of Things (IoT) technology, at a widespread level which will cause industry disruption. “The manager at a service plant can make sure things are clean,” said Morris. “Especially in the restaurant vertical, there is a gigantic opportunity. If a fridge is about to break down, it can automatically schedule a repair call or order replacement parts. There are a lot of things a manager normally deals with that can be automated with IoT.” And IoT’s disruptive potential extends far beyond food service. Morris also described scenarios such as IoT-enabled “smart racks” that automatically notify store associates when they need a refill, or even order more merchandise. “IoT takes a message and deploys resources to fix whatever has gone wrong,” said Morris. “Whatever it is, it can be handled with technology instead of a person.” Morris also noted the growing popularity of automated stores, such as the Amazon Go cashierless model, as an example of how IoT is disrupting traditional store operations. In addition to automatically creating a more convenient and pleasant customer experience in the store, IoT can also deliver significant benefits on the back end. “IoT increases a retailer’s span of control,” said Morris. “It creates an opportunity for a single store manager to manage more than one store. Rather than have the store manager do everything, you can push tasks down to the department managers or even associates. Traditionally, you have one district man-
ager for about every five stores; now you will be able to have one district manager for about every 10 stores. It’s an opportunity to optimize headcount.” Walmart’s Test Store Walmart is live-testing varied IoT technologies at what the chain calls its “Intelligent Retail Lab” (or IRL for short). The 50,000-sq.-ft.-store, in Levittown, New York, contains more than 30,000 products. The IRL is set up to gather information about what’s happening inside the store through an array of sensors, intelligence-enabled cameras and processors. Hardware is connected by what Walmart says is enough cabling to scale Mt. Everest five times and enough processing power to download three years’ worth of music (27,000 hours) each second. Initially, Walmart is using the IRL to test how real-time information provided by artificial intelligence (AI)-equipped store systems can inform associates more precisely when to restock products, so items are avail-
able on shelves when they’re needed. “Customers can be confident about products being there, about the freshness of produce and meat,” said Mike Hanrahan, CEO of IRL. In the near future, a combination of cameras and real-time analytics will automatically trigger out-of-stock notifications to internal apps that alert Walmart associates when to re-stock. This will require AI and IoT technology enabling the store to automatically detect a product on the shelf, recognize specific products (such as discerning between a one-pound and two-pound package of ground beef), compare shelf quantities to demand forecasts, and send notifications as needed.
WINNING RETAILERS SEE THE VALUE OF IoT A recent study from Retail Systems Research, “The Internet of Things: Finally Finding a Home in Retail?” reveals that retail winners (defined as retailers with top same-store sales performance) are more likely than their lower-performing peers to recognize the value of or have already begun implementing IoT technology in their operations. For example: • 83% of retail winners see high value in using IoT to reduce wait time at checkout, compared to 58% of all other retailers. • 44% of retail winners have multiple, mature, sensor-related projects and use them to drive differentiating capabilities, compared to 30% of all other retailers. • 79% of retail winners see a lot of organizational value from IoT in the supply chain, compared to 55% of all other retailers. • 83% of retail winners see a lot of opportunity for impact of IoT in customer engagement in stores, compared to 58% of all other retailers.
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Walmart is testing new technologies at its store in Levittown, new York.
NOVEMBER/DECEMBER 2019
CHAINSTOREAGE.COM
11/11/19 10:17 AM
T
MARCH 15-17, 2020
GAYLORD TEXAN, DALLAS
TWO BIG NAMES AT ONE MUST-SEE EVENT BARBARA CORCORAN
RON INSANA
Founder of The Corcoran Group, investor, author, entrepreneur, and TV celebrity
CNBC senior analyst and commentator, business journalist, author, and financial professional
KEYNOTE: Monday, at 8:00 AM
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EXPERT OPINION
Fighting the Disruptors Compelling customer service experience, seamless omnichannel offering are key By Antony Karabus As digital shopping continues to grow at a rapid pace, it is causing tremendous disruption to the economic model that retailers have relied upon to build and run their businesses. Today, retailers are competing with other traditional brick-and-mortar stores, online giants like Amazon and Wayfair and new digitally driven threats from rental and resale businesses such as Rent the Runway, The Real Real and Stitch Fix. This disruption represents a fundamental shift in shopping behavior that will accelerate as a new generation of digital and valuesavvy consumers become an even greater economic engine. Retailers that rely heavily on traditional brick-and-mortar sales as their primary source of growth must urgently adapt or face significant declines in operating earnings and working capital. Why? The digital environment is evolving. Consider this: While Amazon grows by more than 20% annually, many traditional retailers are experiencing flat to slightly positive comparable sales (if successful). Also troubling is the fact that, despite the liquidation, bankruptcies and downsizing of numerous traditional retailers over the past few years, little of the market share released was captured by traditional retailers. Instead, Amazon — as well as the discount channel and value chains — captured most of this available market share.
Manage the Omnichannel Shift Carefully To remain competitive and play to their strengths of offering a physical experience that allows customers to “touch and feel” the merchandise, many brick-and-mortar retailers have adopted omnichannel offerings. Importantly, however, a recent HRC Advisory survey among C-suite executives at more than 30 North American retail chains found that, if not implemented properly, omnichannel strategies can inspire a host of additional challenges on the financial and customer-service front.
For many retailers, e-commerce represents a cannibalization of earlier sales from their physical stores. Which means they must incur additional capital and operating expenses to achieve the same total sales level — if at all. This has resulted in a significant deleveraging of store operating infrastructure costs (store occupancy, labor and other costs) and a decline of as much as 40% in retailer EBITDAto-sales performance. Common challenges to consider in making the shift to an omnichannel strategy include: • The high cost of digital sales: Providing customers with the flexibility to shop online or in store may sound like a profitable plan. But the reality says otherwise. Revenue from multiple channels may equal prior total store sales but this is only made possible by the addition of massive capital and operating costs, with no overall incremental sales bump. In its aim of serving digital and omnichannel sales, the retail landscape has evolved from a largely fixed-cost environment to an increasingly variable-cost one. While digital sales now account for up to 15% — and as much as 40% or more (for those with a digitally connected customer demographic) — of total sales, unfortunately, for most retailers, up to 95% of those digital sales represent a channel shift from their brick-and-mortar stores — not incremental sales. Many chains, moreover, cannot justify investments in store upgrades to maintain their brand standard, a necessary tool for keeping and attracting younger customers to their stores. Our research found that 40% of store fleets have not undergone a meaningful remodel in more than 10 years (the number is closer to 60% for capital-constrained retailers). • Inventory management: Retailers trying
to adapt to the new retail environment using omnichannels often face a steep learning curve, with challenges along the way. Unpro-
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ductive inventory often gets “trapped” in the wrong store or distribution center, for example. Addressing that issue is an expensive one, whether through transfers, deep markdowns, liquidation or write-offs. • Serial returners and other challenges: The costs of free shipping and serial returners are other concerns, the latter a particularly serious issue that severely undermines profitability, according to HRC studies.
Raising the Level of Play Any retailer looking to rise above these challenging times must up the ante with a compelling customer service experience and seamless omnichannel offering. As one of the strongest weapons retailers have, omnichannel allows them to increase sales, traffic and customer loyalty. But it’s not easy to get right. Retailers must ensure their inventory is accurate and integrated across channels. Getting the execution right means the product is available where and when it’s needed to meet customer demand, while minimizing markdown and inventory liability and potential customer order cancellations. And, of course, physical retailers must implement the right tools, processes, infrastructure and organization for the greatest chance of success in this new digital environment. Traditional retailers are experiencing the many seemingly insurmountable effects of the evolving environment. And they’re incurring high costs trying to exceed customers’ needs across all channels as well as e-commerce demands and the invasion of Amazon. But it does not have to be this way. A bespoke approach with tailored solutions can help them rise above and survive these difficult circumstances. It’s no longer a question of whether to take the next steps, but how soon they can begin. Once they do, positive outcomes are sure to follow. — Antony Karabus is CEO of HRC Retail Advisory, leading retail consulting firm that has assisted over 150 national retail chains since 1990 to adapt their economic operating model to compete more profitably and effectively in the evolving, increasingly complex retail environment (akarabus@hrcadvisory.com).
NOVEMBER/DECEMBER 2019
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11/11/19 10:19 AM
MARCH 15-17, 2020
GAYLORD TEXAN, DALLAS
FEATURED SESSIONS ON THE SPECS MAIN STAGE: HOW TO WORK WITH & LEAD PEOPLE NOT LIKE YOU
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Kelly McDonald
Robert Siciliano
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Author Kelly McDonald discusses how leveraging workforce diversity can lead to a more progressive retail culture. McDonald will also share tips on how to lead, motivate and inspire diverse teams, and explore the successes a diverse workforce can produce.
Security expert and private investigator Robert Siciliano takes a deep dive into how retailers can prevent potentially dangerous situations for employees and customers. Siciliano will reveal how to educate and inform front-line employees, managers and supervisors — and share specific steps that will help businesses create an observant and security-conscious company culture.
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STARTING MARCH 9, YOUR SUPPLY CHAIN POSSIBILITIES ARE ENDLESS CONNECT: 950 leading solution providers showcasing new equipment and technologies LEARN: 100+ free education sessions and 4 powerful keynotes MEET FACE-TO-FACE: thought leaders and industry peers from the U.S. and 140 countries across the globe ATTEND: Registration is free
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11/11/19 7:24AM AM 9/3/19 9:31
NEW YORK
SHOW SCOOP • Julie Swinehart on financing today’s new projects • Adam Ifshin on leasing trends • Joe Coradino on building for the future • Ezra Stark on outlasting the trends • Willie Hoag on the spread of ‘medtail’ • Meghann Martindale on the risk in restaurants • Don M. Casto on change and growth • Jeff Edison on the new groceryanchored center • Steven Lebovitz on transforming the enclosed mall
COVER STORY
DEBORAH BUTLER
on relevant redevelopment
• Tom McGuinness on the evolving neighborhood center
ALSO
• Booth Highlights
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11/11/19 11:06 AM
JOIN
NOW OPEN N
EST. 2018
AT S TE N G E L FI E L D
• GAINESVILLE, FL • 12 COUNTY MARKET - 1.2 MILLION PEOPLE •
TOP TEN UNIVERSITY 75K STUDENTS 5 MILLION ANNUAL VISITORS
ANCHORED BY BEST-IN-CLASS RETAILERS, SEPHORA - UNDER CONSTRUCTION - OPENING FEBRUARY 2020
FIRST IN REGION OPENED MAY 2018
CONTACT: THE ZALL COMPANY | Leasing@ButlerEnterprises.com 352.372.3581 | WWW.SHOPATBUTLER.COM
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ECONOMIC ENGINE UF HEALTH HOSPITALS $1.8 BILLION PAYROLL
FIRST IN REGION-OPENED SEPTEMBER 2018
Visit us at ICSC NEW YORK DEAL MAKING Booth #2408 11/11/19 12:10 PM
TABLE OF
CONTENTS 22
ON THE LEVEL A summary of industry trends analyzed by top retail center developers in this year’s Show Scoop Leadership Series
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WHO’S WHO IN THE AISLES Booth highlights of key developers.
THE LEADERSHIP SERIES
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DEBORAH BUTLER/BUTLER ENTERPRISES Perpetual relevance is the key to successful redevelopment.
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DON M. CASTO/CASTO Rampant change in the marketplace demands stability in the corporate offices
34
JEFF EDISON/PHILLIPS EDISON & CO How technology is transforming neighborhood centers
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JULIE SWINEHEART/RPAI The complicated game of financing new projects
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TOM MCGUINNESS/INVENTRUST Today’s open-air center is managed for expediency and one-stop-shopping for time-challenged consumers.
42
STEPHEN LEBOVITZ/CBL PROPERTIES Remaking 21st century malls with non-traditional tenants and data-driven digital marketing
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EZRA STARK/STARK ENTERPRISES If you want to know where the future of retail lies, stay flexible and listen to your customers.
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WILLIE HOAG/MID-AMERICA REAL ESTATE Why ‘medtail’ is good for retail centers
45
MEGHANN MARTINDALE/CBRE Food & beverage brands pose both great benefits and great risks for brick and mortar retail
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ADAM IFSHIN/DLC MANAGEMENT CORP. Rents rise due to the space needs of value retailers, restaurants, gyms, and medical tenants.
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JOE CORADINO/PREIT A new enclosed mall, Fashion District, attempts to make retail history in Center City Philadelphia CHAINSTOREAGE.COM
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NOVEMBER/DECEMBER 2019
SHOW SCOOP 21
11/11/19 11:17 AM
ON THE LEVEL
VIEWS FROM THE TOP W REAL E S TAT E DEFINED
ouldn’t you chalk it up as a successful show experience if you left the hall having learned what’s on the minds of 10 or so of the most experienced CEOs and senior executives in retail real estate? Well, we’ve got you covered in this year’s issue of the New York Show Scoop. DLC Management CEO Adam Ifshin informs us that a new normal has taken hold in the outdoor centers he operates, and that normal is steadily rising rents driven by large footprint chains (mostly value merchandise sellers) and tenants such as gyms, restaurants, and medical services that post high per-square-foot sales in small spaces. CBRE’s new global head of retail research Meghann Martindale writes that there is risk in restaurants for both developers and retail tenants in that 80% of new concepts fail and leave behind empty spaces that can be hard to fill. Still in all, she identifies food & beverage operators as the “juggernauts” of retail real estate, accounting for 17% of retail sales. Another significant new wave of tenants filling retail centers are medical services such as urgent care clinics, physical therapy studios, and athsma centers. Mid-America Real Estate principal Willie Hoag holds that “medtail” tenants are here to stay, adding that investors love them because they sign long-term leases and rarely turn over. Also embracing nontraditional tenants is CBL chief executive Stephen Lebovitz, whose father Charles began building enclosed malls in the Seventies. He writes about a new era dawning at the company in which 74% of new mall tenant leases were signed by nonapparel brands.
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Another big operator of malls, Joe Coradino of PREIT, tells us why the 900,000-sq.-ft. Fashion District in Philadelphia, co-developed with Macerich, will serve as a model for new urban shopping and entertainment centers nationwide in the years to come. RPAI’s chief financial officer Julie Swinehart gives a glimpse of how complex the financing of big mixed-use projects can get, often requiring different owners and operators. To help fund Circle East in Maryland, for instance, RPAI sold air rights over their buildings to a residential builder. Stark Enterprises COO Ezra Stark, whose father Bob Stark built Crocker Park outside of Cleveland, one of the most renowned mixed-use projects in the country, agrees that commercial real estate planning requires, vision, time, and flexibility. The most successful developers, he writes set their sights 10 to 20 years in the future. Our cover subject Deborah Butler, president of Butler Enterprises, relates how her own first attempt at adding a mixed-use, luxury retail component to her company’s mega-retail-complex in Gainesville got side-tracked. She tossed her original plans, started over, and has Butler Town Center open for business. More than 2,000 people attended the opening of the center’s Whole Foods. Supermarkets continue to drive the most successful sector of retail real estate — grocery-anchored neighborhood centers. One of the largest owner-operators of such centers in the United States, Jeff Edison of Phillips Edison & Co., holds that supermarket chains have embraced technology to support pick-up and delivery programs that make them the leaders in online as well as in-store grocery sales. Casto partner Don M. Casto points out that stability in the home office is the best way to deal with a fast-changing world. He details how his company positioned itself for the future with a far-ranging succession plan. Be sure to take in the full stories of these industry luminaries on the following pages.
Al Urbanski aurbanski@chainstoreage.com @AlUrbanski (Twitter)
NOVEMBER/DECEMBER 2019
CHAINSTOREAGE.COM
11/11/19 10:42 AM
one loudoun downtown
connect with us at icsc new york booth 2827
LIFESTYLE / MIXED-USE CENTER A S H B U R N , VA
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11/11/19 7:26 AM
WHO’S IN THIS AISLE
Booth Briefs Stark Enterprises Booth #323
At this year’s ICSC New York Deal Making Conference, meet the native Cleveland, Ohio, commercial real estate development company that has been in the business for over 40 years. Now owning and managing a $2 billion dollar portfolio spanning 10 states, Stark Enterprises’ is a trendsetting developer of commercial real estate. Encompassing retail, entertainment, office, residential, hotel, and student housing, our projects are all built on the philosophy of creating positive experiences for visitors, residents, shoppers, and diners. The Stark portfolio is managed with the company’s long-term investment strategy in mind and is recognized for including some of the most beautiful, well-operated, and well-maintained properties in the nation.
CASTO
Booth #400 Meet with our team of real estate experts at ICSC New York Deal Making. A fully integrated real estate services organization, CASTO is a recognized leader in ownership, management, acquisition and development of commercial, mixed-use, and multifamily properties. With a growing portfolio that includes more than 26 million sq. ft. of commercial property and nearly 4,000 residential units located throughout the Midwestern and Southeastern United States, CASTO strives to provide expert services that create value for customers, partners, and communities served. To learn more about CASTO, visit www.castoinfo.com.
CBRE
BOOTH # 621 As the world’s leading commercial real estate services and investment firm, CBRE has the expertise to serve retailers, restaurateurs, investors, owners, and developers across all retail environments. We operate at the intersection of data and the consumer experience and use the latest information and analytics to reveal market trends to demonstrate a deep understanding of con sumer behavior. Visit our booth during the 2019 ICSC New York Deal Making conference to find out how our unique combination of talent, market insight, and comprehensive capabilities can help you build a holistic plan for success.
DLC Management Corp.
BOOTH #1925
We’re a team of real estate entrepreneurs dedicated to innovative solutions, continuous improvement, and successful outcomes for everyone involved. With a portfolio of more than 18 million sq. ft. of attractive retail space in 24 states, DLC Management Corp. has proven to be one of the premier owner/operators of shopping centers in the U.S. Visit booth 1925 to learn about all the exciting opportunities we have in store! 24 SHOW SCOOP
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NOVEMBER/DECEMBER 2019
CHAINSTOREAGE.COM
11/11/19 10:41 AM
mbrauns
2,032 Likes
This is my favorite spot to refuel for the day. #GroceryRocks #PECOExperiences
Can a coffee shop be the hottest place in town because it’s next to a grocery store? And vice versa? Absolutely. That’s why we’re all about matching up the perfect retail partners in our properties and creating experiences that bring consumers in and entice them to stay, shop, spend, and connect. We love featuring our real-life customers. Follow them on Instagram at #PECOExperiences. See you at NY Deal Making, Booth 2641
phillipsedison.com | Grocery Focused. Retailer Centered. | 800.975.6585 |
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11/11/19 7:26 AM
WHO’S IN THIS AISLE
National Realty & Development Corp
BOOTH #1345
At National Realty & Development Corp. (NRDC) we know the importance of establishing and maintaining the right merchandising mix to maximize sales for our tenants and provide the best shopping experience within our communities. For more than 50 years, NRDC has been creating top-quality shopping centers, office/ industrial parks, and residential communities. Visit our Leasing Team at Booth 1345 to learn more about our newest development, The Shoppes at Middletown, and other exciting opportunities within our portfolio of 75 projects throughout the Northeast. Contact us at 1.800.932 RENT (7368) or www.nrdc.com
InvenTrust Properties BOOTH #1445
InvenTrust’s Essential Retail collection of 70 grocery-anchored and necessity-based open air shopping centers are located in prime U.S. Sunbelt markets. We own, lease, manage, redevelop and are actively acquiring centers in “Smart Locations”: 15 key markets that have above-average projected income and population growth, including: Southern California, Denver, Washington D.C., Atlanta, and key metros in Texas, Florida and North Carolina. Meet with our acquisitions and leasing teams at the ICSC New York Deal Making Conference, and learn more about our portfolio at www.inventrustproperties.com. Follow us on LinkedIn and Twitter @InvenTrustPropNational Realty & Development Corp. Booth 1345
CBL
BOOTH #1521 Through anchor redevelopment projects, CBL is transforming its properties from traditional malls to suburban town centers that offer a wide array of experiences. Whether through the addition of new-to-market entertainment and dining options, turn-key solutions for e-tailers looking to expanding into the physical channel, or investments in new technology – CBL is constantly pursuing opportunities to enhance its core assets and enhance the customer experience. Join us and visit a CBL representative at ICSC New York Deal Making on Level 3, Booth #1521.
26 SHOW SCOOP
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NOVEMBER/DECEMBER 2019
CHAINSTOREAGE.COM
11/11/19 10:41 AM
|
Leasing
Acquisitions
|
Redevelopment
|
Property Management
Visit us at ICSC New York Deal Making.
Essential Retail. Smart Locations.
Booth #1445. Call for an appointment at 630.570.0700
We own, buy and manage grocery-anchored centers in these key markets: Atlanta | Denver | Southern California | Dallas/Fort Worth/Arlington | Houston | Austin San Antonio | Tampa/St. Petersburg | Charlotte | Raleigh/Durham | Orlando Miami/Fort Lauderdale/West Palm Beach | DC Metro www.InvenTrustProperties.com | 630.570.0700 | Follow us on
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@InvenTrustProp
11/11/19 7:27 AM
WHO’S WHO IN AISLES
Butler Enterprises
BOOTH #2408
What began as a small produce stand in 1939, has now grown into the largest retail development in the greater Gainesville, 14-county region. The Shops of Butler include Butler Plaza, Butler North, and the newest expansion--Butler Town Center. With more than 2 million sq. ft. of retail, this dominant center spans nearly 300 acres in Gainesville, Florida, a city growing at 2x the national average. This rapidly evolving city is home to the University of Florida and is adjacent to 11 state and nationally ranked hospitals. Now leasing its first mixed use 450,000-sq.-ft. lifestyle center, Butler Town Center is anchored by the area’s first Whole Foods, luxury Regal Cinema, Sephora, and The Cheesecake Factory. Coming soon are more luxury retail shops, new-to-market restaurants, residential and the region’s first chef-driven food hall. Visit developer and owner Deborah Butler and the Zall Leasing Team at Booth #2408 to learn more.
Phillips Edison & Company BOOTH #2641
Phillips Edison & Company is one of the nation’s largest owners and operators of grocery-anchored shopping centers. Its diversified portfolio of welloccupied neighborhood shopping centers has a mix of national and regional retailers in strong demographic markets throughout the United States. The company owns and manages more than 330 shopping centers. Phillips Edison’s proven, vertically-integrated operating platform allows it to effectively and efficiently acquire, lease, and manage its properties, resulting in a history of strong operating results and great shopping experiences. Visit us at Booth #2641 to learn more about our nationwide portfolio.
PREIT
BOOTH #1E15
Located in some of the East Coast’s top markets, PREIT’s re-defined portfolio is built for the future. Having incorporated unique entertainment destinations, fresh dining options, and new and differentiated anchor offerings, our portfolio is poised for activity. Visit our booth during the ICSC New York Deal Making Conference and learn about our robust presence in Philly and DC and how we have transformed our portfolio with our COMPLETED redevelopment projects like Fashion District Philadelphia, Woodland and Plymouth Meeting Malls. Be sure to read CEO Joseph Coradino’s story of the building of Fashion District and the part it’s playing in re-making Center City Philadelphia in this issue of Chain Store Age.
RPAI
BOOTH #2827
Meet with our high-class team on the main aisle at the ICSC New York Deal Making conference to discuss our RE/Development projects and available leasing opportunities with our diverse portfolio of quality assets. We are sure we can match your needs with the right retail center.
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NOVEMBER/DECEMBER 2019
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CHAINSTOREAGE.COM
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LEADERS
DEBORAH BUTLER
Deborah Butler
on relevant redevelopment How a Depression-era fruit stand in Gainseville metamorphosed into a 267-acre retail mecca designed to satisfy nearly every consumer desire and need.
R
ELEVANCE. That’s the first thing I think of when I’m considering a redevelopment. For my family, retail was the “promised land.” Leaving the farm in 1939 was the dream, and my father started this all by selling produce at a roadside stand here in Gainesville, Florida. This developed into a supermarket, and thanks to Dad’s forward-thinking ideas of curbside service and being open seven days a week, that supermarket grew and underwent several redevelopment phases led by him, us together, and now me with my own team. Remaining relevant is something we eat, drink, and breathe. It has to stay at the forefront of thought. You can never fall asleep and you have to stay on your guard every day. Your business, your retailers, and your community depend on it. Succeeding at this requires a well-balanced combination of past research and forward-thinking vision. A consistent mantra in my office is “Don’t reinvent the wheel.” This strategy only works when synchronized with purposeful progressive thought — something that is in my DNA and that I learned working with my Dad in this business since 1980. Fortunately, due to our 80-year tenure in the community, we’ve had the opportunity to run our company by taking the long view, building value and trust over time, profiting from both the projects themselves and the goodwill we create connecting with our community. This was especially important when we tackled our first big expansion after completing a 15-year entitlement process. We had by then grown to a roster of successful stores along a one-mile stretch of Gainesville’s busiest I-75 exchange. We had steadily accumulated land adjacent to our property, but its current residential use was no longer relevant. In 2014 we finally broke ground on 750,000 sq. ft. of proposed retail. With that secured, our master plan called for two different developments built in quick succession. The first was Butler North. The key to this redevelopment was a company-funded, four-lane multi-model connector to our original Butler Plaza, enhancing the entire property’s 360-degree access and paving the way for a north-south throughway adjacent to I-75. Existing tenants like Walmart, Lowes, Olive Garden, and Fridays all expressed interest in updating and expanding. By relocating them to the North project we would gain back the valuable land we needed for phase
We’ve run our company by taking the long view, building value and trust over time through the goodwill we create connecting with our community.
two. We relocated 14 businesses in just two years, and all of them experienced increased sales. This drew other new-to-market retailers and Butler North was built and 90% leased in only two years. It was then time to add something our community desperately needed — a mixed-use lifestyle development that would come to be called Butler Town Center. First, you have to do your homework. I brought my own experiences to the table, from my studies at Thunderbird International Business School to living abroad in Italy. I knew our center had to be walkable, inviting, more of an experience. But these couldn’t be just trendy buzzwords; they had to be executed in a way that would be relevant to our community. I believe in hiring top experts, and I seek out the best. But, “the best” in one city may be the best another. This is critical. You must never be afraid to say no, or even start over. I went pretty far down a path for Town Center that in one moment became clear wasn’t going to work for our market or our property. Never be afraid to go with your gut. It would have cost me much more in the long run had I not thrown it all out and started over. I sought experts like Robert Gibbs, President of Gibbs Planning Group. Together we walked top centers in the country and he introduced me to other visionary developers like Yaromir Steiner who became a mentor. Since “the devil’s in the details,” we talked about how every moment matters the second you enter a property — from architecture and lighting that grabs you and brings you in, to convenient infrastructure and accessibility that makes it work. I also loved the gathering places that anchored the centers in Italy, but we had to Americanize it. Give it a Steve Wynn meets Disney approach. To do this, I worked with a thought leader in landscape architecture, Steve Ryzdon of SWA Group-California, for an innovative, and technologically advanced water feature that will draw, excite, and entertain a crowd. Give it pizazz. Around which is live entertainment and events, or just room for children to run. Every market segment has to be considered when designing for relevance. In total, we’ve relocated nearly 400,000 sq. ft, added new-to-market businesses that doubled our property to 2.1 million sq. ft., and created three connected, market-dominant, highly assessable shopping destinations that continue to evolve every day and will, we hope, remain relevant for another 80 years.
Deborah Butler is president of Butler Enterprises, based in Gainesville, Fla.
30 SHOW SCOOP
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Hamilton Quarter Columbus, Ohio New mixed-use development with 225,000 s.f. of retail and 500,000 s.f. of medical in the first phase. Second phase will feature Âą 100,000 s.f. of retail and 5.75-acre outparcel area
Providing expert real estate services
Midtown Tampa Tampa, Florida 22-acre mixed-use project with 1.8 million s.f. of retail, entertainment Class A office with multifamily residences and a boutique hotel.
The Grove at Towne Center Snellville, Georgia 18-acre mixed-use, town center development in the heart of Snellville featuring a marketplace, 250 luxury apartments, community gathering spaces and state-of-the-art library. Development starting 2020.
Inspired ideas. Integrated real estate solutions. | www.castoinfo.com
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11/11/19 7:28 AM
LEADERS
DON M. CASTO
Don M. Casto
on change and growth In an industry faced with constant shifts and changes, stability in the corporate offices is more important than ever.
C
asto, founded in the 1920s as a single-family residential developer, was for many years run as a small, family-owned, hierarchically managed company. In the 1950s and 60s, while it was a pioneer in the creation and development of shopping centers, it was essentially a low-growth single product type real estate services firm. In the late 1980s Frank Benson III and I, grandsons of the founder, reached the conclusion that, as a family business, Casto was limited in its access to both financial and human capital, which sparked the bold strategic decision to recast ownership and management to allow for growth. Our goal was to create an organization with the foundation and values of a family-owned company but with a diversity of skills and leadership which had not previously existed. We were very successful and lucky to have created a partnership of seven individuals, each with different skill sets and ranges of experience. That foundation led to steady, continued growth — many millions of square feet of retail and mixed-use and more than 10,000 multifamily units. That was the first transformation to the organization, and it produced decades of growth. More than 30 years later the original partners remain together and active in the management of Casto. However, biology and actuarial reality are factors that leaders of any business shouldn’t ignore. We began focusing many years ago on succession and have positioned the organization well with strong management that will allow continued growth. All original partners focused on bringing the next generation of leaders, all of whom we had worked with and respected for many years, with experience in various product types. We then transitioned Casto’s day-to-day operating responsibilities to this group. Every company today must focus on the right succession plan and strategy early and ongoing. It is a delicate and not always easy balance which takes years of planning. As the new generation of leadership steps up, the current management remains present and active but loosening the reigns and allow the next generation to lead. We have been lucky to have a great next generation--or should I say current generation — that now occupy lead positions in the majority of our business units and executive committee with the original partnership group maintaining ongoing roles in a board of director capacity. We, as a whole management team, are focused on assuring that Casto has many more years of success. Who are some of the next generation of leaders for CASTO? This group of leaders have an average tenure of 15 years with Casto and over 180 years of combined real estate experience. Brent Sobczak and Kolby Turnock now have lead responsibility for multifamily devel-
opment in Columbus, Cincinnati, and Cleveland with nine projects comprising over 3,000 units currently under active development. Together they have also led Casto’s entry into a complex historic rehabilitation and conversion product type. Recently completed historic projects include redevelopment of the Julian Shoe Factory in downtown Columbus, the Baldwin Piano Factory in Cincinnati, and the Barrett Middle School in Columbus’s German Village. Jason Freeman and Eric Leibowitz assume growing responsibility for continued retail development. Jointly they led the development of Hamilton Quarter’s first phase in Columbus, Ohio, a 70-acre project that includes 225,000 sq. ft. of retail and a 500,000-sq.-ft. medical campus. Linda Swearingen and Nikki Fisher will continue to lead and grow the asset management, leasing and property management functions for our over two billion dollars in assets under management. C.H. Waterman and Craig Dyer will oversee all legal and financial operations and Martin Moehring will manage Casto’s innovation and process function. John Carr will continue to lead our affiliated Mortgage Brokerage business. Growth will continue in the Southeast with Shannon Dixon leading efforts in Carolinas and Georgia including mixed-use projects in Raleigh, Clemson, and suburban Atlanta and in Southwest Florida under the leadership of John Hutchens, Mike Chadwick and Aaron Ruben. As we made this transition and brought other experts to the team, we expanded Casto’s real estate services to include luxury multifamily, vacation home rental, medical office and surgical centers and more. It’s interesting to note that most of these individuals mentioned above are in their 40s or younger — lots of runway left for continued growth. I’m excited to witness how Casto will continue to change and grow throughout the years with our executive leadership team. The Casto early decision to expand the company to leadership partners outside of the family has paid off. I can speak for the other six original partners by saying that Casto hasn’t hit its peak yet. Looking to the 21st Century, Casto is continuously growing, improving and exceeding expectations.
Don M. Casto, III, is a partner in Casto, is a member of the California and Ohio Bar Associations, and sits on the board of the Columbus Airport Authority.
32 SHOW SCOOP
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NOVEMBER/DECEMBER 2019
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11/11/19 10:43 AM
Now Leasing Monmouth County, NJ’s New Retail Destination
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Visit shoppesatmiddletown.com 11/11/19 7:30 AM
LEADERS
JEFF EDISON
on the new grocery-anchored center Leading national grocery chains and small shops and restaurants alike are embracing technology that are transforming neighborhood centers. Q: Grocery–anchored centers remain the strongest sector of retail real estate. They’re neighborhood-based, easy to get in and out of, and have tenants like nail salons and gyms that demand physical presence. So in what areas are they intersecting with online retail? A: Grocers have been truly innovative in adapting to the rise of e-commerce, offering conveniences such as online ordering for delivery and pick-up. But at the end of the day, it comes down to the delivery cost and convenience. Walmart’s new InHome service allows delivery personnel into your home while you are away, but that requires more trust than many consumers are prepared to grant. So people generally need to be at home to accept a grocery delivery and get their goods into the refrigerator or freezer, and that can be inconvenient. That’s why so many find it better to order from a grocer online and stop by the store, on their own schedules to pick up the items, and that’s why they keep coming back. It’s not just grocers, but small restaurants in our neighborhood centers. They had been slow to adopt new technologies, but now they employ delivery services like Seamless and Uber Eats. Service providers like Great Clips are using online portals to make scheduling more efficient. Q: It’s working the other way ‘round, too, right? Amazon’s moved into the physical marketplace with Whole Foods. How has that changed the game? A: Amazon’s entry into the physical marketplace hasn’t really had a significant effect on the grocery industry, at least not in the way many speculated it would. This is partly because the main players in the space — including Walmart, Kroger and Publix — were already leading the charge in innovation. If anything, Amazon’s acquisition of Whole Foods and subsequent announcement that it would open new grocery stores has validated the need for an omnichannel model that combines online delivery with a brick-and-mortar presence. The Whole Foods acquisition seems to have mostly been a game changer for Amazon’s own grocery strategy, as the company appears to have recognized that solving for the last mile is more critical in grocery than perhaps any other segment of the retail industry. Whole Foods gave Amazon access to a physical footprint that would have taken a lot of time to develop organically. Amazon also remains focused on growing its Prime membership as opposed to creating great grocery experiences. Its recent announcement that it would be eliminating its $15 monthly membership fee for Amazon Fresh and rolling Fresh into Prime membership seems to speak to that strategy. Q: German grocery chains Aldi and Lidl have expanded rapidly across the U.S. in the past two years with smaller formats that use data to
better match inventory to local tastes. Do you Jeff Edison see that happening in your centers? A: Trader Joe’s is another chain that is employing this type of format, and it just goes to show the truly innovative concepts that can arise through the power of data and knowing your customers. By analyzing local consumer preferences, grocers can tailor their offerings to meet the needs of the markets they are serving, thereby creating a more seamless shopping experience. The trend towards smaller store formats extends beyond the grocery industry, as well, as brands respond to increasing urbanization and endeavor to create more engaging and satisfying shopping experiences. Q: Do you see a future for more concepts like Sam’s Club Now, a mobile-first concept in which 32,000 sq. ft. stores fulfill orders entered online? A: In short, yes. Sam’s Club Now directly relates to the themes we’ve been discussing, exemplifying the use of data, technology, and omnichannel strategies to drive customer loyalty and engagement by creating a frictionless shopping experience. Using the Sam’s Club Now location as a lab of sorts also enables Sam’s Club to test new ideas and technologies, and expand the ones that work to other locations Q: How has Phillips Edison been employing technology to enhance not only customer experience, but tenant’s bottom lines? A: We’ve gone all-in on technology. Innovations our team have come up with have reshaped critical functions of our business. Data and analytics are informing decisions across the business — from which properties we invest in to how we merchandise our shopping centers. Creating the right merchandising mix is key to promoting the success of all tenants. Robotics are creating efficiencies in our accounting department, automating bill pay and facilitating easier communication with lenders and tenants. We launched an internal Alexa skill last year that puts vital, property-specific information at our management team’s beck and call. The skill was such a hit that earlier this year we launched an external version that allows current and prospective tenants to quickly pull information on properties, including finding available space for lease and reaching a leasing agent to help them take the next steps.
Jeff Edison is chairman and CEO of Phillips Edison & Company.
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NOVEMBER/DECEMBER 2019
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THE MIDWEST’S RETAIL REAL ESTATE LEADERS Project Leasing | Tenant Representation | Property Management Investment Sales | Net Lease Sales | Land Brokerage Construction Management | Surplus Disposition Illinois | Michigan | Minnesota | Wisconsin www.midamericagrp.com
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LEADERS
JULIE SWINEHART
on Financing Today’s New Projects RPAI’s CFO tells why the foundation of complicated mixed-use projects with long timelines is a strong balance sheet. Q: Julie, you have been with RPAI for several years, serving in a variety of accounting roles prior to making the move to CFO roughly two years ago. As CFO of RPAI, what’s your top priority today? A: That’s correct. I recently celebrated 11 years with RPAI, and in terms of priorities, all are rooted in working to improve RPAI’s cost of capital, both equity capital and debt capital. It’s an exciting time at RPAI right now as we are underway with each of our “Big 3” expansion and redevelopment projects — Circle East, One Loudoun, and Carillon. This key facet of our growth profile needs to be supported today and in the future by our strong balance sheet. Ensuring that these projects have the green light from a funding perspective is top of mind for me. Q: We spoke with Steven Grimes, RPAI’s CEO, in the past about RPAI 2.0 and those projects. Specifically, what funding sources are you considering? A: The good news is that we have plenty of options, which allows us to stay flexible and in the driver’s seat. In the past, we have sold air rights to help fund projects, like we did at Circle East, our redevelopment in Towson, Maryland. There, we sold air rights to AvalonBay — the company responsible for developing, owning and operating the multi-family portion of that project. We will own the retail portion, which was funded, in part, by the air rights sale. In other cases, including our expansion at One Loudoun Downtown and our Carillon redevelopment, we have formed joint ventures with best-in-class partners, which provides a portion of project funding, but also benefits our projects as we let the “experts” in multi-family and medical office execute those components of our mixed-use redevelopments. For these initial projects, which are sizable investments, a portion of funding will come from borrowing temporarily on our revolving line of credit. Our current portfolio contains a significant amount of additional air rights, most of which are already entitled, which are also available to fund the projects if we wish to go that route. Q: Have you been able to take advantage of lower interest rates this year? How do you think about that opportunity today and what additional opportunities may exist in the future? A: For us, the low-interest rate environment has paired nicely with interested lenders and fixed income investors. In an effort to preserve ample capacity for purposes of redevelopment spend over the next few years, we replaced our revolver borrowings with bank term debt, at very attractive interest rates. We also repaid a handful of higher interest rate mortgages early with the proceeds. As a
result, our revolving line of credit is practically Julie Swinehart undrawn and we have further strengthened our debt profile, having improved both our weighted average interest rate and our weighted average years to maturity. Because we pay interest on our revolver based on one-month LIBOR, plus a credit spread, as one-month LIBOR has moved lower in recent months, we continue to benefit. All this work around debt structuring clears the way for the development team to progress on the projects without having to think about the funding sources. Q: The projects sound like they are getting a lot of attention from all sides of the business. What else are you focused on in your role? A: While the development teams are busy on these projects, the rest of the company is acutely focused on operating the core portfolio of just over 100 assets. We’ve had tremendous success on the leasing front this year, in terms of volume, rent spreads and annual contractual growth in our leases. I focus on maintaining rigor around our financial reporting and forecasting processes, and our external communication with all constituents — striving for accuracy and transparency. Q: It’s said that investors rate companies taking environmental, social, and governance factors into account as having superior business models. What are your thoughts on ESG and how is RPAI responding to the increasing interest in the topic? A: ESG has become a larger area of focus than ever before. Everyone, from investors, to ratings agencies to our employees, wants to know more about how we are evaluating decisions and actions through an ESG lens. We have made great strides this year on the topic, including rolling out our microsite at RPAIesg.com. Now it’s much easier to locate information about all the great work we are doing on the environmental, social and governance fronts. As we move forward with our expansion and redevelopment projects with an energy-conscious focus, we will have even more to share in the “E” category. ESG is extremely relevant and has truly become part of the RPAI fabric.
Julie Swinehart is executive VP, chief financial officer, and treasurer of Retail Properties of America, Inc., based in Oak Brook, IL.
36 SHOW SCOOP
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LEADERS
ADAM IFSHIN on Leasing Trends
Tenants wanting big spaces and tenants wanting small spaces are driving rent increases.
T
he open-air retail center sector remains strong. It’s just that it’s not your father’s or mother’s kind of retail anymore. While rents are steadily moving upward, we’re seeing different types of tenants at our centers. There are a growing number of special service providers such as OrangeTheory Fitness and Aspen Dental and fewer traditional retailers such as Payless or Bed Bath and Beyond. Here are three big trends we are seeing in leasing. 1. Higher rents from smaller spaces. In 2019, DLC Management will be up 15% to 20% from last year in the amount of rent generated by new leasing activity. While deal counts are relatively flat, we see a great amount of that activity taking place in the under 10,000 sq. ft. range. Most chains going bankrupt and disappearing are those with larger retail footprints. Entering our centers, meanwhile, are brands like Chipotle, Starbucks, WellNow Urgent Care, and Club Pilates that operate within smaller formats. That’s not to say that larger format stores are going away. We signed multiple deals with Ross Dress for Less, Burlington, LA Fitness, and HomeGoods this year. Retail real estate is a bifurcated marketplace. You have the big guys and the little guys simultaneously driving rents these days. The commonalities are value and wellness. The trend of lease re-negotiation toward shorter durations has pretty much played out and settled down. Instead, larger-format chains are signing 10-year leases while smaller-format chains are entering five-year leases with options. As a landlord, we prefer 10-year over five-year, but we are still doing some 15- and 20-year leases in cases where we’re executing full-scale buildouts. In non-traditional uses like fitness and medical, longer lease terms are typical.
Adam Ifshin
box in certain markets. Vacancy continues to drive value creation, but it’s not universal. Selectivity is key. Our costs depend on what tenants want and their needs vary greatly. If a tenant wants the lowest rent possible, a landlord may spend only $20 per sq. ft. on a buildout. On the other end of the spectrum, if a tenant wants to turn the old Kmart into a supermarket or a Dick’s Sporting Goods, it’s likely to be in the $100 to $130 per sq.ft. range. Furthermore, those costs are trending upward due to the shortage of construction labor and tariffs on imported materials. If a developer is going to invest that money in a buildout and not generate $10 to $14 in average net rent, there’s no money to be made. 3. Changing tenant mix. As of October this year, DLC had executed 66 new leases for properties under 5,000 sq. ft. — and not one of them was for an apparel brand! Smaller apparel shops are migrating away from our open-air centers. The days of us going out and doing a portfolio review with Dress Barn, Ann Taylor, or rue21 are practically over as consumers nowadays shop for apparel at valueoriented retailers retailers such as Burlington, Marshalls, and T. J. Maxx. A new wave of tenants who provide experiential retailing or specialized services has moved into our open-air centers. For instance, our spaces have been filled by the urgent care clinic or healthy chain restaurants that can generate in excess of $400 a square foot in sales and can afford to pay higher rent. To name a few, LA Fitness, Aspen Dental, Chipotle, and Verizon are the types of retail businesses that continue to bring consumers to our centers. Tenants that create traffic and dwell time, regardless of their use, continue to be a focus at DLC. Agility and adaptability are becoming crucial to the success of our business. We have been working hard to strike the right balance between what consumers want and what tenants need to succeed. At the end of the day, it’s all about making retail places better for all.
“A new wave of tenants who provide experiential retailing or specialized services has moved into our open-air centers.”
2. Tenants want turnkey installations. One of the main reasons that tenants are paying higher rents is that they want you to build the space for them and construction costs are soaring. It used to be the case that if we bought a shopping center with vacant box, there was no way that we weren’t going to make a profit leasing that empty box. Today, however, there are scenarios in which developers don’t make money on that box even if they didn’t pay anything for it in a deal. For example, if we buy a vacant box at a market cap rate and spend $100 per sq. ft. for renovation, it will be a struggle to generate $10 net per sq. ft. As such, there’s no reason to lease the
Adam Ifshin is CEO of DLC Management Corp., based in Elmsford, N.Y.
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NOVEMBER/DECEMBER 2019
CHAINSTOREAGE.COM
11/11/19 10:45 AM
LEADERS
JOE CORADINO
Joe Coradino
on building for the future How Fashion District, Philadelphia’s new retail epicenter, is redefining the downtown mall experience.
R
arely do we have an opportunity to start from scratch with a blank canvas, but when we do, it is important to take that step back and immerse ourselves in the opportunity. Sixteen years ago, we embarked on a journey to transform what was once known as “The Gallery,” an underused shopping center in Center City Philadelphia, into Fashion District Philadelphia. It is the first robust retail and entertainment offering of its kind in Downtown Philly, and we used the present-day consumer as the blueprint for how to design and curate a lineup of concepts for the modern retail environment. Our vision for The District was to create a truly unique and iconic destination, to completely reimagine the consumer experience and employ a forward-thinking, strategic approach to redefining the future of retail. The objective: create a well-curated, one-of-a-kind destination that blends shopping, dining, entertainment, and cultural experiences in a downtown location that is inclusive, accessible, and convenient for everyone. From a variety of retailers to multiple dining concepts, dynamic entertainment for kids and adults, ongoing community events, immersive activations, and several unique features — including art installations and local businesses — the offerings at The District are designed to maximize day-to-night appeal and deliver an unforgettable experience for all. By considering who we are serving, what their needs are, how they will be utilizing the space, how we can impact the neighborhood and the city, and why guests would want to visit The District, we were able to shape the industry by setting the standard for shopping destinations of today, while at the same time determining what the future of commercial real estate should look like. The District’s tenancy and programming has been curated to attract residents, commuters, and tourists alike. The physical space had to be inviting; its design was based on four pillars. • Style: Bringing together a combination of flagship, off-price, fast-fashion, traditional full-price, branded outlet stores, and first-to-market concepts, The District offers mass appeal to a diverse customer base, combining a high-quality experience with accessible style, and introducing 30 first-to-market concepts including Nike and Primark. • Dining: The District offers a collection of unique dining concepts, ranging from fast casual like Chick-fil-A to quick bites and coffee at Starbucks and and cross-over live entertainment at City Winery. Its 20 dining options are destinations for lunch breaks, happy hours, and date nights. • Entertainment: The District features a dedicated third-floor entertain-
ment zone where visitors can enjoy billiards, bowling, karaoke, a dine-and-recline movie at AMC Movie Theater, or rotating interactive art exhibits from around the world at Wonderspaces. • Arts & Culture: Aspiring to be an integral part of the local community, the project has invested more than $1 million in art and murals by both local and world-renowned artists. Uniquely Philly on the concourse level sells Philadelphia-made products and supports small businesses. These four pillars foster endless possibilities for experience within The District’s 900,000 sq. ft., spanning three city blocks. The ultimate goal: Make The District a “must-see” destination Philly’s 43 million annual visitors, as well as a multi-purpose, one-stop-shop for its office workers and residents. After more than three years of construction, we opened The District on September 19 and drew more than 156,000 consumers in the first four days with a dynamic mix of tenants, live music, giveaways, experiential activations, and events. Nine out of 10 tenants reported strong traffic and sales that exceeded their expectations for opening weekend. The experience-driven model is one that the best retail properties all over the country are emulating in an effort to provide go-to destinations for people, regardless of what they are looking for. We are confident that the central location of The District — connected to the SEPTA commuter train terminal and the Pennsylvania Convention Center — will make it the place to meet, eat, shop, drink, exchange ideas, experience entertainment, and find respite in the heart of a bustling world-class city. In just two months of operation, we have welcomed more than 1 million visitors to the District, announced new destination tenants and first-tomarket concepts, hosted two dozen events, and created hundreds of new retail jobs that directly impact the Philadelphia community. Fashion District Philadelphia is not only a beacon in PREIT’s evolving portfolio, but will serve as our legacy for years to come as we continue to be industry leaders in the ever-changing retail landscape.
“Our goal: Make The District a must-see destination for Philly’s 43 million annual visitors, as well as a multipurpose destination for its office workers and residents.”
CHAINSTOREAGE.COM
Joseph F. Coradino is chairman and chief executive officer of PREIT, based in Philadelphia.
NOVEMBER/DECEMBER 2019
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LEADERS
TOM McGUINNESS
on the evolution of neighborhood shopping centers Today’s successful open-air shopping center is managed for expediency and one-stop shopping for the time-challenged consumer.
Tom McGuinness
B
ack in the day (which wasn’t that long ago), Mom loaded in technology are going to be able to stay ahead of the game and the kids into the mini-van for the long and dreaded prosper amidst present changes as well as those in the future. grocery store shopping trip. She wandered the aisles While the interior of the store has evolved, the exterior is also with her carefully edited list in hand, while the seeing changes. In addition to the dedicated parking kids ran ahead, searching out that sugary snack they areas for picking up pre-ordered groceries, there A lot of work goes saw heavily advertised on the Saturday morning cartoon may be a drive-up window for pharmacy orders, into exteriors. shows. When, at long last, the shopping was complete, adjacent branded grocer fuel stations for one-stop your purchases were bagged and the family headed convenience, and brighter, energy-efficient lighting There are dedicated home. for late evening shopping trips. Today’s successful parking areas for Fast forward to today: Mom or Dad checks the digital open-air shopping center is managed for expedienpicking up precoupons received from their favorite grocer and they orcy and one-stop shopping for the time-challenged der their groceries online or via their smart speakers. At consumer. ordered groceries, a time convenient for them, they swing by the store, pull Elevating the shopping experience, even for daily drive-up windows into a designated parking spot and have their personal needs shoppers, has influenced InvenTrust’s propfor pharmacy orders, erty redevelopment and operations. At our centers, shopper bring them their items. Other trips may include a trip inside the store to select fresh fruit, meats, and a you can recharge your electric vehicle while getting and branded grocer bottle of wine while perusing new recipes on the store’s fuel stations for one- a haircut. We’ve incorporated seating areas for cusapp. If the kids are along, everyone can also stop at the tomers to relax and enjoy a cup of coffee, and have stop convenience. in-store restaurant for a cooked-to-order meal and a built play areas to host playdates or let the kids gelato and pay for it all with a swipe of a credit card or romp in the middle of running errands with Mom. tap of a phone screen. National, regional and local dining establishments are bringing There have been more changes in the grocery operations space Instagram-worthy design concepts to our centers, along with the in the last few years than in previous decades. Grocers can reach latest trends in food and drink, such as wines on tap. out to us, the customer, anywhere, at any time, with merchandise, No, it’s not the same shopping trip your parents made at the wellness and lifestyle information. They can source their products local grocery-anchored center, and it shouldn’t be. Tracking the from across town as well as around the world, deliver our desired continuous evolution of shopping, even for groceries and everyfood items fresh to our homes if we prefer, and offer everything day essential goods and services, is critical to having our centers from in-store wine tasting to cooking demonstrations which we meet the needs of our communities. And we’ll keep developing our can enjoy during our shopping trips. Investing in new technology center leasing, management, design and investment to stay at the and concepts is critical for maintaining a grocer’s top position in forefront of these changes, in partnership with our grocers and their local market. tenants. As InvenTrust has refined its grocery-anchored portfolio throughout the last few years, we have focused on building our portfolio with grocery-anchored centers that included the No. 1 or No. 2 Tom McGuinness is president and CEO of InvenTrust Properties, based grocer in the market. Those companies that can invest their capital in Downers Grove, Illinois.
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CBL PROPERTIES
EVOLVING
FOR OUR CUSTOMERS
Our properties offer our customers an inviting place to shop, dine, be entertained, socialize or just relax. Recognizing that today’s consumer has numerous options, we are adapting our tenant mix to meet the demands of changing preferences and offer a wide array of experiences.
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Our strong leadership, responsiveness, and focus on relationships make us an ideal business partner. We strive to maximize long-term value for our properties and our partners.
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Whether it’s through transformational anchor redevelopments, or through investments in new technology - we are constantly pursuing opportunities to enhance our core assets.
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LEADERS
STEPHEN LEBOVITZ
on transforming the enclosed mall CBL is embracing data-driven marketing tools and non-traditional tenants as it remakes its properties into suburban town centers.
H
ere’s the understatement of the year: retail leasing is changing. CBL has responded by actively executing our redevelopment strategy. We are transforming our properties from apparelbased, enclosed malls to market-dominant, suburban town centers featuring a diversity of users. Our redevelopments and leasing efforts are delivering a variety of uses customized to the local market that range from entertainment to hotels to casinos to fitness. We recently opened a redeveloped Sears space at Brookfield Square in Milwaukee that includes Movie Tavern by Marcus Theatres and WhirlyBall, an entertainment concept. Outback Steakhouse and Uncle Julio’s also opened as part of the project in the former Sears parking lot and next year the new city-owned hotel and conference center will open, which will connect to Brookfield Square through a pedestrian pathway. CBL is able to attract these exciting new uses and remake its malls due to the strength of our properties, their locations within their respective markets, and the inherent value of the real estate. We are also embracing three major trends in transforming our properties: the rise in non-apparel deals, digital lead generation, and data-driven pitching. 1. Successful malls are destinations that go far beyond shopping. From axe throwing and bowling to “instagrammable” installations to lodging and fitness concepts, non-apparel users are rapidly expanding into retail centers. Overall, 74% of new mall leasing and 60% of CBL’s total mall leasing this year has been with non-apparel tenants. We are currently under construction, have agreements executed or are in active negotiations on two multifamily projects; 15 entertainment operators, including two casinos; nine hotels; 31 restaurants; eight fitness centers; eight medical uses; two self-storage facilities; two grocers, and a number of other nonretail uses. We saw more than 40 anchor stores close over the past two years and, already, we have 27 locations spoken for with tenants either open, under construction, or committed. In fact, CBL has executed leases with entertainment users such as Dave & Busters and Round1 for approximately 825,000 sq. ft. across more than a dozen properties. Art installations are also creating new consumer experiences at traditional shopping centers. In 2019, CBL welcomed Wonder Wonder to Oak Park Mall in Kansas City and pop-up installation InsideOut Land to Hamilton Place in Chattanooga, Tennessee. We expect to be welcoming more of these kinds of experiential tenants in the coming years. 2. Landlords are reinventing lead generation strategies. Our specialty leasing team is successfully using digital advertising to
source leads for vacant space by placing ads Stephen Lebovitz using Facebook Lead Generation and Google Search Engine Marketing, targeting entrepreneurs and business owners on Facebook while also bidding on keywords like “space for lease” on Google. Potential tenants are directed to fill out a lead-generation form and this information is shared with CBL’s specialty leasing managers. In the case of our POP-UP program, this campaign led to a new user seeing the ad, clicking through to the website, calling our team, and signing an in-line deal. Across five properties, this B2B campaign resulted in 328 leads and 10 closed deals so far. The power of social media extends beyond paid advertisements. The social network has evolved from a customer service tool into a vital sales tool. Something as simple as responding to Facebook comments can lead to closing a deal, as it did for our Mid Rivers Mall specialty leasing team earlier this year. 3. When it comes to closing deals with retailers, pitching must be personalized and data driven. As the retail industry continues to face headwinds, fewer legacy brands are hungry for expansion. As a result, the courting process is longer and more customized, so we are taking a more targeted approach when pitching prospective tenants. The right mix of personalized data is crucial to the process of serving digitally native brands that are expanding into brick-and-mortar. When working with Liverpool Los Angeles to identify the right market for their first pop-up shop, we suggested 10 potential locations. They immediately narrowed it down to four based on what they knew about their customer. However, we were able to help fill in their blind spots with customer profiles, common area traffic, social media activity and engagement — KPI’s that we bring to the table that can help a retailer decide on the best market for their brand. The expectation from retailers also extends beyond signing on the dotted line. For Liverpool, a comprehensive marketing plan was developed that included initiatives that started months before the shops grand opening in November. Our team is committed to evolving along with the industry and experimenting with new ways to enhance net operating income. As we look ahead to next year, we are excited to see these creative leasing strategies in action as more of our redevelopment projects come to fruition. Stephen Lebovitz is CEO of CBL properties, based in Chattanooga, Tenn.
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LEADERS
EZRA STARK
Ezra Stark
on outlasting the trends Planning brick & mortar retail environments for the future requires forecasting, planning, flexibility — and listening to your constituents.
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nlike in retail or F&B where executing a new trend is relatively quick and the results are readily apparent, real estate commands a more disciplined, patient approach. Constructing a physical edifice or creating a conceptualized space takes time and demands a certain degree of flexibility to evolve with changes in everything from building codes to public sentiment. It’s a lengthy process that requires a great deal of passion and prudence in order to deliver, and even then, it can take years to gauge whether or not the new trend will create a lasting impact. At its core, commercial real estate development is all about future planning. What will suffice a year from now will most definitely not suffice further down the line. So, whether you’re proposing a new retail project or making management decisions for an existing property, you should never simply look at how things will function in the near term. You have to set your sights much further in the future, thinking 10 to 20 years ahead. In order to do so, it’s imperative that you make every possible effort to stay ahead of the curve as trends shift and evolve. We have seen that the notion of suburban living with a white picket fence, a shopping mall down the block, and a grocery store around the corner is no longer relevant. Similarly, the increase in takeout and door-to-door delivery has resulted in a decreased need for larger dining rooms (or dining rooms at all) and fully featured kitchens. As a result, we have focused on creating malleable, adaptable spaces that steer away from being too customized or constricted in order to better accommodate various lifestyles and align with forthcoming trends. Due diligence, and the process of ensuring that each and every decision is carefully considered, has become important as ever. A crucial part of that process, and something that is becoming somewhat of a lost art, is simply meeting with and carefully listening to your constituents. Who better to help you find the answers than those directly involved? Not only can you gain valuable insights into the people it serves, but you can also begin to CHAINSTOREAGE.COM
develop ideas and plot out potential execution strategies to implement new trends that may become the industry standard for years to come. Whether you’re constructing a retail space from the ground-up, renovating an existing space, or revamping your business model, flushing out a new trend or steering in a different direction requires a strong vision. This will ensure you employ solid decision-making throughout and are operating from a structured, solid foundation. At the same time, you must also remain flexible. Allowing for a certain extent of freedom to evolve with fluctuations in the marketplace is crucial. For instance, as e-commerce and brick-and-mortar continue to collide, traditional ways of thinking about retail have shifted and opened up new opportunities to innovate. With that in mind, it’s prudent to think dualistically in all business decisions. Against the backdrop of your original vision, it’s vital to gauge the sentiment of the status quo alongside what you can divine will excite future consumers. Each day is an exercise in learning from the successes and failures of current operations and coming up with new ways to improve future experiences. Finding new avenues to reach customers, to create better interactions, and to evoke lasting impressions that resonate with your target market is critical for sustained future growth. In that way, development never truly ends. It is an evolution, an ongoing process of evaluation and forward thinking. Taking the time to examine which trends are working and which ones are not in order to fully understand the current climate will provide you with the tools to anticipate what’s next. There is no guarantee that will lead you down the right path every time, but it will always provide you with opportunities to learn and grow. More importantly, it will keep you moving forward, which is always the right direction.
To align with future trends, we focus on creating malleable, adaptable spaces that steer away from being too customized or constricted.
Ezra Stark is chief operating officer of Stark Enterprises, based in Cleveland, Ohio.
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LEADERS
WILLE HOAG
on the spread of ‘medtail’ Like retailers, today’s docs and dentists crave branding and great locations — and available high-profile space is abundant.
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hile the integration of medical users into our retail centers has seemed rather sudden, the logic is unassailable. Meshing self-care into the American’s everyday needs pattern is a necessary evolution. Scarce free time means convenience and efficiency are more crucial than ever. Any landlord now expects that when interviewing a prospective leasing broker on their concept to fill the 2,500-sq.-ft. square foot endcap or the white elephant vacant anchor or enclosed mall, the reply boils down to “probably a medical user.” The now ubiquitous presence of “medtail” in retail centers is born from numerous factors. At more than $10,000 the United States has the highest per capita spend for healthcare in the world. We’re an aging country with a volatile healthcare infrastructure and the past decade has seen a greater emphasis on preventative wellness, a model that places value-based care. A leader in this approach is Oak Street Health, a primary care clinic for Medicare Advantage seniors. Over the past three years, our team has overseen their national expansion efforts, allowing us to see firsthand a model that occupies retail space in “healthcare deserts.” The stakes are high for insurance companies and local hospital networks to keep their existing patient base within their networks, thus the impetus to allocate capital on smaller spoke clinics that specialize and create a perception of local or regional network dominance. Pediatric care or allergy and asthma clinics land next to your Whole Foods to address child wellness in one fell swoop. Meanwhile, privately backed medical start-ups have flourished to expose the inefficiencies of some of the large and cumbersome hospital networks. We consult with tenants as varied as PM Pediatrics, Aspen Dental, and ATI Physical Therapy, all expanding quickly to win over a captive audience that seeks familiarity and convenience uniquely fostered only by prominent retail space. Real estate investors love medtail. There is limited turnover or relocations, usually long-term leases, and the upside potential of consolidation or buy-out opportunities from even stronger entities. As an example, a freestanding net-leased dialysis center provides a seemingly secure harbor for real estate investors due to their necessity for the foreseeable future. Legions
Wille Hoag
of youth sports leagues and athletic retirees give ATI and Athletico clear runways for expansion. The growth potential breeds a competitive landscape that requires the best real estate that seamlessly weaves into the narrow landscape of the market. From the perspective of the medical tenant, the opportunity for high-profile space is abundant. Retail real estate, as opposed to the nondescript medical office buildings of yesteryear can immediately enhance branding and credibility. Not so long ago, many traditional retail tenants abhorred medical tenants because they required too much long-term parking. In reality, most medical tenants with whom we consult have less stringent parking demands than all but a few thriving retail categories. For example, the urgent care and microhospital models may require less than 30 patient visits per day to ensure success. There remains reluctance from landlords and some anchors to allow healthcare users to locate proximately within centers. There’s been a marked shift in attitude, however: A center marked by vacancy is a grim alternative to a co-tenant that may not seem perfect. The depth and breadth of active tenants has winnowed considerably. The future of medtail is expansive. Staffing and burnout from these highly specialized, welleducated professionals may impede the growth desires of many of these concepts. Telemedicine, like online shopping, may compete with some acute care practices for typical urgent care visits, but the mutually accretive benefit of brick and mortar retail space for medical use is clear. In our retail climate, it is thus not a stretch to envision the “lifestyle center” of the near future as a one-stop health and wellness center with your fitness club adjacent to the pediatric dentist. Before you drop your pet off at the luxury vet (with lodging), Grandma is picked up from her senior living classes at Oak Street Health, efficiently addressing the health of our families, communities, nation.
“Medical tenants sign long-term leases, rarely turn over or relocate, and have great potential for consolidation or buy-outs.”
Willie Hoag is a principal and director of tenant representation at MidAmerica Real Estate Corporation, based in Chicago.
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LEADERS
MEGHANN MARTINDALE
Meghann Martindale
on the risk in restaurants
Food-and-beverage is now the largest sector of retail, but new concepts have an 80% failure rate and long-vacant spaces can stigmatize retail centers.
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estaurants, bars and “eatertainment” concepts have emerged as coveted tenants for shopping centers as the retail industry adapts to e-commerce and store closures by various soft goods retailers. But the ongoing food-andbeverage renaissance can deliver mixed results for retail landlords who don’t choose their operators and merchandise offerings carefully. The restaurant sector is notoriously risky, with a failure rate of around 80% for new concepts. The steep upfront costs of building and operating a restaurant can be debilitating for inexperienced operators, often resulting in failure within the first two years. A restaurant space can remain empty and stigmatized for extended periods while a replacement is found, especially if multiple concepts in that space have failed, That said, the food-and-beverage category is a juggernaut in retail real estate these days, benefiting consumers, landlords and, in some cases, neighboring stores. Restaurants accounted for 17% of retail sales in the United States last year, making the sector the fastest-growing and largest in the retail universe. Excluding food courts, restaurants now occupy roughly 43 million sq. ft. in U.S. malls, up 18% from 2007, according to the International Council of Shopping Centers. This growth has yielded some upside for neighboring retailers. Foodand-beverage brings shoppers to retail centers at times when traditional soft goods stores’ draw might be less, namely at lunchtime and in the evening. It also tends to increase shoppers’ dwell times. Although restaurant patrons sometimes crowd parking lots at busy times, inconveniencing other shoppers, the benefits outweigh the drawbacks for most retail landlords these days. Here are some notable trends in food-and-beverage that we at CBRE are monitoring. Eatertainment goes small. Eatertainment concepts like Dave & Buster’s, Punch Bowl Social, Round One Entertainment, and Topgolf have firmly established themselves in suburban markets. Suburban malls, lifestyle centers, and adjacent free-standing locations provide these concepts with the big boxes and ample parking that they require. Now some are testing smaller formats to crack urban markets. Earlier this year, Topgolf announced its roughly 7,700-sq.-ft. Topgolf Lounge that will offer virtual golf and virtual games in addition to food and drink. Dave & Buster’s and Punch Bowl Social, too, are experimenting with downsized formats to give them access to densely populated cities and hordes of new customers. It’s a fast-casual world. Fast-casual reigns as the dominant restaurant format in the U.S., accounting for four of every five locations
opened by top-500 chains in 2018. The format’s calling cards — better quality fare than fast food, relatively quick service, and lower prices than full-service restaurants — have resonated with today’s diners who are health-, time-, and price-conscious. While established fast-casual brands like Chipotle Mexican Grill continue to expand, we’ve also seen emerging and regional, farm-to-table operators open fast-casual outlets. Many retail landlords are happy to welcome these restaurants to replace departed retailers. Yet, amid this growth, there is need for caution. Adding too many restaurants to a retail center can result in those eateries cannibalizing one another’s sales. Additionally, many fledgling F&B concepts struggle with the rising costs of operating a restaurant, including rent. U.S. retail rents have increased for 23 consecutive quarters. Ultimately, retail landlords must be careful and deliberate about which operators they bet on and how many they add to their centers. Today’s special: ghost kitchens. As the meal-delivery sector expands, a few restaurant operators have established delivery-only kitchens, also called ghost kitchens. These locations allow operators to serve a heavy volume of delivery customers without requiring in-dining restaurant kitchens and resources, copying the decades-old approach of pizza-delivery operators. Aggregators like Kitchen United provide commercial kitchen space for multiple restaurateurs to produce meals solely for delivery customers. Ghost kitchens needn’t occupy prime retail space. Food halls hit the ‘burbs. Food halls are rocking in urban markets, but their road to success in the suburbs will be rocky. Food halls need the continual, all-day flow of customer traffic often provided by downtown locations in larger cities. Some suburban malls are installing them in vacant space, and they can serve as a new form of anchor, but they need the 24/7 traffic of shoppers, office workers, and nearby residents to be successful. They also require a carefully curated roster of unique and often artisanal eateries set inside an authentic environment to set them apart from mere food courts.
Ultimately, retail landlords must be careful and deliberate about which operators they bet on and how many they add to their centers.
CHAINSTOREAGE.COM
Meghann Martindale is CBRE’s global head of retail research, based in TK
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SUCCESSFUL STRATEGIES FOR AN EVOLVING LANDSCAPE. Leveraging the industry’s leading Retail and Industrial & Logistics platforms, CBRE offers deep expertise and robust analytics to help companies adapt and plan for growth. We create successful real estate strategies for companies to increase speed and improve service for online, in-store, delivery and distribution. Explore our food & beverage series that examines how the space has evolved and what it means for consumers, occupiers, and owners in the retail and industrial real estate arena.
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STORE SPACES
Spotlight on X/SPECS By Marianne Wilson Brick-and-mortar retail was in the spotlight at Chain Store Age’s X/SPECS 2019 conference, which focused on the evolution of physical retail from a design, build and facilities management perspective. The 17th annual event, held at the Waldorf Astoria in Orlando, Fla., attracted executives from the nation’s leading retail companies, including Walmart, American Eagle, AutoZone, Ulta Beauty, Walgreens, Kohl’s and Sephora, along with such newer brands as Untuckit and Warby Parker. The restaurant category was represented by Burger King, Dunkin’ Brands, Darden Restaurants, Firehouse Subs and others. The sponsors of the event ranked among the top suppliers in store planning/design, construction and facilities management. SPEAKERS: The X/SPECS program combined top-level speakers with business networking in an informal setting designed to build business partnerships. In keynote presentations, speakers addressed how stores are evolving and meeting the needs of customers in a digital age. Gary Hawkins, founder and CEO of The Center for Advancing Retail & Technology, discussed how innovation, customization and immersion are redefining retail and how embracing these strategies can enable retailers to deliver more engaging and personalized in-store experiences. “Technology is turning retail inside out, enabling many things that were not previously possible,” he said. New capabilities, he added, are providing never-before available insights into true shopper behavior. “What’s needed is to use the data to improve the performance of traditional brick-and-mortar stores,” he advised, “because the new competitors coming out of the digital world are already doing it.” From here on out, Hawkins told the
audience, retail success will be defined by a retailer’s ability to understand and use data across every part of their company, including store design and store layouts. In other presentations, tech consultant Gene Marks gave the audience an overview of the top trends in retail technologies.
The speaker lineup at X/SPECS included Gary Hawkins, author and founder and CEO of The Center for Advancing Retail & Technology.
FROM LEFT: Brookfield Properties’ Shannon Krushlin, VF Outdoor’s Brandon Sanchez and Centennial Real Estate’s Sam Whitebread relax at an evening reception.
Kohl’s Phillip Wright, left, and and Jeff Adam get down to business at Face2Face.
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STORE SPACES Dunkin’ Brands Samantha Jupe participated in the Face2Face information exchange. Workforce trends expert Seth Mattison followed his keynote with a supplier-only workshop.
Table topic discussions were featured at the networking breakfasts.
“Cloud technology is one of the biggest trends in facilities management,” he said. “The cloud and mobile apps are changing the way you manage your facilities.” Another top trend involves buy-onlinepickup-in-store and the challenges it is creating, including the changes needed in store layouts to accommodate quick pick-ups and the extra parking space required for pick-ups. “BOPIS also requires better e-commerce and in-store integration and a lot of employee training,” he added. This year’s event also featured a tour
of Disney Springs, a themed outdoor shopping, dining, and entertainment destination in Lake Buena Vista, Fla., close to Walt Disney World Resort. Inspired by Florida’s waterfront towns of the early 1900s, the center features four distinct neighborhoods, each with its own distinct architecture. The eclectic retail mix includes unique boutiques, Disney-themed shops and such name brands as Under Armour, Ugg, Lego, Anthropologie, Uniqlo, Zara and more. Among the newest tenants is the NBA Experience, whose sleek retail
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FROM LEFT: EarthCam’s Lisa Kelly, RaceTrac’s Vanessa Cooper, The Blue Books Network’s Tara Orrick and AutoZone’s Kemona Ward enjoyed the tour of the Disney Springs center.
space evokes the feel of a modern NBA arena. X/SPECS also provided retailers the opportunity to network with colleagues and business associates. Retailers discussed specific business needs with suppliers at one-on-one, or “face-2-face,” information exchanges. Suppliers also had the chance to share solutions with retailers in a wider setting via theatrestyled presentations. For more photos, visit chainstoreage.com/xpecs2019. NOVEMBER/DECEMBER 2019
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Lighting Rebates Update Incentives still going strong in most areas By Marianne Wilson Rebates are a win-win solution for retailers looking to offset the initial upfront costs that come with deploying more energyefficient lighting in new stores and existing locations. The most popular type of incentive is the prescriptive rebate, which is typically focused on existing buildings. Industry experts say that rebates can significantly reduce the installed cost of new lighting in existing buildings, improving payback by 20% to 25%. Currently, approximately 75% of the United States is covered by an active commercial lighting rebate program, according to BriteSwitch. (The Princeton, N.J.-based company specializes in helping businesses find and take advantage of rebates and incentive programs across the United States and Canada.) But due to a variety of factors, including funding levels, deadlines and rules, the programs are constantly changing and the rebates vary widely. The three states with the highest populations — California, Texas and Florida — are the least beneficial for rebates, according to Brite Switch. During the past few years, California’s commercial lighting programs have dwindled as they have shifted their focus towards energy efficiency legislation
rather than providing incentives. Texas’ utility rebate programs are traditionally geared towards large projects and require several extra steps that add complexity for both the customer and the contractor, Brite Switch noted. And Florida’s utilities offer meager rebate opportunities. Only a few rebate programs are available and their incentive levels are typically low. For instance, one of their incentives comes out to only $0.05 per 4' LED tube. For chain retailers with locations in multiple states, searching for rebates can be timeconsuming. Brite Switch says the number one question it gets is, “Where are the best lighting rebates in the country?” The answer is complex because rebates programs vary so widely. But the company has put together a review offering some insight into the question on its web site (briteswitch.com.) Here is the BriteSwitch update: Northeast Traditionally, Northeastern utility providers have offered lucrative rebates but the process is difficult and the fine print can seem daunting. Rebate applications in this area are typically outsourced to third party organizations, questions are forwarded to call centers and the paperwork is redirected countless times
Getting Help One of the most comprehensive sources of incentives and rebates is DSIRE (https://www.dsireusa.org), which is operated by the North Carolina Clean Energy Technology Center at North Carolina State University and funded by the U.S. Department of Energy. A repository of information on incentives and policies that promote renewable energy and energy efficiency across the U.S., the DSRE database includes programs and initiatives specifically for lighting upgrades. Another source of information is the Department of Energy’s Tax Credits, Rebates & Savings page (www.energy.gov/savings/search For companies with their own rebate department, Brite Switch’s Top Rebates report (RebatePro) uses an algorithm to quickly identify the best rebates across North America for a specific product.
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before it’s reviewed. This can make it difficult to follow up on a project and to find out when materials can be purchased or even for which incentive you will be eligible. All these steps also lead to a lengthy preapproval period, sometimes taking as long as six to eight weeks. Some utilities have also started midstream rebates where the rebate is taken directly off the invoice. These types of programs can be problematic if businesses want to use a specific distributor or contractor that is not in the program. Midwest & Northwest Some of the highest rebates can be found in the Midwest and Northwest regions. One challenge is to navigate the many different available rebate programs. For instance, Washington alone has 31 separate rebate programs, similar to Colorado and Minnesota. Each of the utilities’ programs has their own incentive levels and product requirements, so what worked for one location may not be available just one town over. Rebate programs typically have set budgets, meaning that program funding can run out for a few months, a year or indefinitely. Typically, Brite Switch has seen that between 10% to 20% of the rebate programs nationwide run out of funding at some point. While a few programs are currently out of funding, the company has noticed this year that several rather large utilities are struggling to meet their program goals. Products Specified The product being used will also influence where the best rebate areas are. For example, Avista Power in Idaho offers a $610 rebate for a LED pole mounted fixture replacing 1000W HID; one of the best in the country. On the other hand, their $6.50 4' tube rebate is close to the national average. Also, some areas don’t allow exterior lighting or Type B / Direct Wire retrofits.
NOVEMBER/DECEMBER 2019
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JC Penney Goes Experiential New format offers break from the past for the retailer By Marianne Wilson JC Penney wants to make its stores more fun and engaging — and easier to shop. But with a 850-store footprint, it’s starting small, specifically with one location in a Dallas suburb. The department store retailer unveiled a revamped location at North East Mall in Hurst,Texas, that features a totally reimagined format and a truncated name in script: Penney’s, which is how most people now refer to the 117-year-old retailer. The redone store is the clearest indication yet of how Jill Soltau, who took the reins as CEO in October 2018 and has since brought in a new executive team, hopes to turn around the long-ailing chain, whose revenue has fallen for the past three years. The store open and uncluttered, with less inventory but plenty of experiences designed to get attract people and keep them coming back. The format was created around data and insights learned from more than a year of extensive customer research, according to Penney, which said the “brand-defining” store is experiential at its core, and a direct result of what today’s shoppers want from a retailer. “Our customers are at the heart of everything we do,” said Soltau. “They told us that they want a retailer that reflects their lives, makes them feel good about themselves, is fun to shop and truly understands the im-
portant moments in their lives, big and small. This store is more than a renovated location, it is the fullest articulation of our customer-centered strategy, an investment in our future and a lab to inform decisions to return JCPenney to sustainable, profitable growth.” Layout: For shopping ease, the merchandise layout in the store has been reorganized. The clothing assortment is organized by occasion, ranging from All Day for casual workwear and weekend wear to Shine for special times. A new area, All-You, showcases fashion jewelry and accessories, the in-store Sephora shop and Penney’s updated beauty salon, Salon and Spa by InStyle. But men need not feel left out. The store is home to Penney’s first-ever barber shop, The Barbery. Other new features include The Styling Rooms, fitting rooms equipped with technology that allows shoppers to get new sizes or different colors without leaving the space. The rooms are staffed with style experts who will help customers pull together outfits. In the home goods area, Penney’s partnered with Pinterest on a digital tool that helps customers looking for a home refresh find inspiration. After answering a few home décor preference questions, shoppers are presented with a curated Pinterest Board featuring Penney home products that best meet their needs and match their style.
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In other store highlights: • The space includes Penney’s first-ever fitness studio, with instructor-led fitness, stretching and yoga classes. • Shoppers can participate in lifestyle workshops on a variety of topics in the Style and Substance area. • A kid’s destination features a clubhouse where kids can see artwork come to life virtually and participate in fun events. • To make customers feel more comfortable, 13% of the store space has been dedicated to 11 lounges. • A café, Pearl Cup Bistro, is located on the second floor, with a takeout on the first. • Penney’s signature portrait studio has been updated to be the first-ever Shutterfly Picture Pop Selfie Studio. Customers can take advantage of different wall options and props such as pillows and framed art to personalize a backdrop. • An information desk is located upfront, with a designated area for shoppers to pick up their online purchases. Customers can get the most out of the new store via the Penny app, the retailer said. App users can book their appointments at the salon and barber shop, schedule curbside pickup, secure a spot at a workshop or studio class, reserve clothes to try on and notify an associate to get support anywhere in the store. NOVEMBER/DECEMBER 2019
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IS YOUR SUPERINTENDENT CERTIFIED?
Being a retail superintendent requires a unique set of skills different from other market segments. While all construction superintendents have responsibilities for schedule, productivity, safety, and quality on the project site, the challenges and constraints of the retail environment mean that a special training focus is needed. Superintendents must learn how to think like a retailer and a contractor throughout these projects. RCA’s Retail Superintendent Training Program addresses this need. Certified Retail Superintendents have:
Ask your GC if they have a Certified Retail Superintendent on your project.
• At least three years of experience in retail construction • Completed OSHA 30-hour certification • Completed RCA's two-day workshop, which includes in-depth training on retail-focused customer service • Passed the Certified Retail Superintendent exam
Learn more about the program & view a list of participating companies: retailcontractors.org/superintendent-training-program Toll Free: 800-847-5085 | Phone: 703-683-5637 | retailcontractors.org
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STORE SPACES Q & A
Spotlight on Facility Maintenance
Retail facility managers are challenged on many fronts, but none are as critical as ensuring that the customer has a good experience while on a property. Chain Store Age spoke with Bill Schaphorst, VP of business development, MaintenX, about how MaintenX works with facility managers to help them maintain quality standards.
What are the biggest challenges facing retail facility managers? In retail today, we know that the customer experience within a property is incredibly important. If the customer isn’t having a good experience, they often will leave without making a purchase. Retail facility managers have an incredible responsibility in that they are accountable for a big part of the customer experience. Most of the things that a customer notices from when they first enter the parking lot and/or walk through the doors — overall cleanliness and appearance, lighting, flooring and even the temperature and humidity within the space — are the responsibility of the facility manager. The customer experience must be exceptional and be managed within the budget given by retail leadership. This is the biggest challenge currently facing facility managers. How does MaintenX stand out in the marketplace? MaintenX is a facility maintenance service contractor providing plumbing, electrical, handyman, roofing and HVAC/R repairs to our clients in the U.S. and Puerto Rico. Our key differentiation is we will self-perform the repairs/resolve work orders with our MaintenX facility maintenance technicians. We believe this, combined with our focus on work order management, provides a superior experience. Our team fully understands that our clients do not have time to manage us and that it is our responsibility to receive the work order, dispatch, diagnosis, resolve and communicate per customer expectations. How many technicians does MaintenX have and what areas and trades are covered?
We have more than 250 technicians located within the Southeast, Mid-Atlantic, Las Vegas and Southern California. Our technicians cover plumbing, electrical, HVAC and refrigeration, roofing, waterproofing, general repairs and general contractor services. We also offer disaster preparedness services including board-ups, sandbagging and generators. Why is self-performance so important to MaintenX? Our leadership believes very strongly in accountability combined with excellent communication. We have found that when you have your employees in the field, entering customer properties to repair/resolve issues, we can deliver the best experience. Our technicians have company-supplied smart phones loaded with our proprietary smartphone app that allows real-time communication. Also, we have their GPS coordinates and can easily see where the closest technician is to a customer facility. We do use subcontractors in certain areas, as it is necessary to have trusted business partners in order to respond appropriately to client repairs and resolve requests. Due to the control and communication self-performance provides, it is our first choice, and the lion’s share of our work orders are performed by MaintenX technicians. Does MaintenX service areas outside its self-performing geographies? Our preference is to self-perform our work but, in some cases, we must rely on a trusted business partner in order to take care of our clients. We have an extensive network of business partners to repair and resolve customer issues in all U.S. states and Puerto Rico. One factor that makes MaintenX unique is that throughout our 40 year history, we have entered into partnerships with many subcontractors that have lasted dozens of years. The
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reason for the longevity is that they meet our clients’ repair/resolve expectations and maintain exceptional communication. We have a reputation for paying our business partners per agreed terms…not when we are paid by the customer. Is the company expanding its selfperforming model? Yes, we continue to grow and state, by state, we are working toward our founders’ goal of providing self-performing facility maintenance repair/resolve in all continental U.S. states. We have just completed the necessary paperwork to expand into Arizona. Our next growth opportunity will be Texas and Colorado. Is MaintenX a 24/7 operation? At MaintenX, we never close. Also, no matter the time, the processes that we deploy to manage our clients’ issues do not change. There is always a service manager working to oversee our technician’s or business partners work. How does the company ensure a technician’s work maintains the company’s standard of quality? At MaintenX, we understand that clients care deeply about how the work is done, that it’s work done safely and that the final resolve is performed according to worldclass standards. To ensure we meet these expectations, we have made investments in a full-time field service quality manager and a full-time field safety manager. Our field service quality manager performs audits of completed work to ensure the work is done properly and meets the MaintenX quality standard. Our field safety manager performs unannounced visits to our technicians while they are working in the field. He makes sure that all safety and OSHA safety standards are being met.
NOVEMBER/DECEMBER 2019
CHAINSTOREAGE.COM
11/11/19 10:39 AM
SHOP TALK tions include magic shows, baby doll adoptions, build-your-own race cars and an FAO Schweetz candy shop. … REI has gone big on experiences and rentals. The outdoor gear and apparel co-op unveiled a new store concept that combines merchandise, guided outdoor experiences and equipment rentals under one roof. Located in North Conway, New Hampshire, the 24,779-sq.ft store is designed as a launching pad for outdoor activities — a place where people of all levels of expertise can gather to plan their trip, pick up rentals or a new piece of gear, take a class or workshop, or sign up for a guided outdoor experience.
Nordstrom
Trending stores: Nordstrom’s long-awaited flagship for women in New York is sleek and modern, with a glass wave façade that floods the seven-level, 320,000-sq.-ft. store with natural light. The merchandise assortment includes a curated offering across categories and price points. Many brands have their own pop-ups or in-store shops, including Nike, whose space is designed as the ultimate women’s sneaker boutique. The two-level beauty department is Nordstrom’s largest ever, with more than 100 brands, 16 shop concepts and a full-service spa. And with seven different food and beverage outposts, shoppers are unlikely to go hungry. … Gap Inc. opened the first store for its direct-to-consumer premium men’s activewear brand, Hill City, which the retailer launched about a year ago. The 12-month pop-up is in San Francisco’s Hayes Valley neighborhood. …. Manhattan’s busy Penn Plaza is the site of the first-ever StarbuckPickup store. The new format is dedicated to mobile orders, with the mobile order & pay feature on Starbuck’s app serving as the primary ordering and payment method for customers. … The maker of what it calls “the world’s most comfortable shoes” is ramping up its brick-and-mortar presence. Allbirds, an eco-friendly footwear brand founded online, plans to open 20 stores in 2020, bringing its total store count to about 35 by yearend. … Major League Baseball will open a “state-of-the-art” retail destination in midtown Manhattan in summer 2020. The two-level, 17,000-sq.-ft. store, the league’s first permanent retail location in the U.S., will offer a wide assortment of officially licensed products from all 30 clubs and authenticated game-used memorabilia. Legends Project Development is overseeing the design and construction of the space, which will “bring the game of baseball to life.” … Selfridges continues to push the envelope of department store retailing. The company is opening a three-screen movie theater, complete with an underground bar, inside its iconic store on Oxford Street in London. The move will make Selfridges the first department store in the world to house a permanent theater. Selfridges London is also to home FAO Schwarz’s first store in Europe, a 22,000-sq.-ft. in-store “flagship.” The shop features FAO’s most iconic elements, including the signature dance-on-piano, greeters dressed as toy soldiers and clock tower. Other attrac-
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STORE SPACES
H&M Goes ‘Hyper-Local’ By Marianne Wilson H&M’s new flagship in Berlin offers more than clothes. The Swedish fast-fashion giant opened its first “hyper-local” flagship in Berlin, in the city’s trendy Mitte Garten creative district. The approximately 3,300-sq.-ft. space is one of H&M’s smallest locations to date. It has a boutique-like feel, with pale green walls, vaulted ceilings, and wood and white shelving. The store blends the digital and the physical. Two tables are outfitted with Microsoft Surface Studio 2 styling touchscreens that allow customers to browse H&M’s complete collection and build an outfit. Customers can call for assistance from buttons in the smart fitting rooms. Customers, store employees, office staff and management are all connected to a system via an internal application that is based on Microsoft Teams and PowerApps. It is linked to a wearable for notifications and alerts (such as a call from a fitting room) that employees wear on their wrist. Via the app, H&M’s employees can, among other things, receive updates on, for example, new collections, trends, and scheduling. The in-store merchandise mix is highly curated and targeted to appeal to the local clientele, with fashions drawn from H&M’s main collection and select external brands (most of them Berlin-based) along with vintage pieces. More than a store, H&M Mitte Garten has a regular schedule of events such as lectures, fashion talks and yoga. It also boasts a café, a garden and a showroom space where upcoming trends and looks will be presented to customers before making their store debut. “It’s [the store] a test for us as a global retailer to elaborate around how we can be more personal and locally relevant,” said Anna Bergare, business development, H&M Laboratory, where the retailer tests new concepts and technology.
Employees wear a connected bracelet that links them to an internal store app.
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CHAINSTOREAGE.COM
11/11/19 10:35 AM
TECH VIEWPOINT
It’s hard to believe that I came back to Chain Store Age as technology editor in January, and already the year is almost over. The past 10 months seemed to go by in a blur, and yet so many important and disruptive trends emerged in the world of retail technology. There is no way to reflect on all of them in my allotted space, but here are my thoughts on three trends from 2019 poised to continue disrupting retail in 2020 and beyond.
features such as Instagram@shop, an assortment of shoppable products curated by a team of Instagram editors. In addition, Instagram enabled a small group of Instagram “creators” (such as Kim Kardashian West, Kylie Jenner and Kris Jenner) to tag products in their posts, making the products instantly shoppable. Instagram also piloted a new instant product launch notification service that enables consumers to set reminders for the launch date, preview product details and buy a product as soon as it is available without leaving Instagram. Fellow visually oriented social network Pinterest also introduced several new social shopping features in 2019. These included personalized shopping hubs at the top of users’ home feeds, an updated shopping section that enables users to browse entire product catalogs from companies and click directly to the checkout page on the retailer’s site, and “Shop a brand,” a new dedicated section from retailers that Pinterest is starting to roll out beneath product pins.
• Delivery — minus the driver Retailers piloted a wide assortment of automated delivery vehicles throughout the year. In January, Amazon introduced a public test of Scout, a sixwheeled, automated robot which makes deliveries while traveling sidewalks at a walking pace. Other self-navigating delivery robot pilots launched this year included a device called the FedEx SameDay bot that FedEx rolled out with Walmart and Target, as well as an autonomous delivery device called Serve that Postmates tested in Los Angeles. Self-driving autos, trucks and vans were also all the rage in delivery during 2019. Pilots using self-driving vehicles from a slew of manufacturers, ranging from start-ups to “Big Three” automakers, sprang up at retailers and delivery providers including Walmart, Kroger, UPS, Stop & Shop, DoorDash and H-E-B. In October, Walgreens made a big splash by partnering with Google and FedEx Express in the first-ever “store to door” pilot of dronebased deliveries in Virginia. The year also saw Amazon unveil a new drone model it plans to use for Prime Air deliveries in 30 minutes or less. Other big-name retailers that publicly explored the potential of autonomous drones as delivery devices included Walmart and CVS (in partnership with UPS).
• Furniture virtually comes to life As a high-touch, high-price, high-impact purchase, furniture has traditionally been a tough sell online. However, several retailers attempted to provide digital shoppers with a realistic view of furniture products, including how they would look in the customer’s own personal space, using augmented reality (AR) and virtual reality (VR) technology. La-Z-Boy launched a 360-degree product viewer with 3D product configurator, enabling consumers to virtually customize and explore products with 360-degree product spins, as well as 3D room planner solutions for customers, associates and designers. Bob’s Discount Furniture and Amazon also introduced VR-based 3D online room planning tools. Meanwhile, Ikea rolled out a new AR app that enables users to enter the dimensions of rooms in their homes and then place realistic digital images of home furnishings into virtual representations of those rooms. Customers can directly purchase items after viewing them from the app. What new disruptive retail technology trends will emerge in 2020? One likely contender is included in our cover story, and I can’t wait to see what the year brings.
• Social Retail 2019 was also a year where social media became more of a transactional platform. Instagram led the way by rolling out direct online shopping
Dan Berthiaume dberthiaume@chainstoreage.com
2019: Three Trends That Disrupted Retail Tech
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TECH Q & A
Customer Experience: Capturing the Big Picture By Dan Berthiaume Your customers are on a journey and need a good experience every step of the way. Customer experience management technology provider SMG helps retailers listen to their customers and act on shopper feedback in real time. Chain Store Age recently spoke with Brian Dennis, senior VP, customer engagement, SMG, about how retailers can deliver the type of experience that keeps modern, omnichannel customers coming back. What are the top two things retailers should focus on to evolve and enhance their experience management program? It’s important for retailers to truly understand the entire customer experience [CX] journey. Customer service is simply one aspect of that journey. For example, if you place an order over the phone to be picked up in a store and the person you are speaking with is friendly and knowledgeable, that is good customer service. When you arrive to pick up your order at the store and it’s there, is accurate, and you’re in and out quickly, that is a good customer experience. This “total view” of the customer experience is what retailers should dial in on as they evolve their experience management program. The two things they should focus on is capturing feedback in real time and leveraging data to provide actionable insights. The data needs to be in a very structured format that allows quick interpretation and the ability to act on it in a meaningful way so it can be measured against business results. How should experience management teams optimize insights from a growing number of listening channels? From a program design standpoint, it’s really about putting disparate datasets in dialogue with one another to make sure different listening channels don’t get siloed within different departments. We sometimes see a CX program get cast as an “operations responsibility” or a “marketing effort.” What that really means
for most people is that it's “someone else’s job.” To break down those walls and bring the program up to the enterprise level, we partner with brands to establish a crossfunctional steering committee in the early days of the program. By gathering internal stakeholders from different areas of the business, brands are more likely to develop a program strategy capable of impacting the entire company, find innovative ways to sync up improvement efforts, and ensure the right people are in the room when opportunities arise. From a technology standpoint, again, it’s about capturing feedback across channels in real time and reporting on it in a single platform that’s both intuitive and actionable. Which is more important, consistent experiences across channels, or personalized experiences for every customer? In the prior five to seven years, delivering a consistent experience probably ranked higher on the importance scale among consumers. However, delivering personalized experiences has quickly caught up as the customer journey has become shaped more and more by digital channels — and both are equally as important today. Customers have now come to expect this frictionless experience from the brand and demand a seamless experience as they cross the different channels within that brand. How can SMG uniquely help retailers? SMG's core differentiator is our unique partnership model. Unlike SaaS companies
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or CX research firms, SMG combines platform technology and professional services. There are SaaS providers with data collection and reporting technologies that will serve any industry. However, we've found that there can be a disconnect between platform providers and platform users, which often leads to cumbersome, check-the-box activities for field teams instead of useful tools geared toward end-user actionability. On the other end of the spectrum, some companies choose to partner with research firms that specialize in insights but rely on third-party suppliers for technology needs. Sometimes the SaaS and insight vendors partner together, but that can be expensive and inefficient. SMG brings the best value to leaders of consumer insights, analytics, and customer/employee feedback teams. We're unique because our client insights, technology and research teams all speak your language. They sit down the hall from each other and collectively understand what brands are trying to accomplish with their feedback technology and data. Instead of being another vendor to manage, SMG brings thought leadership, adds to existing competencies and enhances their brain trust. And our clients value the expertise we're able to provide to their programs. In fact, we owe our growth to the loyalty of our clients and their willingness to refer us — the source of 50% of our new business each year.
NOVEMBER/DECEMBER 2019
CHAINSTOREAGE.COM
11/11/19 10:34 AM
TECH
Puma Powers Up By Dan Berthiaume
Puma has opened a massive flagship in New York that brings products to life with digitization. The technology-infused, two-level 18,000-sq.-ft. store, located on Fifth Avenue in Manhattan, makes a dramatic brand statement, with double-height storefronts spanning across 160 feet of wraparound frontage. Along with an array of services, digitally enabled experiences and a high level of customization, the flagship offers interactive displays and optimized stock. Puma is leveraging front- and back-end technology from Internet of Things (IoT) platform Evrythng and label solution provider Avery Dennison Corp. to create a connected store experience in the space. Customers scan a QR code on a display sign with their smartphone when they enter the store. They can then access dynamic experiences by scanning a unique QR code on each displayed Puma product using their smartphones. The QR code triggers an augmented reality experience featuring the Puma mascot, allowing customers to take a selfie with the image of the wild cat. Customers then are led through the store, scanning QR code displays for interactive experiences that ultimately lead them to the second-floor basketball section. Upstairs in the basketball section, different styles of Puma basketball shoes are displayed and tagged with unique QR codes. Customers scan the codes to experience unique AR scenarios. Every Puma product in the store is also now digitized with an Evrythng Active Digital Identity to connect them to the web. Consumers scan a product’s unique QR code with their smartphone to access the item’s product detail page on the Puma e-commerce site and can review product details and/or purchase online.
In addition, RFID technology is integrated into each product label, enabling Puma to optimize stock efficiencies and cut down on waste, while also providing a pathway toward a checkout-less, “graband-go” transaction experience. Utilizing RFID, Puma expects to increase the store’s inventory accuracy to around 99%, while also providing last-minute inventory replenishment and reducing excess inventory and outof-stocks. The technology also provides an identifier to help highlight counterfeit returns. Customers can also view products in alternate colors and styles through interactive displays that utilize Avery Dennison’s RFID technology to bring up alternative product selections based on the item the consumer tries on. Or they can press a button to notify an associate they need help at the display, sign up for in-store events, and use it as a point of sale in the future. Here’s a sampling of some of the store’s highlights.
• A customization studio features new residencies with artists and designers every two weeks. Shoppers can customize and personalize Puma footwear, apparel and accessories using paints, dips, dyes, patchwork, embroidery, 3D-knitting, laser printing, pinning, material upcycling and other creative mediums. • Highlighting Puma’s involvement with racing and motorsports, visitors can hop into professional-grade F1 racing simulators and virtually race down the streets of New York City. • Soccer fans can test the latest Puma boots on the in-store simulator that mimics the pitch of the legendary San Siro Stadium while being virtually coached by the company’s brand ambassadors and professional footballers. • Shoppers can relax in the basketball zone, which features stadium seating and large screen NBA 2K gaming experience.
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CHAIN STORE AGE -FAST SAFE EFFICIENT 2/3 July November_AD 3/8/19 10:08 AM Page 1
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DOCK LIFTS VERSUS TRUCK TAILGATES: Tailgates and their maintenance are more expensive than dock lifts. Tailgates reduce truck payload and increase vehicle wear. Tailgate platforms are smaller and do not offer handrail protection available on dock lifts, more risk for operators and cargo.
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TECH
Retail Tech Trends Privacy concerns will impact retail tech in 2020
By Dan Berthiaume Privacy, transparency and speed all factor prominently in retail tech trends for 2020. Nielsen has released seven predictions for how technology will affect retailers and their CPG partners in 2020 and the decade beyond. The data analytics company anticipates that 2020 will represent an inflection point for trust and transparency, 5G, and time to purchase in the U.S. retail and consumer landscape. High-level predictions include the following:
1
Privacy concerns and misinformation will threaten brand credibility. Big retail and CPG brands will have
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to confront and counteract the consequences of social network attacks, such as activists using “deepfake” (the realistic superimposing of images and videos) to destroy the credibility of a brand.
2
Transparency will be tomorrow’s brand currency. Interest in what was previously considered “behind-the-scenes” information about a company’s operational footprint will become mainstream topics of conversation. This will create opportunities for companies across industries to grow trust and authenticity while delivering on the need for urgent action on climate change.
3
Manufacturers will produce locally to win globally. With the dual impact of tariffs and consumer preference for locally sourced products and waste reduction, manufacturers will face increased pressure to produce locally and import fewer goods. Supply chains will continue to be realigned to deliver on consumers’ increasing desire for sustainable products.
4
Smart supply chains will anticipate and react to consumer demands. As retailers increasingly focus on owning the supply chain from start to finish and grow their private label brands,
11/11/19 10:33 AM
TECH
5
5G will revolutionize the Internet of Things (IoT) for retail. With 5G, the IoT will finally become a mainstream reality, providing end con-
sumers with access to more data with virtually no response delay. This will mean consumers are less limited in their ability to come to an informed decision about retailers and brands they want to patronize. Meanwhile, 5G will transform smart packaging and delivery through applications like smart sensors that can collect real-time data to ensure viable internal package conditions for food and medications.
6
Time and trust will dictate consumer relationships with retail. From pop-up shops with cashier-less payment to automated warehouses in urban centers, fusing the overall consumer experience with smarter, intuitive tech is the future. Speed and convenience will drive consumer behavior to the millisecond.
7
Try-before-you-buy will come into consumer homes. Augmented reality (AR) technologies will improve, and 5G will indirectly reduce barriers to entry, based on the shift to cloud and enablement of smartphones to be AR devices. Mobile, AR-based buying will reach a critical mass — and increase pressure on brick-and-mortar retailers to keep consumers coming back with experiential benefits. “The true value of today’s emerging technologies has remained in the hype cycle for much of retail and CPG, but the dawn of a new decade will see a rapid acceleration in meaningful use cases,” said Jeanne Danubio, president, Nielsen Connect, North America. “From the transformative effect of 5G to the increase in frictionless commerce — all underpinned by trust and transparency — the consumer landscape will become increasingly complex.”
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