CSA_11-2020

November/December 2020

Walmart’s Digital Redesign Retail Real Estate’s New Era Making Indoor Air Safer

2021 Issues, trends and insights for the coming year

+

6

from the editor’s desk

22

41

On the Level: A real estate column

Contents

tech viewpoint: a retail tech column

VOL. 96 NOVEMBER/DECEMBER NO. 6

COVER STORY

8

RETAIL 2021: THE YEAR AHEAD A special section on what retailers can expect in the coming year, with insights and trends regarding technology, brick-and-mortar, the economy and more.

LOOKING AHEAD TO

2021 Issues, trends and insights for the coming year

18

18 20

Walmart to give nearly 1,000 stores a digitally enabled design makeover.

Expert Insight: Significant opportunities exist for retailers that retool their operating model and customer experience.

24

Takes from the Top on Retail’s New Era Omnichannel.

Tenant communications.

Logistics. Leading retail real estate execs delve into the topics that will remake retail in the coming decade.

CSA (USPS 054-410; ISSN 0193-1199), is published bimonthly by EnsembleIQ, 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631, on a controlled basis to qualified retailer titles and architects.

Real estate and shopping center owners and developers $75 per year. All other non-qualified in the United States: $80 one year; $155 two year; $14 single issue copy; Canada and Mexico: $105 one year; $185 two year; $16 single issue copy; Foreign: $115 one year; $215 two year; $16 single issue copy. Periodicals postage paid at Chicago, IL and additional mailing offices. POSTMASTER: Please send address changes to CSA, Circulation Fulfillment Director, 8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631. Subscription changes may also be emailed to contact@chainstoreage.com, or call 1-877-687-7321. Vol. 96, No. 6, November/December 2020. Copyright ©2020 by EnsembleIQ. All rights reserved.

CHAINSTOREAGE.COM

NOVEMBER/DECEMBER 2020

3

Contents VOL. 96 NOVEMBER/DECEMBER NO. 6

40

STORE SPACES

36

Shoptalk: Dollar General launches new retail concept, Popshelf.

36

TECH

38

Ionization technology helps center reduce spread of COVID-19.

39

Q&A: Professional Retail Services’ Bianca McNamara discusses facility maintenance trends.

42

Rakuten Ready’s Jaron Waldman examines how the pandemic is accelerating consumer demand for mobile ordering and pickup.

40

Trending Topics: Lidl U.S. upgrades store ventilation systems, Sam’s Club expands fleet of floor-cleaning robots and Home Depot makes largest renewables procurement yet.

4

NOVEMBER/DECEMBER 2019

CHAINSTOREAGE.COM

D U S T BA R R I E R SYS TE M

Stay Open for Business During a Renovation!

ZipWall – A Temporary Dust Barrier in Minutes ®

Up to 20' high  Protects store from dust  Conceals messy worksite  Easy to set up and take down 

zipwall.com

info@zipwall.com

800-718-2255

FROM THE EDITOR’S DESK

CHAIN STORE AGE

• Five Below: The tween and teen value retailer has joined the exploding esports craze, partnering with Nerd Street Gamers, the national network of esports facilities and competitive gamer events, to open esports gaming facilities connected to it stores.

Pandemic Doesn’t Stop Retail Innovation It’s been some year. The events of the past 10 months have tested the mettle of all businesses, and physical retail has been hit hard. Indeed, the consumer media is chock full of stories proclaiming everything from the demise of department stores (a point on which I disagree) to the transformation of malls (something that was happening long before the pandemic struck).

Amid all the doom and gloom, it’s easy to assume that retailers aren’t doing anything innovative in the physical space as they go “all in” online, investing in the expansion of contactless shopping, BOPIS and the like.

Sure, digital is a top priority and it should be. But savvy retailers are also making physical investments that go beyond necessary repair and upkeep or even the standard update. Smart ones are also investing in new formats and innovating in ways both big and small.

Here is a sampling of some of the more recent ones that have caught my attention.

• Rite Aid: The pharmacy retailer’s new “store of the future” design upends the traditional drug store experience by bringing pharmacists out from behind the counter (typically in the rear of the store) and into the center of the space, enabling them to be more easily accessible to customers. It’s a move that capitalizes on the sector’s most valuable asset, leveraging the high level of trust consumers already have in pharmacists.

• Dollar General: The extreme-value discounter’s new store concept, Popshelf, is targeted at a more upscale shopper than its namesake stores — but one just as appreciative of a bargain. The constantly refreshed, non-consumable merchandise mix ranges from seasonal décor to beauty essentials to party goods and crafts, with 95% of the items priced at $5 or less. The interior is bright and colorful, with bold graphics.

• Michaels: It’s all about the experience at the arts and crafts retailer’s new format, which includes dedicated square footage where customers can take classes, watch an instructor-led project on display screens or simply use the space and its supplies — all free of charge. There are “inspiration and trend” hubs in key departments where customers can touch and try out products prior to purchase.

CHANNELS chainstoreage.com > COMMERCE > CUSTOMERS

An EnsembleIQ Publication

Corporate Office: 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631

Vice President, Group Publisher, CSA, SPECS Chairman Gary Esposito (212) 756-5118, gesposito@chainstoreage.com

Editor Marianne Wilson

(212) 756-5261, mwilson@chainstoreage.com

Technology Editor Dan Berthiaume

(978) 994-1881, dberthiaume@chainstoreage.com

Real Estate Editor and Manager Al Urbanski (646) 957-5224, aurbanski@chainstoreage.com

Online Editor Jennifer Mosscrop

(212) 756-5264, jmosscro@chainstoreage.com

• Dick’s Sporting Goods: The country’s largest sporting goods retailer has been busy expanding in assorted ways, including launching two new clearance store concepts and opening pop-ups dedicated to Calia by Carrie Underwood, the fitness and lifestyle brand created in partnership with superstar Carrie Underwood. It’s also experimenting with in-store Soccer Shops, which promise a high level of service from experts trained to help customers find the equipment they need and the right fit.

• Asda: Across the pond, U.K. grocery store retailer is testing a format designed to help shoppers reduce, reuse and recycle with a minimum of fuss. Among the features: 15 huge refill stations where more than 30 household staples are sold in refillable format, 53 fresh produce lines that are sold loose and unwrapped and on-site recycling for items that are difficult to recycle in curbside collections.

• Target: The best of two worlds: mass and prestige beauty brands. That’s what Target will be offering shoppers via its blockbuster partnership with Ulta Beauty, which will see the opening of hundreds of branded in-store Ulta shops at Target stores.

Ulta will also give Target a service boost via the beauty retailer’s popular GlamLab virtual try-on tool.

Marianne Wilson mwilson@chainstoreage.com

6

Midwest and South Sales Manager Michael Morrissey (312) 645-5072, mmorriss@chainstoreage.com

East and West Sales Manager Lise Slaviero Groh (610) 212-7997, lslaviero@chainstoreage.com

Program Director Deena AmatoMcCoy (516) 208-9483, damccoy@chainstoreage.com

Event Director Melissa Murphy

(212) 756-5059, mmurphy@chainstoreage.com

Event Coordinator Rita Ruzalski

(212) 756-5268, rruzalski@chainstoreage.com

Marketing and Event Administration Coordinator Farida Batuta (212) 756-5269, fbatuta@chainstoreage.com

Vice President, Production Derek Estey 877.687.7321, destey@ensembleiq.com

Creative Director Colette Magliaro 973-607-1320, cmagliaro@ensembleiq.com

Art Director Regina Loncala rloncala@gmail.com

Production Manager Patricia Wisser (973) 607-1322, pwisser@ensembleiq.com

SUBSCRIBER SERVICES/CUSTOMER CARE TOLL-FREE: 1-877-687-7321 FAX: 1-888-520-3608 contact@chainstoreage.com

Reprints & Permissions: Materials in this publication may not be reproduced in any form without permission from the publisher.

Contact Wrights’s Media at EnsembleIQ@wrightsmedia.com, or call (877) 652-5295.

Corporate Officers Chief Executive Officer Jennifer Litterick Chief Human Resources Officer Ann Jadown Chief Financial Officer Jane Volland Chief Innovation Officer Tanner Van Dusen Executive Vice President, Events & Conference Ed Several Senior Vice President, Content Joe Territo

NOVEMBER/DECEMBER 2020 CHAINSTOREAGE.COM

COVER STORY

A Year of Recovery

By Dan Berthiaume

2021 THE YEAR AHEAD

Amid an ongoing pandemic that has upended the retail industry and accelerated the pace of transformational changes, retailers both large and small are hopeful that 2021 will bring with it — eventually — a return to some form of normalcy.

That said, many unknowns are likely to carry forward, especially in the beginning of the year, from questions about another stimulus package to the availability of vaccines.

In this special section, Chain Store Age looks at some of the key trends and issues that will impact retailers in the coming year, from tech trends to the outlook for brick-and-mortar stores to the economy.

8

T

signaling that their needs were changing for a long time, and this crisis has made the message clearer than ever,” said Menon.

“Brick-and-mortar brands will expand their online footprints to meet customers where they are now, and e-commerce brands will develop smarter and more agile logistics and fulfillment strategies to compete. Everyone will likely have to play a balancing act as they weigh tradeoffs among convenience, speed of transaction, value to customer and cost of operations.”

Menon also explained how retailers should utilize data analysis to support effective omnichannel marketing programs that integrate their brick-and-mortar and digital experiences as recovery efforts begin in the new year.

“Customer information collected on their websites will allow retailers to develop more robust and targeted customer engagement, and even more importantly, reengagement and loyalty, tactics and smarter real-time forecasting,” said Menon. “Use this rich data to analyze your shoppers’ behavior and create customized incentives for every stage of the customer experience.”

Midwestern convenience chain Casey’s General Stores is building its own “new normal” operational strategy around meeting customer needs. This has included offering curbside pickup chainwide and expanding an on-demand, contactless delivery program with third-party platform DoorDash from a 30-store pilot in Nebraska to about 600 stores. Casey’s plans to continue focusing on of consumers have providing safe, convecome to expect nient omnichannel services for customflexible shipping and ers in 2021. fulfillment options “In terms of such as curbside a ‘new normal,’ pickup or BOPIS our sense is these (Salesforce “State of the consumer behavConnected Consumer” iors are here to stay,” survey, Oct. 2020) commented Chris Jones,

he seemingly endless year of 2020 is finally coming to a close, and the dawning new year holds potential for retailers that apply the right technology strategy.

On its surface, 2020 has been the year that consumers fearful of exposure to COVID-19 took a large part of their shopping online.

However, many retail executives and experts say that the pandemic merely accelerated existing trends toward e-commerce.

In addition, dramatic growth in the usage and availability of omnichannel services such as buy-online-pickup-in-store (BOPIS) and curbside pickup suggests that consumers are not abandoning physical stores, but rather utilizing them as a convenient fulfillment mechanism for a seamless shopping experience that spans physical and digital channels.

Experts also caution that consumers’ desire for omnichannel convenience extends into the supply chain – both in terms of having desired products readily available and also of having an easy means for returning items as needed. Consequently, retailers seeking to recover from the difficulties and losses of 2020 in 2021 should base their technology approach around meeting customer demand for seamless convenience that will most likely outlast the duration of COVID-19.

Here are three critical technology areas retailers should focus on in 2021 – omnichannel shopping, supply chain visibility and returns management.

OMNICHANNEL SHOPPING According to Sree Menon, COO of ecommerce platform Tophatter Inc., one of the strongest differentiators between successful and struggling retailers in this era is the strength of their omnichannel strategy.

“Consumers have been

83%

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

54%

Casey’s chief marketing officer. “Curbside pickup and delivery have taken a twoto-three-year leap forward in the past six months. We plan to continue expanding delivery with other third-party platforms.

Everything we have done, we will be able to persist with further.”

Rich Minns, North America commerce leader, Capgemini, said retailers can improve the margin of omnichannel transactions such as BOPIS and curbside pickup by offering last-minute impulse purchase opportunities, introducing new items, and providing content-driven messaging to increase average order value (AOV).

“These could be features like utilizing a mobile app to notify when a customer has arrived and while the package is being brought out, the customer has a small limited number of items they can add to their order,” said Minns. “Or during that same wait time, the customer is greeted with a message and relevant content about new products that are now in the store. There are other ways to engage the customer through the shopping and pickup journey that can help boost these margins and offset the additional labor costs of BOPIS.”

SUPPLY CHAIN VISIBILITY With online shopping in overdrive, retailers must obtain better visibility into their supply chains to handle not only the influx of e-commerce orders, but a more personalized and segmented customer experience, advised Matthew Lekstutis, global practice leader, supply chain transformation, Tata Consultancy Services (TCS).

“We are not post-COVID-19, we are in a new beginning of the supply chain,” said Lekstutis. “Supply chain actions were previously driver-based or event-based. Now, supply chain actions are steered by factors such as what markets are open or closed and lockdown regulations. The economics of recovery are driving demand.”

As a result of all these accelerating trends, Lekstutis said the supply chain is CHAINSTOREAGE.COM NOVEMBER/DECEMBER 2020

of consumers say they are unlikely to purchase a product they want if the retailer has a poor or unclear return policy

at a “phenomenal Menon stated. “But inflection point” of course, this crethat will create ates additional chalwinners and losers lenges for retailers.” among retailers.

Retailers seeking (Pitney Bowes October 2020 consumer survey) He highlighted some to bolster their returns results of a recent TCS management capability survey of retailers. without making large invest“Half of retailers have increased ments in infrastructure may want to their market share since COVID-19 and investigate partnering with a third-party half have lost market share,” said Lekstutis. returns network. In many cases, these “Being resilient means if something fails, platforms allow retailers to process both you can rapidly find a new solution, or their own returns as well as products use intelligent or predictive technology to from other retailers, boosting foot traffic anticipate and sense what’s happening.” in stores.

Lekstutis cautioned that retailers need For example, office supply giant Staples to obtain this type of clear supply chain will turn more than 1,000 of its stores visibility on both the supply and demand across the U.S. into packageless drop-off sides, and not just upstream or downpoints for the Express Returns service stream, but on the shelf. from end-to-end return solution pro“Retailers now need to make real-time vider Optoro. Early in 2021, participating decisions about dispositioning and disStaples stores will be part of a nationwide tributing products,” he said. “They must network of physical locations that accept respond to changes in the marketplace in-store returns for online consumers. with automation and collapse their supAs part of the program, Staples will be ply chain response time with automation able to seamlessly process in-store returns and analytics.” of its own products, as well as items sold Menon’s supply chain commentary by other retailers, using QR code techconcurred with Lekstutis’ advice. nology from Returnly. Simon Malls and “Retailers should be prepared to invest FedEx both engage in a similar in-store in their end-to-end supply chain,” she omnichannel reverse logistics program said. “Do customers want to browse with the Happy Returns Return Bar soluonline and buy in-store? What are the tion, and both Walgreens and Nordstrom trade-offs between different tiers of shipaccept returns of online purchases at ping and in-store pickups? Optimize for stores in collaboration with the Narvar real-time communication between and Concierge network. visibility into your supply network and to Of course, retailers also need to have your shoppers.” a strategy for efficiently clearing out returned items from their inventory as RETURNS MANAGEMENT quickly as possible.

As customers permanently shift to a more “Returns can kill a business, so retailers digitally oriented shopping approach, need to find channels to liquidate returns retailers need to prepare to offer greater and move excess inventory,” advised flexibility and ease in returning products.

Menon. “Many of the traditional brick“It just makes sense that the more and-mortar options like T.J. Maxx and someone buys online, the more they will Marshalls don’t have online presences, need to return or exchange, since they so there’s a big opportunity for fresh couldn’t experience it in person first,” perspectives.”

9

COVER STORY: LOOKING AHEAD

Brick and Mortar Forecast Focus on right-sizing and making stores feel safe

By Connie Gentry

A

ccelerated adoption. That’s how industry analysts describe 2020’s integration of brick-and-mortar with online sales. Multi-year plans to transition offline and online into an omnichannel presence came to fruition in a matter of months, a momentum born of necessity that effectively positioned retailers that ‘got it’ to enter 2021 poised for reinvention.

“Something positive coming out of COVID-19 is that retailers finally understand omnichannel is about functioning as one; you can’t think about the online business and physical store as two [entities],” said Lynn Gonsior, partner and COO of retail brand experience and design firm ChangeUp. “Retailers are thinking more holistically about the customer journey and how they have to deliver consistently across both online and offline.”

For years, the talk has been about giving consumers what they want, where they want it. That hasn’t changed. But what few saw coming was that the “where” might be curbside — a trend that speaks to the intrinsic value of having a brick-and-mortar foundation to support online sales.

“We’ve all had a lesson in improv during COVID,” Gonsior added. “There’s more of a mindset for experimentation, and more integration across channels. We’re seeing more retailers do a better job around curbside service.”

Craig Johnson, president of Customer Growth Partners, noted that online sales were 18% of total retail sales in 2019, a measure that would typically increase about 1 point a year.

“At the peak of COVID closures this year, the online penetration went from 18% to 26%,” he said. “Since then there’s been a little bit of a ratchet factor so it tucked back to around 24 or 25%. What that means is we’ve packed six years of growth in online penetration into six months elapsed time.

It’s a sea change; and now omnichannel is a must-have — it’s like table stakes just to get 10

A critical aspect of rightsizing is footprint optimization within the box, a move to efficiency that ideally is tailored to meet the unique expectations of consumers in each individual market.

in the game.”

With regard to 2021, Johnson said brick-and-mortar retailers must do three things: optimize online, gain a better understanding of their customers’ needs and preferences and “right-size their store fleets.”

“A lot of retailers were over capacity,” he said.

“They have too much retail square feet facing too few customer feet. And a lot of retailers, particularly apparel and department stores, have been in denial about being over capacity versus demand.”

Johnson’s advice: Unless you are expanding into a new geographic area, concentrate growth on the online side and increase productivity through an omnichannel hybrid.

“Look at Home Depot, they haven’t expanded in the U.S. in the last couple of years,” he said. “Their growth comes from increased productivity at existing stores and migrating customers to online or that hybrid model [where customers buy online and pick-up at the store].”

What hasn’t changed is the real estate that is at greatest risk of failing: B and C malls around the country, populated with weak tenants and department stores that are struggling.

In its Predictions 2021: Retail report, Forrester predicts that the savviest mall operators will see a renaissance in 2021 — but with new business models and purpose in place.

“We predict mall operators will change tenant fee agreements to include online sales that involve in-mall fulfillment, such as “buy online, pickup in-store,” on top of traditional in-store sales,” the report stated. “And mall operators will attempt to take more control of their destinies (and their custom-

ers’ mall experience) by acquiring parts of their tenant portfolio, such as Simon Property Group and partners buying mall stalwarts such as Brooks Brothers and Forever 21.”

(At press time, a U.S. bankruptcy court approved the sale of J.C. Penney to Simon and Brookfield.)

RIGHT-SIZE EVERY DETAIL “This is a forced right-sizing,” Johnson added. “Although painful, the industry will emerge much healthier and more flexible than in the past. In its own crazy way, this will have a pretty positive outcome.”

Ethan Chernofsky, VP of marketing at Placer Labs, is also optimistic about brickand-mortar retail in 2021, and about the concept of right-sizing.

“As brands are able to look at data sources and understand where audiences are coming from, they can right-size intelligently,” he said. “Just cutting stores can hurt the situation and not solve the problem. Walmart closed two supercenters last year, not because they were underperforming but because they could serve the same customers from other stores. That is what right-sizing is all about: How you serve as much of your audience as possible with as few stores and as little cost as possible.”

Another critical aspect of right-sizing is footprint optimization within the box, a move to efficiency that ideally is tailored to meet the unique expectations of consumers in each market.

“The idea of a cookie cutter [format] will go away this year,” Gonsior predicted. “We need to be more flexible in how we think about what stores are, how they service the consumer, and how they deliver a meaningful experience.”

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

We Self-Perform!

SUPER SERVICE TEAM

U B

COVER STORY: LOOKING AHEAD

Finding balance is going to be critical, acthe two big steps I see happening better in cording to Gonsior. Retailers need to look at 2021,” Jaggi said. a store’s square footage and consider proporA sense of safety about returning to shoptions of the front of house and back of house. ping is a critical component for brick-and“If a store functions as a distribution center mortar retailing, but it is one that is conbecause the retailer is making deliveries to trolled largely by extenuating circumstances. local customers or doing curbside pickup, Jaggi suggests the speed at which workers maybe the footprint where people shop is return to the office will be a big indicator for smaller and more space is dedicated to the the broader retail recovery across the U.S. back of house,” she said.

“Recovery for retail may be spotty, we’ll Right-sizing applies to product assortment likely see better recovery in the Sunbelt and inventory control as well. and in suburban markets before we see it Antony Karabus, CEO, HRC Retail in urban and mass-transit markets,” he Advisory, predicts 2021 will be “incredibly said. “I believe August will be a significant uneven, with a huge polarization between point in the 2021 calendar — major line the winners and the losers. of demarcation between recovering and “The big difference is that the winners will recovered will be next August.” have very strong omnichannel capabilities,” HUMANIZE THE STORE Karabus said. “Winners will also have very strong inventory management capabilities EXPERIENCE For the better part of 2021, what has become and create a reason for people to come to the norm for retail settings will remain in the store, whether it’s a treasure hunt or place: masks, social distancing, limited fresh new merchandise. You can’t have stale interaction and contactless transactions. goods in your store and think people will What will be different is that retailers will come, because they won’t.” increasingly find ways to humanize the store Karabus cited Dillard’s as having done a experience despite the pandemic protocols. good job refreshing its inventory.

Even before 2020 and what she calls “the “They did massive markdowns in the second great acceleration and resetting of retail,” quarter to clean out inventory,” he said. “The Joan Insel, VP of global retail strategy at Calonly way department stores are going to surlisonRTKL, said the industry was “already vive is if they have an incredibly strong digital moving to a health and well-being approach presence, an incredibly strong omnichannel to store design, making stores welcoming, capability, and merchandise that is fresh.” healthy, and smart.”

Naveen Jaggi, president, America, retail That’s even more important for 2021, advisory services at global real estate firm JLL, when retailers must convey a sense of believes the big success story for retailers in safety without creating a setting that 2021 will be how effective they are in feels sterile or cold. making consumers feel at ease, “Always approach your either shopping online or stores from a customin-store.

Retailers must er-first mindset, and “Stores will get convey a sense of think about all of smarter about the safety without creating the senses when seamless transia setting that feels sterile designing retail tion of product or cold. Bring in fresh air spaces,” Insel from online to whenever possible, create advised. store and they’ll Suggestions get smarter about ambiance with sound for the coming giving the cusand incorporate months are to tomer that sense of nonporous surfaces create openness safety to come into that reinforce and a feeling of hara store after they buy sanitary practices mony. Bring in fresh online, so fulfillment air whenever possible, as well as product mix are 12

create ambiance with sound and incorporate nonporous surfaces that reinforce sanitary practices.

“Have an edited assortment in stores so the aisles can be wider, and use lighting to create brightness, maybe even use lighting for subtle cues to direct people on where to stop and socially distance; it doesn’t always have to be a physical barrier,” Insel said.

Face masks actually create a “smile deficit,” she warned, which can affect mental wellness and leave a dubious brand impression. As a result, retailers should identify how store associates might show emotion or communicate positive feelings to customers.

Insel expects retailers will increasingly schedule private appointments for shoppers, particularly higher-end apparel brands.

“Consider how Ministry of Supply is doing individualized apparel with their special fabrics,” she added. “We want to get to this idea of personalization, and retailers have to figure out how to do that at scale.”

Placer Labs’ Chernofsky also believes appointment shopping will continue and become an even more significant part of offline retail, in part because it creates an opportunity for the retailer to balance their brand promise, brand identity and value proposition.

“Economic uncertainty will linger beyond the pandemic,” he said. “For a huge swath of retail serving the majority of consumers in the U.S., value is going to be incredibly important.”

Insel believes that retailers will be doing more than “selling product” as services become a point of differentiation for brick-and-mortar brands. And the consensus among the analysts CSA spoke with is that the services will involve people as much as product.

“Retail has proven time and time again to be successful when customer service is one of the anchors on which they pride their business,” said Jll’s Jaggi.

Jaggi noted that five years ago, Best Buy was watched as a retailer on the downside. But they spent millions of dollars on employee training and customer service, he said, and today they are a success story, which he credited to their customer service.

NOVEMBER/DECEMBER 2019

CHAINSTOREAGE.COM

ROOTED IN CHARACTER. BUILT ON EXPERIENCE. DRIVEN BY SAFETY.

Pine Ridge CM is an experienced national provider of both CM, GC and design build services. We demonstrate consistent professional construction standards to the project owner and deliver effective project management, functionality, on time delivery expectations including quality and safety best practices.

HOSPITALITY

RETAIL INDUSTRIAL & WAREHOUSING FOOD & BEVERAGE

We are successful in several vertical spaces and construct and deliver either single space or multi-location projects.

EDUCATION

AFFORDABLE HOUSING

PINE RIDGE IS A NATIONAL PROVIDER WITH OFFICES IN:

WILLIAMSPORT, PA NEW YORK, NY DALLAS, TX Introducing our new office in Dallas, TX!

pineridgecm.com

A warm Thank You to Chain Store Age for putting together an amazing SPECS 2020.

The Virtual Event was a huge success for networking, building relationships, and has opened doors to numerous leads and opportunities.

We look forward to the continued success that's this event brings Pine Ridge CM.

Follow us on social media

+1 570 505 3890 CHAINSTOREAGE.COM NOVEMBER/DECEMBER 2019

13

COVER STORY: THE YEAR AHEAD

Economic Forecast Retail poised for a return to normal in 2021

By Phillip M. Perry

R

etailers can look forward to an increasingly favorable operating environment in the coming year.

“Our current 2021 forecast is for 6.2% growth in core retail sales,” said Scott Hoyt, senior director of consumer economics for Moody’s Analytics, a research firm based in West Chester, Pa. (economy.com).

That growth is a substantial improveMoody’s ment over 2020, a year in which the Analytics is COVID-19 pandemic caused core retail sales to decelerate to 2.1% from forecasting 6.2% the 3.9% clocked for 2019. (Core growth in core retail retail sales exclude the volatile auto sales in 2021 and and gasoline segments.)

Driving the retail rebound will be a a 4% increase in strong housing market, a surge in corthe nation’s porate profits and the successful rollout GDP. of a vaccine. It all comes together to create international a stronger business climate. immigration, “The COVID-19 recession is over, and which will boost the the economy is currently in an early-cycle supply of labor and in turn the econoexpansion,” said Sophia Koropeckyj, manmy’s potential.” aging director of industry economics at With the economy firmly on an upward Moody’s Analytics. path, retailers will be assessing the psychological state of the nation’s shoppers.

ECONOMIC REBOUND Here, economists anticipate a slow but The more rapidly the economy expands, steady improvement. the greater the potential for wage increases “We are assuming a slight upward that can fuel retail sales. Moody’s expects trend in consumer confidence until we the nation’s gross domestic product to get a vaccine or an effective treatment, increase at a 4% clip for 2021. (The GDP, at which point it will probably move up the total of the nation’s goods and services, faster,” said Koropeckyj. is the most commonly accepted measure of Consumers are more willing to spend economic growth.) when jobs are plentiful and wages are That’s a welcome reversal from the previous rising. The pandemic caused a sharp year’s decline, expected to come in at 4% when uptick in the unemployment rate, which all the numbers are collected.

Moody’s expects to top 8.5% when 2020 Adding fuel to the rebound is the Joe numbers are finally tallied.

The months ahead should see some Biden presidential win, expected to buoy the improvement, with the figure expected economy in three areas. to decline to 7.8% by year end. Wage “Biden has proposed significantly more fiscal increases, for their part, should top 2.5% stimulus, which will pack a punch in the comfor 2021, a level higher than the 1.3% ing year as aggregate demand is still recovering expected for 2020 but too low to spark from the pandemic,” explained Koropeckyj. anything more than a gradual increase in “Second, Biden would not resume Trump’s tariff wars with China, which have acted as a spending. (Wage and salary income figtax increase for consumers.” ures exclude government payments such “Finally,” she added, “Biden will liberalize as the 2020 pandemic relief checks).

14

NEW DEAL Job and wage trends anticipated for 2021 suggest a gradual return to normal conditions. In the opening months of the year, as households continue to self-quarantine, indicators such as the number of business bankruptcies and the level of consumer confidence will help illuminate the future economic trajectory.

“The core unemployment rate, which excludes temporary layoffs, will gauge how much joblessness is attributable to permanent layoffs which leave behind long-lasting scars on the labor market,” said Koropeckyj.

As 2021 advances, retailers will be looking for increased certainty on matters such as market stabilization, access to qualified labor pools and international trade issues. But perhaps the most reliable economic indicator will be the rate of progress toward a cure for the not-so-hidden elephant in the room: the pandemic.

“Businesses will be concerned about the timeline of a vaccine,” added Koropeckyj.

“The path toward some semblance of economic normality hinges upon its development and widespread distribution. We anticipate the economy will regain its stride in the second half of the year, when a vaccine or treatment is assumed to be widely available.”

— Philip Perry is a New York-based business writer.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

532-PRS-

Our 4c’s To Diamond Level Service

- COMMITMENT - CONSISTENCY - CREATIVITY - COMMUNICATION

Experience The Brilliance

Nationwide Facility Maintenance & Specialty Construction (888) 834-2411 | Profretail.com

532-PRS-CHAINSTORE-AD.indd 1

10/29/2020 2:52:10 PM

COVER STORY: THE YEAR AHEAD

Adaptive Retail: Business Flexibility Will Be Key in 2021

By Jill Standish

R

etailers might feel they’ve experienced enough change in the last 12 months to last a lifetime. From pandemic disruption to economic uncertainty to changing consumer behavior to the ongoing climate crisis, this year has thrown up so many new challenges it can be hard to keep count.

However, those hoping that 2021 will bring a return to the world the way it was pre-pandemic are likely to be disappointed.

Many of the behavioral changes th pandemic catalyzed are expected to last much longer and some shifts will be permanent.

ADAPTING TO ONGOING CHANGE Accenture has called this the start of “the decade of the home,” as consumers significantly accelerate their use of digital services and recenter more of their social and working lives around the home environment. For retail, the long-term impact of this sustained increase in ecommerce coupled with lower store footfall is still only really sinking in.

In addition, the environmental, social and governance (ESG) agenda continues to grow in importance for this industry.

Sustainability, environmental and social issues (including movements like Black Lives Matter) are driving more and more consumer purchasing decisions. Employees and investors, too, are also paying much more attention to a retail brand’s ethical and environmental credentials.

While all this undeniably brings complexity to short-term business planning, there are significant opportunities for retail brands that are willing to embrace change, show flexibility, and ensure their organizations have enough agility to respond quickly to new circumstances.

Adaptive retail, in other words, will be the key to a successful 2021. But what does 16

that mean in practice?

There are three key factors to consider.

1

Use data to guide the business Adaptiveness is not an end in itself, but rather a means of ensuring you can sense change as it happens and respond effectively in good time.

In a retail context, this means making sure the business is getting up-to-date, accurate and insightful information on supply and demand.

Consider the analogy of flying an airplane in poor visibility. When you can’t see what’s coming, you rely on your navigation instrumentations to guide you.

Similarly, in retail, you need to know who your most valuable customers are, what they want, and where they live — and how that’s all changing in real time — to have any hope of adapting to high levels of uncertainty.

It means capabilities like linked data in the cloud, hyper-localized demand analytics, and smart forecasting based on machine learning are all now essential components of running a retail business.

2

shopping experiences.

Seamless customer experience across channels and touchpoints will be an even greater differentiator, especially for those brands that can translate the best parts of the “in store” experience into a digital context.

Evolving linear supply chains into more flexible and resilient supplier networks will also be vital.

Sustainability and ethical responsibility should be a central part of any retail strategy for the year ahead.

Adapt supply chains for extra digital demand Many retailers have already shown exceptional resilience and flexibility to manage the ecommerce surge seen throughout the pandemic. But this is no temporary spike. Digital demand is almost certain to stay elevated over the short term, and may do so indefinitely.

So retailers must continue investing in digital capabilities across their supply chain, fulfilment operations, and online

3

Demonstrate sensitivity and transparency Sustainability and ethical responsibility should be a central part of any retail strategy for the year ahead.

This means being genuinely open and sensitive in dealings with customers, employees, and suppliers. Living true to the brand’s purpose will continue to be a key selling point.

As retailers look to reexamine their budgets for the post-COVID era, this is actually an ideal time to bring ESG into the heart of business decision-making.

By combining cost takeout with carbon takeout, or by reassessing the supply base with factors like diversity and inclusion front of mind, a retailer can make its business more responsible and environmentally sustainable — as well as financially sustainable.

This kind of purpose-driven commitment, when brought together with the right level of analytics insight and supply chain agility, will be a key determinant of retail success — a not only in 2021, but for many years afterward.

Jill Standish is senior managing director and global head of Retail at Accenture NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

We’re Your Source for

Qualifed General Contractors

As part of the RCA membership process, we vet contractors with a

The Retail Contractors Association is a

• Excellent reputation in the industry; three references from retailers are required.

national organization of high caliber contractors united to

• Properly licensed in all states where the contractor conducts business.

• Insured in accordance with industry standards.

• Bondable by an AM Best carrier rated A- or better.

• Review of EMR rating.

provide a solid foundation of ethics, quality, and professionalism in the retail industry.

These rigorous requirements are reviewed on a regular basis.

Find a Contractor at retailcontractors.org US: 800-847-5085 | Intl: 703-683-5637 | retailcontractors.org

NEW FORMATS

Walmart in Store Makeover Redesign focused on digitally enabled shopping experience

By Marianne Wilson Walmart has been updating — and innovating in — its stores for the past couple of years, but nothing so far has approached the scale and size of its newest initiative.

The retail giant has reimagined its store environment for a more seamless blend of shoppers’ in-store and digital experiences.

The airport-inspired, digitally enabled store design has a sleek, modern look and puts a big focus on use of the Walmart app as an end-to-end in-store shopping tool. The design will be rolled out to nearly 200 U.S. supercenters by the end of January, reaching close to 1,000 stores by the end of 2021.

The refurbished stores will also feature self-checkout kiosks and contactless payment solutions, including Walmart Pay. Select locations will also have the chain’s Scan & Go technology, which lets customers manage their checkout directly using their mobile phones.

The changes start on the exterior, with new signage that resembles the Walmart app icon. (The signage is also on the interior.)

A large and very prominent blue arch — visible from across the huge parking lot — marks the order pickup area where shoppers can retrieve their online orders.

“By creating a system that acknowledges our app navigation from beginning to end, we create an optimized omni experience for both customers and associates,” stated

Janey Whiteside, executive VP and chief customer officer, Walmart.

As customers enter the store, they are greeted with clean, colorful iconography and a store directory that encourages them to download and use the Walmart app as they shop. Throughout the interior, bold, dimensional typeface (e.g., SEAFOOD, DAIRY, etc.) directs customers to the exact section they are looking for. Aisles are marked with letter and number combinations to guide customers from phone to product.

The product layout has been revamped to bring greater visibility to key items throughout the store, including dedicated in-store sections for electronics, toys, baby products and more.

The retailer said that airport wayfinding systems provided inspiration as best-in-class examples of how to navigate large groups of people using clever designs and clear signage.

“We developed simple yet thoughtful designs to replicate these navigation efficiencies, which will help us move customers through the store more quickly,” Whiteside said.

Walmart will be listening to shopper and employee feedback on its store overhauls.

As the new look is rolled out, the chain will “continue to get customer and associate feedback and evolve the design accordingly,” said Whiteside.

18

Walmart Designates Four Stores as ‘Test Centers’ Walmart is testing new ways to operate and help its employees better serve online and in-store customers alike in four designated locations.

The discount giant has identified four stores (including two near its Bentonville, Ark. headquarters) as “test centers” for testing new technology, digital tools and physical enhancements.

The stores will serve as testing grounds for solutions to help Walmart stores operate as both physical shopping destinations and online fulfillment centers.

“To increase the speed at which we learn, product and technology teams will be embedded in the stores to prototype, test and iterate solutions in real time, scaling what works and scrapping what doesn’t, creating a true rapid prototype environment,” said John Crecelius, senior VP of associate product and next Generation stores, Walmart U.S. “Some of what we test will be visible to customers and some of it won’t. Regardless, it’s the customer who will benefit.”

In its first test store, Walmart is testing “omni-assortments” in which all eligible in-store items in apparel are also available online. Another test involves the use of a Walmart-developed app that uses augmented reality to help employees get items from the backroom to the sales floor faster.

Walmart is also testing how it can use a combination of in-store signage and handheld devices to help employees navigate quickly to the right locations when picking items for an online order.

So far, it has reduced the time it takes employees to find the items on their first attempt by up 20% in some hard-to-pick categories.

Walmart’s test stores will also continue to build upon a new experimental checkout experience the discounter introduced earlier this year. It will be testing different hardware and software solutions focused on enhancing and re-imagining a contactfree checkout experience for customers.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

EXPERT OPINION

Recipe for Successful Retailer Transformation To thrive, companies must meet ever-changing customer expectations

By Antony Karabus and Farla Efros The retail sector continues to experience turmoil with numerous retailers filing for Chapter 11, liquidating or restructuring out of court.

But there is a silver lining for the winners.

In 2020, with the onset of the pandemic, the pace of the retail sector disruption has accelerated and the sheer number of Chapter 11 creditor protection and out-of-court restructuring announcements have grown exponentially, including such well-known names as Tailored Brands, Pier 1, New York & Company, Ascena Retail Group, Forever 21, Century 21, Stein Mart, Sur La Table, Stage Stores, Modell’s, Tuesday Morning, J.C. Penney and Neiman Marcus.

The pandemic is not the underlying cause for most retailer restructurings. Instead, it has been the accelerator. The debt previously added to retailers’ balance sheets from leveraged buy-out debt and earlier failed transformations has prevented those retailers from making the necessary investments to their business models to re-tool their store fleets, operational capabilities, and technology and processes to more effectively and profitably compete in the digital environment.

at a time when Amazon’s market capitalization increased 28-fold due to the company’s rapid growth rates and steady increase in market share.

Massive amounts of market share — or billions of dollars of market value — is available from retailers that have gone out of business or have closed stores. While much of this market share has been won by Amazon, Wayfair, Walmart, Target and other discounters and the home improvement chains, we believe there is plenty available for other retailers that transform their operating model with a customer focus.

Consumers Are Spending While people are still shopping, spending behaviour has changed. Enclosed mall traffic is considerably down and continuing its multiyear decline. But stores whose entrances are open to the outside are holding their own and online traffic is growing.

In addition, retailers have received a windfall amounting to as much as tens of billions of additional market share in 2020 and hopefully into 2021 due to typical household

Retail leaders must invest in the right operational capabilities that are valued by their target consumer, including digital, omnichannel and flexible fulfillment. More than ever, strategic capital allocation has become a competitive advantage as every dollar matters.

Primarily due to the debt service commitments, many retailers didn’t have access to the liquidity to fund the new business models and operational capabilities that were necessary to meet the expanding and changing customer demands and expectations. These include the operational capabilities for frictionless omnichannel capabilities.

Since 2010, the retail market has grown at 2% or less most years, which has resulted in numerous retailers’ market capitalization declining meaningfully. And this has occurred

spending being curtailed as a result of restrictions imposed by the pandemic.

Winners include retailers in categories such as home categories, mattresses/bedding, home improvement and appliances, grocery, beauty, pet, pool, and active/outdoor. Numerous specialty apparel retailers (especially those selling work and tailored clothing) and department store sectors are experiencing double-digit negative comparable sales.

Winning requires significant investment in brand differentiation, exceptional and seam-

20

less integration between channels, investment in omnichannel and digital capacity as well as a customer experience model that meets the needs and expectations of their target consumer. A flexible cost structure will allow successful retailers to continuously transform to meet customer needs in an ever-changing macro environment.

Success requires meeting ever-changing customer expectations. Retail leaders must invest in the right operational capabilities that are valued by their target consumer, including digital, omnichannel and flexible fulfilment.

More than ever before, strategic capital allocation has become a competitive advantage as every dollar matters.

An additional complication is that, for most retailers, digital growth is coming at the expense of in-store sales, which means most of it is cannibalization. And the fact is that digital sales are costlier to fulfill than traditional in-store sales as a result of the increased variable costs due to shipping, fulfillment, digital marketing, talent, returns and other expenses. The increased variable costs can be mitigated by fulfilling and returning digital orders in physical stores.

Three Step Plan Based on our experience, we have determined three important priorities for retailers to successfully and profitably compete in these complex times.

• Capitalize on the most important strategic weapon to more profitably compete the store fleet.

• Build and strengthen omnichannel capabilities to meet customer expectations and win against on-line only competitors.

• Build a customer experience model seamlessly and without friction across channels and become a true destination in the eyes of your target consumer.

Antony Karabus and Farla Efros are CEO and president of HRC Advisory (www.hrcadvisory.com) respectively, a leading retail consulting firm.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

In a world of infinite possibilities, we deliver ideal solutions.

Stratus is igniting the energy that has driven us for decades to make a greater impact — for you, for your teams, and for the world. We go beyond the expected to deliver tailored solutions, focused on taking brands to the next level.

With more than 50,000 projects completed annually, we are turning infinite possibilities into your ideal solutions. From signage to refresh & remodel to energy services and repair & maintenance, we continue to create and maintain some of the world’s largest and most recognized brands. Join us to discover how we’re bringing brands to life.

888.503.1569

• Signage

• Refresh & Remodel

• Energy

• Repair & Maintenance

stratusunlimited.com

ON THE LEVEL

Co-Tenancy Clause RIP? In September, Simon Property Group and Brookfield Properties acquired the retail and operating assets of J.C. Penney in a bankruptcy auction. Some months before that, Sparc Group, an entity formed by Simon and Authentic Brands Group, purchased Brooks Brothers and Lucky Brand. If you found either of these actions curious, you weren’t the only one.

Victor Sahn has specialized in bankruptcy law going on 40 years, and he says that what’s happening in retail Chapter 11 situations as COVID-19 continues to gnaw away at the retail industry is something new.

“There’s a crossover effect in retail. When the tenants get in trouble, the landlords get in trouble. But what’s happening now is very different from anything that’s gone on before, and in a way that is more ominous than it’s ever been,” said Sahn, a partner in SulmeyerKupetz who’s based in Los Angeles.

Retail bankruptcies tend to follow a common path, according to Sahn. There’s usually little value in the Chapter 11 business for the landlord, so the lenders take discounts on what they’re owed plus a slice of equity and a the business is auctioned off within 35 to 60 days. Brooks Brothers and Lucky Brand both turned over that quickly.

Two things are different in the J.C. Penney acquisition. One is that mall owners are getting involved in owning an anchor tenant. The second is that the involvement of Authentic Brands and its CEO Jamie Salter ensures that contract rents based on co-tenancy requirements in malls are likely going away for good.

“Authentic Brands buys a hallowed and respected apparel brand and goes to the landlord and says, ‘Okay, we’re still going to be around, but we’re not paying you contract rent

anymore. We’re going to pay you a percentage of our sales,’” Sahn said. “That puts the burden back on the landlords to force traffic to flow through their malls.”

Mall owners like Simon, Brookfield, and Unibail-Rodamco-Westfield, then, will strive to prop up their department store anchors in locations where they can make that work.

Elsewhere, they’re looking to fill empty anchor space with tenants they’d never imagined having — and that specialty retailers had never imagined being parked next to.

“It’s so market-specific, what we are doing for our clients,” said Mark Hunter, managing director of retail asset services at CBRE. “We do feasibility studies and demand studies to determine the best strategies to pursue for filling empty anchor spaces. And a lot has to do with the size of the box concerning whether it’s good for medical, educational, or residential tenants.”

Hunter says that reductions in tenant lease terms and structures at malls started more than five years ago. Five year leases now, he says, are much more common than 10-year leases. And where remedy rents that involve paying a percentage of sales are put into play, most tenants get clauses that allow them to terminate their leases after 12 or 18 months pass.

“We’re going to see landlords and tenants have a reckoning, and I think we’ll find that co-tenancy doesn’t behoove anyone from the viewpoint of long-term sustainability,” Hunter said.

Thought leaders speak out on retail’s future. Though the cancellation of ICSC’s New York Deal Making Show also cancelled our annual Show Scoop supplement, we’ve retained our Leadership Series of articles written by some of the most creative minds in retail real estate. On the following pages, don’t miss the astute observations of American Dream Co-CEO Mark Ghermezian, Centennial CEO Steve Levin, Westfield EVP Colin Shaughnessy, Phillips Edison CEO Jeff Edison, Regency Centers CEO Lisa Palmer, and John Morris, executive managing director of CBRE’s newly formed Industrial, Logistics & Retail sector.

Al Urbanski aurbanski@chainstoreage.com @AlUrbanski (Twitter)

NOVEMBER/DECEMBER 2020 CHAINSTOREAGE.COM

lifestyle grocer mixed-use development

REAL ESTATE

Retailers: Embrace Logistics to Win in the E-Commerce Era

By John Morris

R

etail has been evolving for years now, but mass shutdowns of brick and mortar retail locations brought about by COVID-19 has accelerated the process and driven more consumers to online shopping. Now, more than ever, retailers need a new data-driven real estate approach to servicing the new retail paradigm, and this approach will need to include not only traditional retail analytics, but also cutting-edge logistics analytics.

The United States is over-retailed and right-sizing of physical locations can be a healthy, though painful, process for many.

What can be certain moving forward is that retailers will need to dramatically rethink their omni-channel real estate strategies.

This holiday season, CBRE is predicting that e-commerce sales will increase by 40 percent from a year ago. That is almost triple the 14 percent increase we saw in 2019.

Many retailers have already seen sales rise in their e-commerce platforms during the pandemic, though resulting profits have been elusive. Last-mile logistics are costly.

Delivery costs of a single package to a single house can negate or minimize profits and, in some cases, even end up costing the retailer. Not offering this service, however, would immediately eliminate a large portion of potential consumers.

This deposits retailers in a quandary: How can they make omni-channel retail available, but not unprofitable?

For decades, when retailers evaluated a location, they did so purely from a brickand-mortar perspective and based on

the strength of the retail trade area. Now, however, they have to layer in the site’s logistics value as well. They should do this for both existing and future stores. Part of the reasoning is that some locations may actually work better as fulfillment centers. If a site has excellent access to the surrounding population and transportation infrastructure, it could be ideal for ship-from-store and online fulfillment to cut down on delivery costs. Drive time and routing are among the biggest costs for delivery. If a location offers the opportunity to cut down on these costs, it can be a serious boon to a retailer’s e-commerce efforts.

DARK STORES. As of July, CBRE was tracking 59 retail-to-industrial conversion projects across the country. It is still a niche play, but one that retailers and e-commerce firms are starting to employ. Physical retailers going this route will have to perform a balancing act that will require weighing these fulfillment centers — or “dark stores” — against a healthy brick-and-mortar operation. As in-store sales tend to be the most profitable avenue for retailers, they will want to double-down on brick-and-mortar when possible.

It may be that the data reveals that stores could be a combination of both — with a smaller traditional retail footprint and a portion dedicated e-commerce fulfillment and shipping. Beyond the site’s logistics and retail data, another determining factor is rents. There is still a considerable delta between healthy retail and distribution rents.

In many cases, it will not make sense to

When evaluating locations, retailers now have to layer in the site’s logistics value. Some locations may actually work better as fulfillment centers than as stores.

24

John Morris

convert a brick-and-mortar location, even if it would be ideal for a fulfillment center. The economics simply would not work. We still see this scenario more often than not, but as this current retail cycle plays out and a large swath of real estate is re-priced and underutilized, we will see many of these locations open up to other uses.

Shutting certain stores down will be the correct way to create a more profitable enterprise — not only for sales and cost management, but also for inventory control.

Inventory has been climbing with the rise of e-commerce. But the cost to carry the inventory has been climbing as well, because we have become less efficient and productive with its distribution.

The recent changes in our world have retailers pushing for even more inventory, a “safe stock” to be ready for unforeseen events.

We believe that there will be more inventory in stores, but not more inventory in more stores. Retailers will have to consolidate into fewer locations and go through the new retail logistics data process to determine what those locations should be — brick and mortar, fulfillment and shipping, or a mix of both.

This best real estate strategy for 21st Century retailers? It will be an omni-channel approach that maximizes in-store sales and achieves more efficient delivery to online buyers. It’s possible, and the companies that figure it out will be the winners.

—John Morris is the Executive Managing Director and Leader of CBRE Americas Industrial & Logistics, Retail.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

L

NATIONAL REALTY & DEVELOPMENT CORP. OWNS AND MANAGES A PORTFOLIO OF OVER 70 PROPERTIES •

Retail power centers, grocery anchored community centers, office/industrial parks & luxury residential

•

Strong demographics and diversified co-tenancy

•

Established within the most successful retail markets in their region

CONNECTICUT • DELAWARE • MARYLAND • NEW JERSEY • NEW YORK OHIO • PENNSYLVANIA • TENNESSEE • VIRGINIA • VERMONT

NATIONAL REALTY & DEVELOPMENT CORP. 3 Manhattanville Road, Suite 202 Purchase, NY 10577 www.nrdc.com 1.800.932.RENT

REAL ESTATE

Is America Yearning for American Dream?

An interview with Mark Ghermezian, Co-CEO of American Dream

T

he 2020 pandemic wore hard on American retail centers. They are now all trying to re-invent themselves as entertainment and dining centers.

That’s something that Triple Five has done from the start, and since it re-opened its American Dream project in October, it’s been selling out tickets to its Nickelodeon Universe theme park and its DreamWorks Water Park—traffic that’s helped retail tenants such as Primark, H&M, and Lululemon register chain-leading sales.

Mark Ghermezian, who this year joined his cousin Don as co-CEO of the longin-development attraction in the Jersey Meadowlands, sat down with us to explain what American Dream is all about.

Mark, the people in the hundreds of millions of cars that have passed this property on the New Jersey Turnpike over the years have all been wondering. So tell us: What is American Dream?

It’s hard to put one word on it. What we aspire to be is Disney World. A typical shopping center has a merry-go-round. Our center has Dream Works Water Park, the largest indoor waterpark in North America; Nickelodeon Universe, the largest indoor theme park in the Western Hemisphere; Big Snow, North America’s first and only indoor, real-snow, ski resort. We have The Rink, an NHL-regulation size skating facility; and Angry Birds Not So Mini Golf Club. We thought, what if we could have the best of entertainment, shopping, and food just minutes from Manhattan? My father and my uncles developed West Edmonton Mall 40 years ago. Then Mall of America. They created shopping places that people bought tickets to attend. Forty years ago, everybody thought they were crazy, and now it’s what everybody is trying to replicate.

How has the first month in full operation gone?

Typically, when you’re going to any

26

shopping center, you don’t plan a week in advance. But that’s when people buy tickets to attend our theme park and water park. We know the traffic that’s coming in on any given day, and we’re drawing people from 100 miles away. We’re not just opening the doors and hoping people will show up.

What’s more, we’re focused on making American Dream safer than ever before, with an extensive health and safety Plan that includes reduced capacity throughout our center, enhanced cleaning and sanitizing of all surfaces, and physical distancing and face covering requirements.

The pandemic has caused huge turmoil in the retail industry. Retailers and retail real estate developers both are re-writing their playbooks. Should they look to American Dream for inspiration?

It’s going to be hard for traditional retailers to replicate this; it’s not in their DNA to build experiences into their projects from the bottom up. And, if you don’t have the back-end tech to absorb it, it’s not so simple. End-to-end malls are anchors positioned at the ends of buildings with corridors in the middle. They are having a hard time establishing themselves as brands. Whereas, with our attractions, in just one month, we have attracted 150,000 followers on social media. That’s hard for typical malls to do.

People want to be entertained, and you give them lots of incredible options. But what about shopping? Isn’t shopping still entertainment?

I think it’s part of the experience, for sure.

The America Dream experience can start with having a meal, going to one of our attractions, or going shopping. A really huge part of what makes our shopping experience different is that we pushed tenants to build flagship locations. Our It’Sugar is the world’s only candy department store.

Mark Ghermezian

Zara is the biggest in North America. We’re also helping them to create better experiences and customer service. So retail is definitely a big part of the American Dream experience. We sell tickets and can guarantee traffic, and if guests just go to the water park their first time here and don’t shop, they’re going to come back and they’re going to want to shop.

Your background is in digital customer engagement. What are some of the things you’ll be doing online to define this project, build brand recognition, and draw traffic?

Imagine if there was a membership program that gave you premier access like Amazon Prime does — gives you music, free delivery, content, all those different things. We think we’re unique and will be able to do that. We’re still discussing it internally. But we create content every day with attractions and events. We had the Ottawa Senators practice at The Rink. Cardi B just made a visit. We are uniquely positioned to transform American Dream into a digital experience as well as a physical experience.

Everyone’s now ramping up their omnichannel efforts. How is American Dream planning to merge physical and digital retail.

For now, our online business is focused on intellectual properties people experience at the attractions. You came and couldn’t buy your Nickelodeon hoodie or your Shrek doll, so you buy it from us online. But we’ll slowly start introducing our retail properties to our e-commerce operation. For the time being, though, we’re doubling down on selling merchandise from our IP partners.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

REAL ESTATE

New Malls for a New Reality

By Colin Shaughnessy

S

hopping malls have been an important part of people’s lives for decades. However, the current state of the retail industry demands they reinvent themselves in order to stay relevant and survive. But what distinguishes a thriving shopping destination from one that is outdated or even uncompetitive? At Unibail-Rodamco-Westfield, we spend a lot of time thinking about this, and over the past several years, have focused our strategy on making sure we have the best assets in the best markets with the best mix of tenants, creating opportunities for us to develop better, more engaging destinations.

industry-leading digital infrastructure at our centers, to even creating services or building capital infrastructure to help facilitate retailers’ e-commerce sales.

And let’s talk about repurposing shopping destinations — or rather, modernizing them to best reengage today’s consumer.

Our vision to redefine what retail means in the modern world comes hand-in-hand with a commitment to constantly refresh and customize the offerings available at each center in our portfolio. We make sure our centers are places people want to be by improving both the physical and digital

The modern-day shopping destination is not going to be the static, entirely enclosed fixture that it was known for in decades past.

One of the most important parts of our strategy involves changing the way we interact with our retail partners — from just being a landlord to being an active partner, invested in our mutual long-term success.

We are providing digital services, out-ofhome advertising opportunities, enhanced amenities, and retail curation to our retailers, restaurants and brands because we understand that their success is intrinsic with our own. Now, more than ever, it’s important to educate our partners on how best to fully leverage the advantages of a physical location.

Secondly, URW is working to make physical retail exciting again — whether that involves marrying brick to click retail or improving the in-store experience. We are embracing an omnichannel future where our destinations play a key role in the brand experience for both traditional and DTC brands. We have made short- and long-term investments to rethink the infrastructure of our shopping centers to help support the omni-channel evolution — from easier pick-up of deliveries by 3rd party services, to

infrastructure, as well as the tenant mix itself — a combination of traditional retail with a focus on dynamic, industry leading concepts in food, health and wellness, fitness, and entertainment.

For example, Westfield UTC’s resort-like setting embodies the luxury La Jolla lifestyle with many prevalent and first to market brands — from Hermes, Alo Yoga, to SoulCylce, as well as diverse restaurant offerings such as Din Tai Fung and Javier’s Finest Foods of Mexico. Adjacent to the center is our 23-story residential tower encompassing 300 residences with high-end services.

Westfield Valley Fair in Silicon Valley demonstrates unprecedented growth at 2.2 million sq. ft. of retail space with 42 stores and restaurants having opened this year alone. Its mix of prestigious luxury brands, digitally native start-up retailers, and bestin-class dining and entertainment holds the distinction of being the region’s definitive lifestyle destination. Westfield Century City in Los Angeles reached $1 billion in annual sales just after unveiling a modern makeover

28

Colin Shaughnessy

in 2017. This is a testament of our success in key markets and how reimagining an asset has redefined the way in which consumers prefer to shop, dine, and be entertained.

Our next project, at Westfield Topanga in Los Angeles, encompasses a former Sears box. Instead of trying to simply backfill the box with anchor tenants, we are completely transforming the front door of the asset using the opportunity to create a true destination. We think it will be a must-visit destination when it opens in 2022 with new market defining restaurants, exciting new retail, additions to our large luxury collection, and a chef-driven Food Hall showcasing some of the area’s top concepts.

So, what does all this mean? The new reality is that the modern-day shopping destination is not going to be the static, entirely enclosed fixture that it was known for in decades past. Change itself will be the lifeblood of its continued popularity and survival. The millennials and Gen Zers whose feet will provide most of the foot traffic in retail centers in the coming decades seek retail, entertainment, and dining with a point of difference. A destination with a cool factor is what gets them out of the house. To attract them, or to create them, operators must cast off formulaic tenant curations and designs and embrace change.

Westfield’s purpose — ‘Reinvent Being Together’ — is perhaps more relevant now than ever, and keeps us focused on serving our communities, connecting with our customers, and reshaping how people shop, live, work and play.

—Colin Shaughnessy, executive VP of UnibailRodamco-Westfield, heads up leasing for Westfield malls in the United States.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

BVLGARI | GOLDEN GOOSE | GUCCI JIMMY CHOO | MONTBLANC | TIFFANY & CO. | VERSACE PLUS OVER 200 SHOPS & RESTAURANTS Visit us at RECon New York 2020 westfield.com

REAL ESTATE

Serving the Post-Pandemic Consumer

By Lisa Palmer

D

evelopers and operators of openair, neighborhood, and community shopping centers always have had a finger on the local neighborhood’s pulse.

The best operators recognize their community’s needs and merchandise their centers with complementary offerings that strengthen the property’s overall experience for both the consumer and the merchant.

That expertise and local knowledge are critical in how operators will help redefine how the post-pandemic consumer is served.

Since the pandemic, consumers have reprioritized many aspects of their lives. To serve them, we must understand who they are today and what’s important to them.

their neighborhoods. We quickly used social media and map platforms to connect with consumers with this information. The operator’s role in providing reliable information to consumers about the location, open hours, and retail available at their center via digital channels is critical for our smaller merchants’ success.

TOOLS FOR RETAILERS. Those smaller merchants may not have the same capabilities as the larger regional and national retailers who can tap into these tools. We are proud of our relationship with directory listing services, maps platforms, and social media platforms and leveraged these tools to ensure that customers knew what was open and when.

We are using digital apps that connect to our merchants’ POS and kitchen management terminals. These will accurately notify merchants when customers are arriving.

Pre-COVID, we were already seeing trends that emphasized the importance of efficiency and convenience for the consumer.

The shutdowns have helped accelerate these trends. Today’s consumers desire convenient, close, and now safe access to their retail needs. At Regency, we are fortunate to have necessity, service, convenience, and value-based retailers serving our communities’ essential needs. As such, our properties remained open and operating during the entirety of the shutdowns. This essential retail and the freedom of open space in centers like ours provide our merchants with a platform to try new things and reach new customers during the disruption safely and conveniently. Importantly, it has given us opportunities to support them in creative new ways.

Early on, it became clear that we needed to tap into digital tools to alert our consumers to essential physical retail that was open in

Our team also created convenient, easy-to-access areas for pick-up of these essential goods and services early on. As the pandemic continued, these temporary spaces became permanent spaces for curbside pick-up. We are now piloting programs that use digital apps that connect to our merchants’ POS and kitchen management terminals. These apps will accurately notify merchants when customers are arriving. We believe that a quick, convenient shopping center experience will be a win-win for our merchants and their customers moving forward. Shopping center owners should think about the design of their parking fields and their use of outdoor and gathering spaces to serve consumer needs more effectively.

Going forward, merchants will also need to be creative in using tools to stay relevant, nimble, and actively engaged with

30

Lisa Palmer

their customers. Those who already have a strong social media presence and customer database are ahead. For those merchants that are not actively using such tools, operators can connect their merchants with this.

In that vein, Regency has provided our tenants with a Merchant Success Toolkit.

This toolkit features 60 pages of marketing tools that help establish a strong marketing foundation, elevate market position, and amplify merchant offerings to customers.

As we look to the future, we expect people to learn from this experience and form new habits. But we still believe that a physical presence is a critical component of retailers’ omni-channel strategy.

And the proximity of shopping centers to consumers’ homes is critical to future success as shoppers will want to take care of all their retail and dining needs convenient and close to their neighborhoods.

People will want to return to social activities with friends and family, and neighborhood shopping centers with outdoor spaces for dining and other group activities will provide the gathering place to meet that demand. While we don’t know when this will happen, we know that our commitments to our neighborhoods and retailers remain as we navigate the pandemic. We know, too, that open-air, neighborhood and community shopping centers will thrive in the “new normal” as operators and retailers work together to connect with our communities while being adaptable, safe, and creative.

—Lisa Palmer is the President and CEO of Regency Centers.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

Seeing a Pattern?

Steady traffic comes standard.

Regency’s portfolio is always evolving to meet the needs of our retailers and consumers. Our combination of premier open-air locations, essential anchors, and dedication to supporting our merchants’ success makes our centers stand out in every market we serve.

Every day, we connect people and communities.

This singular focus has been our top priority for more than 55 years. With a unique culture and talented team, we are focused and determined to define the future of retail.

Learn why national names, expanding regional brands, and local favorites thrive at our centers.

RegencyCenters.com

REAL ESTATE

Meet Shoppers Where They Want to be Met

By Steven Levin

M

uch has been made about the American consumer’s great leap into online retail during the COVID-19 pandemic. But why did it happen?

Was it because millions of people sequestered in their houses and finally took the time to learn how to buy things online? Unlikely.

COVID-19 exposed retailers and landlords to the critical need to create more meaningful connections with customers. To survive and thrive post pandemic, we must meet shoppers where they want to be met.

to revolutionize our business. It’s called Shop Now! Shop Now! is an intelligent, e-commerce platform that allows consumers to shop our centers the same way they shop Amazon. They can go to any of our malls’ website, search for a product, and be offered a vast selection from nearly every retailer at the property. The customer can then choose to have the product shipped, picked up curbside, or visit the store for same day or future pick-up.

Today’s consumer has proven an

It’s no longer a question of e-commerce versus brick-and-mortar. It’s time for creating a seamless experience that embodies the most attractive elements of both realms.

Several years ago, I spoke with the president of Chase Bank’s retail division. I asked him why Chase was opening so many new branches when every other banks seemed to be moving business online. “We have customers who want to conduct transactions with a banker inside a branch, we have customers who want to access our drive-thru and we have customers that choose to bank online, therefore we need to options to meet them all where they want to be met to retain and grow our business,” he told me.

With our projects unexpectedly closed in March, I was reminded of this conversation.

Centennial immediately instituted a curbside delivery program called Retail To Go and began to focus on the successful recovery of our portfolio. We were committed to supporting our retailers and consumers by sourcing all solutions, both offensive and defensive, to get through this unprecedented time. We needed to meet them where they wanted to be met. One of the solutions our task force developed was designed to do just that and has proven to have great potential

omni-channel experience is not only desired but required. It’s no longer a question of ecommerce versus brick-and-mortar retailing, it is about creating a seamless experience for consumers that embodies the most attractive elements of both realms of retail. Many often ask about the future of the department store.

Shop Now! transforms every Centennial property into one “big store” and allows customers to shop the center online, if they choose. It also serves as an intuitive digital directory; a planning resource that shoppers can use in advance of or during their visit proving to make their visit more productive: they are spending more, in less time.

Even while shopping in a retail store, no one shops alone today; every consumer shops with a smart phone in their pocket and access to e-commerce and online research in an instant.

If someone is looking for a pink V-neck blouse, they will first go online to see which stores stock that item. If someone is looking for a new Asian restaurant, they will start by researching reviews and viewing menus online.

Going forward, every landlord and retailer

32

STEVEN LEVIN

must operate their businesses acknowledging the customer journey now starts online and physical retail must be present from the start.

For several years I have said “we are not in the property management business, we are in the hospitality management business,” and that proves more important than ever right now. Providing best-in-class service to our customers, tenants, clients and partners has never been more important. Just this week our annual Kingsley survey results were received.

The goal of the assessment is to gauge tenant satisfaction throughout the portfolio as a means of improving performance, increasing retention, maximizing portfolio value, and achieving operational excellence. To be honest, I wasn’t sure what to expect given how difficult 2020 has been. I was elated to see we received our portfolio’s highest scores on record, also soaring above the Kingsley benchmark.

Additionally, we had more tenant participation than any year prior. This accomplishment is proof that service and attention matters!

Similarly, another important evolution resulting from COVID-19 is the landlord-tenant partnership. Now more than ever, landlords and tenants need to work together to ensure mutual success. Over the past 30 years, the pendulum has always favored one of these players as “the winner,” the group with a leg up. As we all know, if there is a winner there is a loser and nobody wins. COVID-19 has created an opportunity to reset the ways of the past and reimagine this important partnership.

The landlords and tenants that do this will benefit the most.

Armed with new tools and an even stronger commitment to service and strengthening key partnerships, we look ahead to 2021 with optimism.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

5883

CONNECT MALL | BRAZOS

T | ICUT POS

NPLA N | MAI

CE |

VANCOUV MALL | PUEBLO

ER MALL

making, ging place a g n e d n a ations. handising ning destin retive merc fi c e c d a , n ry g st si u e ventive d orrow’s ind Through in te into tom a st e l a re L ESTATE s today’s AGINING REA ial transform

FOX NTER | TOWN CE DULLES

Centenn

OR | HAWTH VALLEY

REIM

CentennialREC.com

58835-21-CEN-MAG-CSA-2.indd 1

11/10/20 5:59 PM

REAL ESTATE

How to Be an Omnichannel Landlord

P

hillips Edison chief Jeff Edison’s top concern was his tenants — “neighbors” to Jeff — when COVID-19 shut down nail salons, fitness centers, and other non-essential businesses in his centers. He and his executive team rushed to their aid, helping them file for government programs and renegotiating leases. As the pandemic progressed, his concern turned into admiration for the plucky small business owners in his centers.

Regardless of your sector of the retail real estate world, what do you see as the proper operative relationship of physical and digital retail?

Retailers and shopping center developers have always been called upon to adjust as the habits and desires of consumers are modified and influenced by societal changes or historic events. Mass retail started up in downtowns in the early 20th Century when few people had automobiles. When cars became standard equipment and people moved to the suburbs, so did retail, and the enclosed mall was born. Then came a buildout of power centers and lifestyle centers, even though arguably we had enough retail before they appeared. Now, we enter the next historic era in retail, and it’s the early days of our new era.

Online sales, BOPIS, curbside delivery — it’s the retail industry giving consumers what they want, like we’ve always tried to do.

Mall owners like Simon have discussed filling emptied anchor space with fulfillment centers. Are last-mile-fulfillment operations likely to find homes in any groceryanchored centers?

Walmart, Kroger, and Publix became some of the top e-commerce players during the opening months of the COVID-19 pandemic. The irony is, however, that it’s unlikely you’ll see fulfillment operations springing up in our neighborhood centers, and it’s not just because we don’t have spaces for warehouses.

It’s because the supermarkets, off-price retailers, nail salons, coffee shops, and fitness centers that fill most of our properties receive frequent, personal visits from people in their communities. That’s one of the reasons that we call our tenants “Neighbors.”

Real-estate-wise, what are some things retailers in your centers have to contemplate following the groundswell of online sales activity?

The greatest thing the pandemic taught us is that every one of our neighbors has a different story. We were very impressed at the level of creativity displayed by them to keep revenue flowing. One great example was a doughnut shop that set up a stand outside of the store to sell product but added a margarita machine to boost sales. Another restaurant created their own pick-up window with plexiglass on their front door. Many others have embraced omni-channel opportunities through BOPIS and curbside delivery.

How can PECO help them in this effort?

What have you begun to do differently already because of the pandemic?

Phillips Edison has introduced our Front Row to Go curbside pick-up program in every one of our centers because we don’t think it’s a pandemic adjustment. Consumers have shown us they like curbside pick-up for

The greatest thing the pandemic taught us is that every one of our tenants has a different story. We were impressed at the creativity they displayed to keep revenue flowing.

34

Jeff Edison

convenience and safety. We are also attempting to add as many drive-throughs as we can, despite regulatory hurdles by municipalities sometimes limiting that service.

We set up a COVID-19 support center that helped neighbors apply for PPP loans and other financial assistance, and provided content to aid them on DashComm, our communications platform. This has been an incredibly valuable communication link between our neighbors and our management team. We are using it to share everything from CDC guidelines to what pandemic protocols are in place in specific counties to webinars on business development. It answers our neighbors’ questions and provides resources to support their businesses.

Outdoor neighborhood centers such as yours, overall, fared well during the pandemic. Have you learned anything that you will now adopt permanently?

PECO is constantly striving to be locally smart and property focused. COVID-19 brought the value of this mindset to the forefront, reinforcing the fact that we are not a company that owns 300-plus properties, we are a neighbor to 5000-plus businesses in 300-plus communities. The pandemic pushed us to be more creative and collaborate more closely with our neighbors, finding new ways to work together and ultimately be a better landlord. Going forward, we will continue to seek new opportunities to support our neighbors, not only as they continue to navigate the pandemic, but also as they use what they’re learning to broaden and enhance their omnichannel strategies.

—Jeff Edison is Chairman and CEO of Phillips Edison & Company NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

STORE SPACES

Dollar General

Trending Stores: Dollar General launched a new retail concept aimed at a more upscale shopper. Popshelf features a non-consumable merchandise mix that includes seasonal and home décor, health and beauty essentials, cleaning supplies, party goods, crafts and more. Nearly all — 95% — of the items are priced at $5 or less. Stores average about 9,000 sq. ft. and have a colorful look, with bold graphics and a purple-and-white color scheme. Merchandise will be continually refreshed and include seasonal specials and limited-time items. With two Popshelf stores near Nashville, Tenn. (Hendersonville and

π HIPPING UPPL

HOP WI H LE

PECIALI

ORDER B AME DA

M FOR HIPPING

COMPLE E CA ALOG

1-800-295-5510

Clarksville) Dollar General expects to open approximately 30 locations in various markets by the end of next year. …

Charming Charlie is back in business a few months after closing its 260 stores nationwide and selling its trademark at a bankruptcy auction. The women’s accessories retailer opened a store at Cumberland Mall in Atlanta. The store features the retailer’s signature color-grouped displays of apparel, handbags, jewelry, gifts, shoes, scarves and more.

The company plans to roll out additional retail locations in U.S. markets during late 2020 and early 2021. … The Home Depot has signed the biggest retail lease — for both square footage and rent rate — that Manhattan has seen in years. The home improvement giant will move into a 120,000-sq.-ft., four-level space on the city’s Upper East Side. Construction in the space, currently home to a Bed Bath & Beyond store, will begin in 2021. … The Rolling Stones opened a flagship on Carnaby Street in London’s Soho shopping area. RS No. 9 Carnaby is designed to offer customers an immersive Stones experience. The interior has several photo ops, including a super-sized sculpture of the band’s logo. The space also features a glass floor accented with lyrics of Stones’ songs, five video screens showing footage of the band and fitting rooms whose walls are covered with album artwork. The two-level store is filled with branded merchandise and has a T-shirt customization station where customers can choose from an array of exclusive designs. … Krispy Kreme is open for business 24 hours a day, seven days a week in Manhattan’s Times Square. The 4,500-sq.-ft. store features the world’s largest “hot light,” interactive digital experiences and exclusive merchandise along with the brand’s famous doughnuts.

Customers can view the doughnut-making process from start to finish, from the mixing of ingredients to Krispy Kreme’s iconic glaze “waterfall. A stadium-styled seating area is designed as the world’s largest Krispy Kreme doughnut box. Other features include an exterior window for curbside ordering and pick- up and an interior grab-andgo counter. The location is part of the company’s New York City expansion which will total eight shops by year-end.

Krispy Kreme

uline.com

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

CHAIN STORE AGE -FAST SAFE EFFICIENT 2/3 July November_AD 3/8/19 10:08 AM Page 1

Statement of Ownership, Management, and Circulation 1 Publication Title: Chain Store Age 2 Publication Number: 0054-4100 3 Filing Date: 10/1/2020 4 Issue Frequency: Bi-monthly 5 Number of Issues Published Annually: 6 6 Annual Subscription Price: $125 7 Complete Mailing Address of Known Office of Publication: 8550 W Bryn Mawr Suite 300, Chicago, IL. 60631 8 Complete Mailing Address of Headquarters or General Business Office of Publisher: See No. 7 9 Full Names and Complete Mailing Addresses of Publisher, Editor, and Managing Editor: (Publisher) Gary Esposito, Publisher, see No. 7; (Editor) Marianne Wilson, Editor in Chief, see No. 7 10 Owner (Full Name and Complete Mailing Address): EnsembleIQ, see No. 7; 11 Known Bondholders, Mortgagees, and Other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds, Mortgages, or Other Securities: None

12 Tax Status (The Purpose, Function, and Nonprofit Status of this Organization and the Exempt Status for Federal Income Tax Purposes): Has Not Changed During Preceding 12 Months 13 Publication Name: Chain Store Age 14 Issue Date for Circulation Data Below: July/August 2020 15 See Chart Below 16 See Chart Below 17 Publication of Statement of Ownership for a Requester Publication is required and will be printed in the November/ December 2020 issue of this publication 18 Signature and Title of Editor, Publisher, Business Manager, or Owner: I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/ or civil sanctions (including civil penalties): Lina Trunina, Manager. Sept.29, 2020

Sections 15 and 16

Average No. No. Copies of Copies Each SIngle Issue Issue during Published Previous 12 Nearest to Months Filing Date

15 Extent and Nature of Circulation a Total Number of Copies (Net Press Run) b Legitimate Paid and/or Requested Distribution (1) Outside County Paid/Requested Mail Subscriptions (2) In-County Paid/Requested Mail Subscriptions (3) Sales Through Dealers and Carriers, Street Vendors, Counter Sales, and Other Paid or Requested Distribution Outside USPS (4) Requested Copies Distributed by Other Mail Classes Through the USPS (e.g., First-Class Mail) c Total Paid and/or Requested Circulation d Non-Requested Distribution (By Mail & Outside the Mail) (1) Outside County Non-Requested Copies (2) In-County Non-Requested Copies (3) Non-Requested Copies Distributed Through the USPS by Other Classes of Mail (4) Non-Requested Copies Distributed Outside the Mail e Total Non-Requested Distribution f Total Distribution g Copies Not Distributed h Total i Percent Paid and/or Requested Circulation

20,000

19,077

16,441

18,344

0

0

0

0

0 16,441

0 18,344

2,660 0

733 0

0

0

899 3,559 20,000 0 20,000 82.2%

358 1,091 19,435 0 19,435 94.4%

4,895

6,169

21,336

24,513

24,895

25,604

85.7%

95.7%

16 Electronic Copy Circulation a Requested and Paid Electronic Copies b Total Requested and Paid Print Copies (Line 15c) + Requested/Paid Electronic Copies (Line 16a) c Total Requested Copy Distribution (Line 15f) + Requested/Paid Electronic Copies (Line 16a) d Percent Paid and/or Requested Circulation (Both Print & Electronic Copies) (16b divided by 16c x 100)

I certify that 50% of all my distributed copies (electronic & print) are legitimate requests or paid copies.

CHAINSTOREAGE.COM

ADVANCE DOCK LIFTS ARE FAST, SAFE, EFFICIENT & VERSATILE DOCK LIFTS VERSUS NOTHING: Unloading trucks without any equipment is very slow and puts dock personnel at risk for shoulder, back and metatarsal injuries. Also, goods may be damaged.

DOCK LIFTS VERSUS CONVEYOR UNLOADING: Conveyor unloading is 2 to 3 times slower than using a dock lift. It leaves personnel at risk of shoulder, back and metatarsal injuries and goods are at risk.

DOCK LIFTS VERSUS TRUCK TAILGATES: Tailgates and their maintenance are more expensive than dock lifts. Tailgates reduce truck payload and increase vehicle wear. Tailgate platforms are smaller and do not offer handrail protection available on dock lifts, more risk for operators and cargo.

DOCK LIFTS VERSUS DOCK LEVELERS: Dock levelers can only serve a limited range of truck heights (usually 8�) so they cannot serve all size trucks. An Advance dock lift can service any size truck without limitations.

AdvAnce Lifts 4 4 4

offers:

The most recessed dock lift models.

The most top of ground dock lift models.

Coast to coast turn key service.

That is why Advance Lifts has been the #1 dock lift builder in the country for more than 40 years.

1-800-THE-DOCK (800-843-3625) advancelifts.com

NOVEMBER/DECEMBER 2020

37

STORE SPACES

Breathing Easier: Addressing COVID With HVAC Ionization technology helps center reduce spread of COVID-19

By Marianne Wilson In the 1980’s the drive for energy efficiency led to airtight buildings with little to no outside air. Unfortunately for occupants, the lack of fresh air was a breeding ground for pathogens and VOCs off-gassing from modern materials.

Studies showed that better filters and increased outside air improved indoor air quality.

Fast forward to the present day, and improved indoor air quality has become a key priority for businesses. A very large mixeduse center near Columbus, Ohio, asked M+A Architects, which has worked with the center for years, to rethink its HVAC system to reduce the spread of COVID-19 and provide safe working and shopping conditions for its more than 200 tenants.

SHORT TERM: During the spring, M+A Architects first came up with a short-term fix for the center that increased the proportion of outside air, presumably reducing the virus. But the project engineer, Prater Engineering, warned that the air handlers were not designed to cool a higher proportion — possibly 100% — of the very hot and humid air that would arrive in the summer. Worse, if the pandemic lingered, there was no possibility that the equipment could constantly heat freezing cold winter air.

Shortly after implementing the short-term fix, an office tenant complained as temperatures rose and the units were not able to keep up with the cooling. As businesses began to reopen, it was clear that a longterm plan was needed. During the summer, with increased levels of outside air, more rooftop units had failed compressors than in the entire previous year, intensifying the need to find an alternative.

“We explored many technologies,” said Kurt Beres, director, technical services studio, M+A Architects, Columbus, Ohio.

“Our firm’s lighting designers proposed ultraviolet light, but our sustainability team suggested ionization.”

Both options have their advantages and disadvantages. Ionization systems, for example, are efficient at widely distributing ions, which can deactivate viruses, Beres explained, but

some generate ozone. (An ion is a positively or negatively charged particle.)

NPBI: After much research, M+A and Prater Engineering recommended a subset of ionization: needlepoint bipolar ionization (NPBI). NPBI technology is installed in the air handler or ductwork of an HVAC system to generate ions that are distributed into the space, breaking down, and clumping at the molecular level, viruses, pathogens, harmful gases, molds, odors, fungus and other VOCs.

“In addition, post-pandemic, energy savings can be obtained because the code allows you to reduce the amount of outside air further than a design with systems that improve indoor air quality,” Beres said.

Since ions are invisible, the developer created a science experiment to evaluate the effectiveness of NPBI by monitoring indoor air quality in similar nearby buildings — one with NPBI and one without. Both buildings had their indoor air quality monitored, and both were

Needlepoint bipolar ionization works to safely clean indoor air, and also provides other benefits.

“Since the ions are introduced into the air, the system has the potential to stop viruses long before they can make it back to the HVAC equipment,” Beres said.

In other advantages, NPBI technology requires minimal maintenance, he added, and systems are available that meet both UL 2998 and UL 867-2007 standards, certifying no ozone generation.

But NPBI also had some cons, including that ASHRAE (American Society of Heating, Refrigerating and Air-Conditioning Engineers) has not endorsed ionization to date. Also, its performance can vary widely with installation and manufacturer. The center made the decision prior to proceeding to install an ionization system in one building along with sensors to monitor and verify performance.

Independent lab testing determined that the selected system (by Global Plasma Solutions) was expected to kill more than 99% of COVID on surfaces within a room in under 30 minutes, according to Beres.

“Also, the performance of the system can be verified with widely available sensors that detect ions and/or measure dust and particles in the air,” he added.

The system will provide post-pandemic benefits as well, including improved air quality since ionization solutions also reduce particulates and VOCs.

38

set to pre-pandemic levels of outside air. The resulting data showed a 57% reduction in particulates from before the NPBI was installed in the test building and 44% fewer particulates than in the control building.

FILTERS: M+A also took into consideration the filters used in the system. ASHRAE recommends filters with a minimum rating of MERV 13 during the pandemic. Most of the center’s HVAC equipment used MERV 8 filters.

“The data we received indicated that NPBI with the current MERV 8 filter is as effective at eliminating small air particles — which would include the very small COVID virus — as denser MERV 13 filters, which tax equipment and increase energy costs,” Beres said.

Energy modeling shows that the center will recoup its NPBI investment in less than 18 months. (Avoiding the cost of heating or cooling increased levels of outside air drives the savings, according to Beres.) And because NPBI reduces energy consumption, it qualifies for low-interest, government-backed loans.

“It’s not often that we find a solution to a pressing problem that also saves the client money and improves their work environment,” Beres said. “We read and researched technology until our heads hurt, and we climbed on roofs until we checked every HVAC unit, but we were rewarded with a very happy client.”

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

STORE SPACES Q & A

Facility Maintenance Takes Center State Facility maintenance has been much in the spotlight since the outbreak of COVID-19, with store safety a key priority among retailers. Chain Store Age spoke with Bianca McNamara (bmcnamara@profretail.com), national sales and marketing manager of Professional Retail Services, about recent trends in facility management and how retailers can better manage their projects to keep on track and in budget.

What trends are you seeing in facility maintenance?

With COVID hitting retailers so hard, we were seeing a decrease in standard facility requests and a deeper focus on what is considered an emergency or necessary repair. Unfortunately, we also saw a request in store closures/decommissioning requests.

We are now, thankfully, seeing standard facility work order requests come in as well as additional large project work, including store openings.

Tell us more about how the pandemic has impacted retailers’ and restaurants’ priorities in the upkeep of facilities.

There is a deeper emphasis on repairing the issues that most impact the overall customer experience. I personally think there is a greater appreciation for customers across all markets and ensuring that those who are able and or willing to shop in person are not only comfortable but safe while doing so. It’s become a priority of retailers.

Tell us a little about PRS. PRS has been in business for 20 years and is proud to provide coverage for numerous industries, including retailers, restaurants, corporate offices and property management companies, across the U.S., Canada and Puerto Rico.

PRS has made a name for itself based on its integrity, true 24/7 and 365-day availability, reliable service partners and

communication standards. We treat our clients — no matter how large or small — like they are part of the family.

Among the services that PRS provides is project management across multiple sites. What is included in this?

I like to say there are two pillars holding up the PRS house. One is the facility maintenance side of the business, which handles the day to day requests.

The other is the specialty/project construction side, where we have dedicated project managers and team leads who oversee our larger initiatives such as rollouts, decommissioning, store openings, fixture installations, etc. This team manages projects from start to finish, dealing with landlords, architects, property management companies and cities for permits, and more, and also ensuring that deadlines and budgets are met.

What are the most important benefits of a project management program? What headaches does it remove from a project?

Having someone who is imbedded in the project from the initial conversation through completion is critical.

It allows for the goals, budget and expectations to be known and adhered to along the way.

PRS’ project management team is able to track the project evolution and alert the proper contacts should anything

begin to veer off track. Since there is one main point of communication the dialogue and collaboration are much cleaner. Having one person keep track of, and respond to, all comments and concerns while keeping a full historic record of all actions is beyond valuable.

How does PRS ensure that its team stays on track to meet project deadlines?

It begins by assigning our most knowledgeable and dependable technicians to these larger projects. The technician’s expertise and years of service lend to them understanding the importance of adhering to the schedule and staying within budget.

PRS is in constant contact with the client, ensuring they are happy with the service they are receiving throughout the project. PRS also continues to receive and provide the client progression photos if someone is not on-site to oversee the project.

Our team leads also monitor the project timeline by tracking each step of the project on an internal smartsheet. The smartsheet is updated in real time and gives everyone assigned to the project access to the same, most up-to-date information in one secure location. PRS is always willing and able to have touch base calls with the client as well, guaranteeing all expectations are being met.

CHAINSTOREAGE.COM NOVEMBER/DECEMBER 2020

39

STORE SPACES

Trending Topics

By Marianne Wilson

LIDL IN VENTILATION SYSTEM UPGRADE Lidl is upgrading the ventilation system in its U.S. stores to help stop the spread of COVID-19. The German discount grocer is installing new air filtration systems rated MERV 13 or higher in all its U.S. stores, with the rollout to be completed by year-end. Air filters rated MERV 13 or higher help filter out COVID-19, according to public health and industry leaders.

Previously, Lidl stores used advanced commercially rated MERV filtration systems.

Epidemiologists and professional associations have recommended using high-efficiency air filters MERV 13 or higher wherever technically feasible to trap small airborne particles that can transmit the virus. Lidl noted that it is among

the first national grocery retailers to install this type of air filtration system across its entire store network.

Lidl operates about 11,200 stores globally, including more than 110 U.S. locations.

BOLL & BRANCH DEPLOYS SANITIZING LIGHT TECHNOLOGY Boll & Branch is using UVC lighting techBoll & Branch is the first retailer in the nology to fight COVID-19. The designer country to deploy the Healthe Far-UVC techand retailer of sustainable home goods nology, installing the downlights to sanitize installed Far-UVC 222nm ceiling lights the mattresses on display. The ceiling light (the Space downlight, from Healthe, Inc.) combines general illumination with Far-UVC in its new stores in Greenwich, Conn., and 222 sanitizing light to clean air and surfaces in Boca Raton, Fla. real time.

Far-UVC light (222nm) has been shown to safely inactivate up to 99.9% of viruses and bacteria, according to a recent study by researchers at Columbia University.

“This technology will allow our customers to shop and test our product safely, and with the utmost peace of mind,” said Scott Tannen, CEO and founder, Boll & Branch.

HOME DEPOT IN LARGEST RENEWABLE ENERGY DEAL YET The Home Depot has signed its largest renewables procurement agreement to date, the energy purchased is enough to power more than 150 of the chain’s stores. The retailer and Enel Green Power entered into a new power purchase agreement that will power portions of the retailer’s operations across the country using renewable energy from Enel’s Azure Sky solar+storage plant in Haskell County, Texas.

The project, which comprises a 284 MW1 photovoltaic facility paired with an 81 MW battery, is expected to be operational by sum40

SAM’S CLUB CLEANS UP WITH ROBOTS Sam’s Club is expanding its fleet of floor-scrubbing robots. And this time, some of them are doing more than cleaning the floors.

The Walmart-owned warehouse club operator already has autonomous robotic scrubbers from Tennant Company cleaning the floors at hundreds of its U.S. locations.

But it is adding 372 more units, resulting in a robotic scrubber in all of Sam’s nearly 600 U.S. stores.

The machines are powered by an artificial intelligence platform from Brain Corp.

Sam’s Club is deploying Tennant’s new T7AMR floor scrubbers in their clubs. The machines can be easily adjusted to meet changing operational requirements, such as different club layouts, without additional technical support, according to Brain Corp.

In addition, Sam’s club is expanding a retail shelf analytics pilot using Brain Corp.’s accessory for checking shelf inventory to help improve the in-store shopping experiences. A cloud-connected application helps verify pricing accuracy, confirm planogram compliance, and ensure product availability without requiring time-consuming and potentially inaccurate manual processes. The application leverages a dual function design in which Brain Corp.’s data collection and scanning accessory is mounted on the robotic floor scrubbers.

mer 2021. The Home Depot will procure the electricity generated from a 75 MW portion of the solar project.

“Our collaboration with Enel Green Power strengthens our efforts to tap into sustainable energy that’s produced off-site,” said Ron Jarvis, chief sustainability officer of The Home Depot. “Not only does it expand our energy options and reduce our carbon footprint, but when The Home Depot procures or produces energy from renewable sources, we strengthen the business case for clean power alternatives.”

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

CONNECTED

TECH VIEWPOINT

Everything is Becoming a Digital Storefront The notion of “omnichannel” retail keeps expanding to include new customer touchpoints.

With the COVID-19 pandemic continuing to push existing consumer digital shopping trends into warp speed, retailers are scrambling to find new transactional interfaces. Here are three popular content platforms that have always been used for promotions, but are increasingly becoming online retail channels.

QR codes Retailers are beginning to streamline the mobile commerce experience, as well as connect it to the brick-and-mortar environment, using QR codes. These 2D, matrix-style barcodes have long been used as a means of providing customers with scan-based access to digital promotional materials.

However, by having customers scan QR codes with their smartphones, retailers can also create instant, contactless shopping interactions that truly blend channels and make the consumer’s own device into a POS terminal. Several retailers are leveraging the convenience of QR code-based mobile shopping at the fuel pump, including Sam’s Club and Circle K. In addition, Coca-Cola is shifting the interface of its “Freestyle” soda machines directly to customer phones, utilizing Amazon Web Services (AWS).

Customers scan the machine’s QR code to bring the user interface to their phone screen, essentially turning their smartphone into a soda fountain.

Video Shoppable videos have been around for several years, but are evolving from a niche offering to a mainstream digital commerce channel. Ecommerce platform Shopify is partnering with the the TikTok short-form video platform, casting aside possible concerns about TikTok being banned in the U.S. or reaching an e-commerce deal with Walmart.

Shopify’s collaboration with TikTok will enable retailers selling on its platform to create and CHAINSTOREAGE.COM

connect their TikTok For Business account and deploy in-feed shoppable video ads directly within the Shopify site. Meanwhile, Instagram has expanded shopping features to its IGTV long-form video app, and later in 2020 will enable purchases directly within video content across its IGTV, Live, Stories and Reels offerings. And YouTube offers direct e-commerce capabilities such as shoppable Discovery ads.

Video is not becoming a more popular digital commerce touchpoint in a vacuum. Highly coveted young shoppers consume large amounts of video content. According to comScore, more than 60% of Tiktok’s 100 million active U.S. users are between the ages of 10 and 29. And Business Insider analysis indicates 65% of Gen Z consumers use Instagram every day, while 62% are daily YouTube users.

TV Historically, TV was created an advertising medium offering supplemental entertainment content as an inducement to watch the ads. The advent of technologies such as cable, streaming and DVR has diminished (but not eliminated) the power of TV ads to attract consumer attention and drive sales.

In response, retailers are creating digital storefronts out of TV screens. For example, LG Electronics USA is rolling out the Shop Time app, which enables owners of compatible LG smart TVs directly purchase from multiplatform video retailers including QVC and HSN. The app enables consumers to utilize their LG Magic Remote to navigate from their TV to complete purchases with multiplatform retail partners. Shop Time also lets users save items they have found for future purchase, as well as receive curated recommendations about other products they may be interested in.

And NBCUniversal Telemundo just launched Shop Telemundo, an interactive shopping experience that brings viewers of the leading media company serving Hispanics in the U.S. and Puerto Rico products through an online marketplace of more than 50 retail partners.

Using their smartphone camera, viewers can scan an NBCU code to purchase highlighted products they see on Telemundo shows. Shop Telemundo will span across the network’s television, digital, editorial and social platforms and provide viewers the opportunity to shop through Englishand Spanish-language content presentations.

RETAIL

e-newsletter The premier

newsletter showcasing

technology and

multi-channel,

seamless retailing

From e-commerce and mobility to in-store technology and social media, CONNECTED RETAIL keeps retail executives in the know about the fast-paced, ever-evolving world of retail tech.

For advertising inquires, contact

Mike Morrissey MMorriss@chainstoreage.com

Sign up TODAY!

Dan Berthiaume dberthiaume@chainstoreage.com

www.chainstoreage.com/ register

NOVEMBER/DECEMBER 2020

41

TECH Q & A

Mobile Pickup Accelerates Amid Ongoing Pandemic Retailers can greatly streamline omnichannel ordering and pickup processes by leveraging mobile technology.

Rakuten Ready’s platform connects brick-and-mortar stores and restaurants for frictionless mobile commerce. Jaron Waldman, co-founder and CEO of Rakuten Ready, which was previously known as Curbside and acquired by Rakuten in 2018, recently discussed how COVID-19 is heightening existing consumer demand for the convenience of mobile ordering and pickup.

How has the COVID-19 pandemic changed or accelerated existing mobile order/pickup trends?

COVID-19 has dramatically transformed the retail and restaurant industries. New services that may have initially been put in place as a safety precaution - such as curbside pickup — are growing in demand as customers realize the additional benefits, such as speed and convenience. Mobile ordering for pickup was already growing, but COVID-19 certainly catapulted that growth trajectory. Rakuten Intelligence cites a 200% growth rate of orders for pickup between February and September 2020.

This demand puts accelerated pressure on merchants to build infrastructure to deliver truly seamless curbside or in-store pickup experiences. Consumers are more concerned than ever about the amount of time they spend in stores, so speed of the pickup process is important, and customers expect orders to be ready exactly when they arrive on site. Having seamless operations established enables contactless fulfillment, which means faster and safer experiences for customers and employees.

We predict that these expectations will continue even after COVID-19, as people will now expect precautions and time efficiencies to stay in place.

How does the ability to predict customer arrival time improve the mobile pickup experience for both retailers and customers?

Knowing when a customer is on their way allows store employees to prioritize orders accordingly. This ensures that customers

spend less time waiting, and, in the case of grocery or restaurant orders, don’t have to worry about their food sitting out and getting cold. One great example is Kroger.

When COVID-19 came along, Kroger’s digital-first approaches positioned it well to quickly react by further expanding curbside and in-store pickup services, as well as contactless payment solutions like Kroger Pay. The retailer also piloted pickup-only locations, starting in Cincinnati. By knowing exactly when customers will arrive, Kroger can pick and pack, destage and have bags from various temperature locations ready to run out.

What type of data can retailers obtain from real-time analytics, and how can they leverage it for improved operations?

Merchants can get large and small insights needed to constantly optimize pickup operations. For example, one can see the average volume and wait time for pickup orders across all of their sites nationwide.

But they can also drill into one location to try to determine why their wait times are so high, by looking at the peak days/times visa-vis staff resourcing, which can help drive conversations with operators in a much more conducive manner.

Knowledge around how things are operating, who’s killing it and who needs support can help brands plan, optimize and grow their pickup business (which we all know also helps improve profit margins).

What needs to happen on the back end for a seamless front-end mobile ordering and pickup experience?

42

First, merchants need to have an easy-to-use platform for customers to order from, whether that is an app or a website. Then it is vital to heavily promote your digital storefront and tell customers of the benefits as to why to use it. Adding an incentive to your first order to drive trial is common.

Next, operators need to have a detailed plan for how employees will fulfill these orders. This plan should include how and when to prepare or pick the order, monitoring of customer arrivals and destaging of orders so it’s ready to run out the second the customer arrives to safely handoff orders to customers.

How can Rakuten Ready help retailers optimize their front-end and back-end seamless mobile order/ pickup programs?

Rakuten Ready’s Arrive solution suite provides the fundamental tools to merchants to improve operations around their pickup orders. Integrating into merchant online ordering systems, Arrive picks up where online ordering ends by letting staff members manage all pickup orders in one simple place.

The solution tells store employees exactly when customers will arrive, allowing them to have orders timed perfectly to their arrival. And should employees need to ask their customers questions or want to keep them abreast of their order progress, Arrive comes with two-way communications so they can reach out whenever needed.

NOVEMBER/DECEMBER 2020

CHAINSTOREAGE.COM

Innovation

is our 150-year tradition We’ve been expanding and enhancing the ways we serve customers for generations. Today, sophisticated design capabilities are an essential aspect of reinforcing your brand. We can design, build, install, and maintain dynamic environments strategically created to drive greater sales and enhance your profitability. Whether you need customized solutions or right-out-of-our-catalog elements, we deliver lightning-fast service and coast-to-coast capabilities.

And now we’ve added custom signage to our portfolio.

It’s time for a major upgrade in your design, cabinetry and signage suppliers. Choose the company that’s constantly expanding to anticipate your needs—the

Royston Group has it all under one roof.

Royston’s New Convertible Check Lane

800.334.1766 | info@royston-group.com CHAINSTOREAGE.COM NOVEMBER/DECEMBER 2019

13

INTELLIGENT SITE SELECTION FROM CBRE At CBRE, we power the real estate of companies whose business performance depends on integrated supply chains, connected footprints and efficient operations.

Our Intelligent Site Selection offering leverages the industry’s most robust platform to advise Retailers on smarter industrial site selection strategies.

Let us help you with your next distribution facility.

Learn more at cbre.us/intelligentsiteselection