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Focus on: Outlets

BY Katherine Boccaccio

Vacated shells of circa-1985 outlet shopping centers still dot the nation’s highways, but that’s not the format version that is finding a foothold among consumers and retailers.

A new value-oriented center, anchored by top-tier designer names, has opened the eyes and pocketbooks of American shoppers. Mainstream amenities have created the expectation that, while the goods may be discounted, the experience most definitely isn’t.

“Today’s evolved outlet centers are still focused on value, but have now morphed from centers built in rural areas on freeways to more part of the mainstream mix of retail assortments,” said Michael Lebovitz, executive VP development for Chattanooga, Tenn.-based CBL & Associates Properties.

In January 2012, CBL and Horizon Group Properties announced a 75/25 joint venture to develop The Outlet Shoppes at Atlanta, in Woodstock, Ga., which when complete in summer 2013 will feature 370,000 sq. ft. of outlet retailers. At construction launch, the project is more than 70% leased or committed, with names like Nike, J. Crew, Michael Kors, Puma and Under Armour.

When Simon Property Group, Indianapolis, acquired Premium Outlets in 2004, it began an outlet march that would see growth even in tough times and a design sizzle found only in higher-end projects. “The outlet segment of our business is recognized as an important piece of the whole pie — to enhance the mall channel, not compete with it,” said Michele Rothstein, senior VP marketing, Premium Outlets/Simon Property Group.

Woodbury (N.Y.) Common Premium Outlets is the company showcase, an iconic center that opened in 1985, then expanded in 1994 and 1998. Orlando (Fla.) Premium Outlets – Vineland Ave. is another highlight for the company, as it is currently undergoing its second major expansion.

“It has long been considered one of the most productive outlet centers in the world,” said Rothstein. “Sales exceed $1,300/sq. ft. Those are sexy numbers that say volumes about what a strong business this is.”

The fact that developers such as Premium/Simon are leading the outlet development charge, and that companies such as CBL are entering the arena with high-quality projects, bodes well for the format. According to Bill Stinneford, executive VP and head of the retail division for Fort Worth, Texas-based Buxton, the fact that there are a handful of highly competent developers controlling the industry “has resulted in projects that are better planned, better capitalized and better executed.”

Better-executed outlet centers means that more retailers will find them a suitable home. “The best outlet strategies extend the retailer/brand’s reach not just to a new customer, but to a whole new segment of consumer that may have found shopping the brand in its traditional locations at full price to be prohibitive,” Stinneford said.

[email protected]age.com

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Opening Up

BY Katherine Boccaccio

Despite the fact that the nation is still in the throes of winter, albeit a mild one, open-air centers continue to draw shoppers and generate leasing interest among retailers.

In the early days of upscale lifestyle centers, and before enhanced strip centers and specialty formats, the longevity of some open-air centers came under question as developers, retailers and consumers alike challenged the shopability of the format outside the sunbelt regions.

Naysayers have been quieted. Open-air centers are real estate darlings and are showing no signs of losing favor.

“High-end tenants such as national specialty retailers, restaurants and entertainment are attracted to open-air venues as they see these formats as more befitting their brands,” said Joseph Coradino, president of PREIT Services, Philadelphia. “While some brands like Chico’s, Coldwater Creek, Talbots and Loft have always preferred open-air, uses such as restaurants are newer advocates of the format,” Coradino said.

Pennsylvania Real Estate Investment Trust (PREIT) isn’t shy about incorporating restaurants into its mall mixes. At Plymouth Meeting (Pa.) Mall, for example, the restaurant tenants are adding nearly $80 million in sales per year to the center, Coradino said. “And at Voorhees (N.J.) Town Center, our shoppers have shown a desire for more local restaurant concepts, and we’ve responded by opening Firecreek, Doghouse Burger and South Jersey’s own Catelli Restaurant Group opening Catelli Duo later this year,” he said.

Local restaurant concepts aren’t the only smaller players to find success in open-air venues. While local operators can find it difficult to carve out a niche in large, open-air properties, projects similar to Voorhees Town Center can offer a winning formula.

“At Voorhees, the local and regional retailer actually has a leg up, with smaller store spaces available and more of a local demand for their offerings,” Coradino said. “Small shops like Coffee Works Cafe, Spoon Me and It’s a Doggie Dog World are all local players in South Jersey.”

Open-air specialist DDR Corp. has local shops in its sights. The Beachwood, Ohio-based shopping center company in early February announced the launch of Set Up Shop, a program designed to promote entrepreneurship, incubate new concepts and support the expansion of locally owned businesses.

“The first few months of a new business venture are critical to long-term success. The Set Up Shop program reduces the entrepreneur’s start-up expenses and provides a platform for long-term viability,” said Paul Freddo, senior executive VP leasing and development for DDR.

According to DDR, Set Up Shop will launch initially in specific locations within 24 Atlanta-area shopping centers. Qualified entrepreneurs participating in Set Up Shop will receive flexible terms designed to limit some of the barriers associated with starting a business.

This is a particularly innovative and creative approach to small-shop leasing. And it will allow DDR to reduce asset-level expenses, increase recovery rates and turn non-income-producing space into a revenue-generating location, while at the same time establishing a platform for entrepreneurs to take a meaningful step toward small business success.

DDR has partnered with SCORE, a national nonprofit dedicated to educating entrepreneurs, to serve as a resource for Set Up Shop tenants. DDR will evaluate the success of the Atlanta initiative, with plans to expand Set Up Shop to other markets in 2012.

[email protected]

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Family-Friendly Boost

BY CSA STAFF

Rising consumer expectations have driven a corresponding increase in retail amenities, especially family-oriented provisions such as baby changing tables and child-seating products. Chain Store Age talked with Koala Kare Products’ Brendan Cherry about the evolution of family-friendly retail over the decades.

Since you introduced your first baby changing station some 25 years ago, how has the public’s perception of these types of retail amenities evolved?

We have seen increased family mobility and more family adventures away from home. With that increase, caring for the needs of an infant outside the home became more challenging. There was always the issue of where diapers would be changed during an extended outing. Oftentimes, the changing areas were in the car, a tabletop in a restaurant or the restroom floor. Responding to these growing trends by developing products that were responsive to parents and children’s needs away from home became of paramount importance.

Who were some of the earliest adopters of family-oriented amenities?

Operators of public buildings such as airports, stadiums and grocery stores led the way early on. Multi-unit retail and foodservice establishments and independent operators picked up on the trend and began installing infant products in their restrooms. Over the decades since, parents have developed an expectation that a baby changing station will be available in both the men’s and women’s restroom. It’s the family-friendly concept, which means that taking care of the child equals taking care of the parents.

So you don’t see family services and products as optional anymore?

Absolutely not. The inclusion of changing stations in restrooms is no longer a matter of courtesy — it makes good business sense. In fact, a recent study we conducted with parents confirmed their loyalty to retailers and foodservice operators with baby changing stations. They spent more money and returned often to where they were comfortable with the availability of childcare comforts.

I understand that this year marks the 25th “birthday” of the Koala Baby Changing Station. How have you evolved this product?

We debuted the first Baby Changing Station in 1987, which directly coincided with the trend toward increased family mobility and travel. Since 1987, retail operators have gained new respect for the public restroom and its impact on customers — both positive and negative. Interior designers are paying more attention to the consistency of finishes in terms of countertop tile, flooring, walls and ceilings. Accordingly, we expanded the color choices of our standard models. Stainless-steel units in surface mount and recessed models were also introduced, and for specific needs, countertop models fulfill the requirements when space is limited.

In 2009, we introduced a new flagship model, the KB200, which includes expanded contemporary colors and industrial design surfaces as opposed to “boxy” configurations dating back to the early 1990s. Features include a steel frame for strength and durability, multi-point mounting for stability, locking dual bed liner dispensers, and Microban product protection for cleanliness and sanitation between maintenance cycles.

When did your diversification into child seating come about, and what challenges and opportunities has it presented?

Because family-friendly products aren’t restricted just to changing stations, it was a natural extension to move into seating products. We were already providing foodservice establishments with changing stations, and there was a need for safe child-seating products. What restaurant operators have traditionally used are A-frame high chairs that stay upright for toddlers and are then turned upside down to hold infant carriers. As an infant seat holder, these upside-down A-frames were top-heavy, rickety and determined to be extremely unsafe.

After much research, we created a high chair that features a rounded seat back top to prevent it from being used incorrectly. It has a singular use as a high chair and should never be turned upside-down. There’s also a seat cradle that holds infant carriers, eliminating the use of chairs, tables and the floor, and keeping the infant at table height.

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