REAL ESTATE

Levin survey shows store expansion, tech-driven marketing

BY Marianne Wilson

North Plainfield, N. J. — Nearly one-third (31.1% ) of retailers report that their companies have opened or will open new stores this year, according to a survey by retail real estate management firm Levin Management. It is the highest mid-year percentage in the four years for which comparative Levin survey data is available.

More than half (52.9%) of respondents to Levin’s mid-year “Retail Sentiment Survey” of managers within its 95-property, shopping center portfolio reported sales at equal or higher levels than at this time last year. This percentage is notably higher than the mid-year 2014 and 2013 polls, where 42.9% and 43.7% of participants, respectively, reported the same or higher year-over-year sales.

A majority (78.4%) of respondents work for companies that are actively using technology in marketing efforts to attract customers to their stores. Of those survey participants, 53.9% have upped their technology-centered strategy year over year.

The most popular in-store marketing tools include mobile device apps for discounts, loyalty points and/or rapid payment (used by 61.2%); post-sale online surveys (used by 47.8%); and free Wi-Fi (offered by 41.8%).

The marketing tools being used to reach customers outside the store include social media (76.4%), and email (72.3%) use email. Others employ banner ads and other Internet advertising (41.9%), text messaging (27.7%), and SEO optimization like Google AdWords (11.5%).

“What we find interesting is the multi-faceted approach our tenants are taking when it comes to leveraging technology for marketing,” said Matthew K. Harding, president, Levin Management. “Retailers clearly are using many – and multiple – channels to engage shoppers.”

In other survey highlights;

More than one third (37.3%) of respondents reported they have adapted their business model in response to the growth of e-commerce. Of these participants:

• 61.3% have added in-store services and/or incentives.

• 46.7% have incorporated in-store pickup and returns options for purchases made online.

• 42.7% have altered store inventory (fewer in-stock SKUs, larger quantities of popular items, etc.).

• 41.3% have increased collaboration between online and bricks-and-mortar operations.

• 17.3% have altered their store prototype (i.e. smaller store size or increased focus on showrooming, etc.).

And with social media as such a dominant focus for retail marketing, the Levin survey drilled down into specific platforms being used by its tenants. Of applicable survey participants:

• 91.9% use Facebook.
• 39.7% use Twitter.
• 33.1% use Instagram.
• 27.9% use Google+.
• 17.7% use Pinterest.
• 10.3% use Groupon/Living Social.
• 9.6% use Foursquare.

Facebook, Twitter and Instagram have remained the three most popular platforms across a full year of Levin surveys.

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REAL ESTATE

Simon reveals winners of first-ever retail start-up competition

BY Marianne Wilson

New York – Retail real estate giant Simon has announced the winners of its inaugural 'Simon Launch,” a retail startup competition aimed at uncovering, investing in, and accelerating top startups in the retail industry.

The winning startups, which were selected from more than 300 applications, are:

• LimeSpot Solutions, a personalization engine for ecommerce that utilizes the power of advanced machine learning, social network profiles/history, and behavioral analysis.

• Rank & Style, a provider of unbiased, data-driven 'Top 10’ lists of the best fashion and beauty products.

• SKU IQ, technology that syncs real-time inventory across in-store point-of-sale systems, warehouse management systems, and e-commerce platforms and marketplaces.

The three companies have received a co-investment from Simon’s venture capital arm, Simon Venture Group, and Plug and Play, a global investor and technology accelerator. They also have been accepted into Plug and Play's Retail Accelerator Program in Silicon Valley.

"The high levels of interest and participation in this competition illustrate the excitement around next-generation retail technologies," said J. Skyler Fernandes, managing director of Simon Venture Group. "We are particularly excited to be working with our 'Simon Launch' winners and are committed to helping them grow and become even more successful."

A second competition is underway with applications being accepted through July 5, 2015. Winners of the second Simon Launch will receive an investment from Simon Venture Group and Plug and Play Ventures, be accepted into Plug and Play's Retail Accelerator program in Silicon Valley, receive free office space for a year at a Simon property, mentorship from Simon Plug and Play, and other industry experts, and be eligible for follow-on investments.

Simon Venture Group currently has 18 portfolio companies, including Deliv, a same-day and on-demand delivery platform for retail; ShopKick, a geo-targeted offers and rewards app; and Le Tote, an online clothing rental platform.

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REAL ESTATE

Exclusive: Growth Charting

BY Jonathan Lapat

While 2014 was rocky for a great many retailers, with several thousand store closings across most categories of retail, the first half of 2015 has seen some encouraging signs of a modest resurgence in certain retail sectors and from select brands. The higher numbers of store closings are far from over, and it would not be accurate to refer to 2015 as a total turnaround, but it does seem noteworthy that there are significant categories of retail that have aggressively moved to capitalize on opportunities.

Among those expanding segments, the dollar store concepts stand out. A heavy appetite for continued growth is evident amongst all three of the major dollar store players. Of course, those three players will soon be two, with the announced $850 billion Family Dollar/Dollar Tree merger still in the process of being ironed out. The other big name in this category is not standing pat: Dollar General’s 2015 expansion plans include 730 new stores (in addition to a planned remodeling initiative that will update nearly 900 existing locations). The chain’s plans for 2016 are even more ambitious, with a planned 7% square footage increase by the end of next year.

The dollar stores are not the only value retailer eyeing a 2015 expansion. While Walmart announced last fall that it planned to pursue a more conservative expansion plan for 2015, the retailer is actually increasing its growth strategy in Canada. By January 2016, Walmart plans to add 40 new stores north of the border—including a recently revealed 29-store expansion that is part of a $270 million Canadian investment.

In sporting goods and outdoor gear, Dick’s Sporting Goods is continuing to open more units — as well as rolling out its new Field & Stream outdoor-focused brand. Robust fourth quarter numbers in 2014 helped Dick’s increase net sales 10% over 2013. Dick’s is slated to open 54 new stores in 2015, nine of which will be Field & Stream locations.

Other retailers with big expansion strategies underway in 2015 include Charming Charlie, with 55 new stores, a New York City flagship and an international expansion to Canada and the Middle East; Forever 21’s new F21 red concept; Hobby Lobby, with approximately 100 new units; and Men’s Wearhouse, which just had a very successful first quarter and is looking to expand. Ulta is in the midst of a five year strategic expansion that aims to open 100 new stores annually, and Uniqlo has announced the expansion of new locations in Boston, Chicago, Toronto, Seattle, Denver and Washington, D.C., to add to its existing 39-store U.S. presence.

One of the most remarkable expansion stories at the moment is Carter’s, which is opening 110 new stores in 2015 (65 Carter’s locations and 45 OshKosh stores). To put that in perspective, that is a new store every 3.5 days or so. The 5-year plan is even more ambitious, with 550 new stores on tap (300 Carter’s and 250 OshKosh). Carter’s growth is being fueled by some impressive financials, including a record $2.9 billion in 2014 — the retailer’s 26th consecutive year of sales growth.

While the retailers with more aggressive 2015-2016 expansion plans represent a relatively diverse slice of the industry pie, there are some important commonalities. Most noticeably is the fact that most of the expansion-minded names are value-conscious brands. While the economy has been slowly improving for several years now, it seems as if many consumers have been “trained” to look for value plays. This value-bias is especially apparent in the apparel sector, where several big-name apparel retailers that have dominated over the past 10-20 years at a higher price point are now suffering while other style and value-conscious brands like F21 red, Men’s Wearhouse, H&M and Zara have made successful moves into the marketplace.

From a geographical perspective, no one region seems to be performing dramatically better than any other — the expansions on tap for the next 12-24 months seem to be opportunity driven as much as anything else. There is always natural fluctuation and ebb and flow between different markets and different regional/retailer dynamics, but large-scale patterns are not immediately evident. The development landscape is equally diverse and well-distributed, with specific project types less important than the variety of retail and dining options available. The right mix of retailers, strong complementary uses and location are all important, but food options are especially in demand. Restaurant-heavy projects and grocery-anchored centers are a great way to drive traffic, and restaurants in particular (most noticeably fast casuals and many of the newer independent chef-driven concepts) are an increasingly popular inclusion.

One interesting expansion note of a slightly different variety is Payless ShoeSource, which is moving to a new larger store format. At a time when many retailers are tending to downsize, this bucking the trend may seem like a head-scratcher. Payless, however, sees the move as a way to level the playing field somewhat and compete with its larger-format competitors like DSW, Off Broadway and The Shoe Dept. Far more common are stories like Charming Charlie. Four years ago, Charming Charlie was looking for 8,000-sq.-ft. sites, and today the jewelry and accessories retailer is focused on finding locations more in the 4,000-sq.-ft. to 5,000-sq.-ft. range. Many retailers have found that they can still maintain the same level of sales while keeping costs down and improving sales-per-square-foot. Ultimately that enhanced efficiency works out well for both retail tenants and landlords.

While the industry has gone through some big changes in the last few years, and some long-term uncertainties remain, the continued bold growth strategies of so many prominent retailers would seem to indicate that there will definitely be some clear winners (and losers) in the months and years ahead.

Jonathan Lapat serves as principal with Framingham, Mass.-based Strategic Retail Advisors, a brokerage dedicated to providing real estate solutions to the retail and shopping center industry, and president of X Team International, an alliance of retailer brokers with a presence in 45 North American markets. For more information, visit xteam.net.

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