Missing the Forest for the B’s?
I’ve read a few thought-provoking articles recently about the state of the retail real estate marketplace that make the observation that A malls are generally doing better while B malls are continuing to tread water—or even beginning to fade away. Once again, I have to disagree on the B malls.
I think that kind of generalization is not telling the whole story. What seems to be missing from most of the articles I’ve read is the fact that there is substantial value still present in most B malls, (unlike the A malls which are already at their value capacity)—if you know what to look for, and are willing to put some effort into unlocking the value that exists within them.
It is important to remember that B malls are considered B malls because of performance, not potential. I think it’s a reflex for many analysts/articles to look at B malls as what they are, rather than what they can be—which is somewhat indicative of our industry. I think there may even be a misperception held by some that B malls are often in undesirable locations or have inherent and insurmountable structural/geographic limitations. Actually, I think that nothing could be further from the truth. The vast majority of malls—B malls included—are in a relatively prime location within their marketplaces. They tend to be in what is essentially the center of what I like to call the “retail magnet.” Generally speaking, in most cases, they became B malls as a result of increased competition, poor tenant mix, mismanagement or a combination of these factors.
So then how can you change that dynamic and unlock that value? I think it boils down to perception: B malls have to be thought about a bit differently than they used to be. The biggest and most important step is that owners and operators need to be a little more creative about how they tenant these malls. Typically, B malls are stuck with too much small shop space. They need to be thinking about how to move nearby “periphery” retailers into the mall—those that are in the power centers on the edge of the “magnet.” Let’s be honest, the retail landscape is still stretched pretty thin in many markets, making this consolidation strategy not just feasible, but also a mutually beneficial setup for retailers and mall owners. Prioritizing big boxes and anchors, and aggressively pursuing the kind of difference-making tenants that can help generate excitement and traffic can completely change the dynamic of a B mall.
Fundamentally, leasing strategies need to be focused on leveraging that quality real estate and strengthening the retail magnet. There is an abundance of distressed retail out there that really needs to be combined into one place—and what better place to do it than the mall!
B mall owners also need to think about adding a supermarket component or a wholesale club to bring in the daily traffic—diversifying their tenant roster in a way that will inspire more trips to the center from different groups of consumers. Adding other mixed-use elements and creating more of a destination feel can be invaluable, too, and I’m also a big proponent of adding civic uses such a library, post office, or DMV; anything that brings in different kinds of shoppers and different demographics at different times.
There is a reason why some savvy national developers like Rouse Properties have chosen to focus exclusively on B malls: Because they know there is inherent value that is not being recognized, utilized or maximized. I think that the owners, operators, developers and investors who can do that, and who can re-activate these commercial hubs, will potentially find themselves with properties poised for growth.
What do you think? Are there other ways B malls can stay relevant and compete? Please make a public comment below or feel free to e-mail me privately at [email protected].
Click here for past columns by Jeff Green.
Being Prepared for Turnover as More Retail Workers Say ‘I Quit’
By Rick Parker, [email protected]
“Is there a better job out there?”
This is a question that hourly employees within retail industry are asking themselves more frequently, often leading them to say “I quit,” to their current employer.
Consider trends from the government’s latest Job Openings and Labor Turnover survey (JOLTs):
More quits: About 344,000 retail workers gave notice in February, which is up 38% from when workers were least likely to quit during the recession (January 2010).
More job openings: Approximately 377,000 retail jobs were available in February, 98% more than at the worst point of the recession (July 2009).
Less candidate competition: At the toughest point of the recession, there were 6.2 unemployed people for every job opening (June 2009). Now, there are 3.7 unemployed workers per open position, a number that continues to fall.
This data shows less of a “buyers’ market” for employers as quits and job openings have been trending up – and things look to continue in favor of the worker. In short, even with relatively high unemployment, workers are realizing that there can be opportunity elsewhere. What’s an employer to do?
First off, understand that turnover matters, especially from a bottom-line perspective. Retail turnover can hover at 100% annually because most employees don’t last a year. If we assume, at a minimum, that it costs $1,000 to replace an hourly retail employee, with approximately 15 million retail employees in the United States, the industry is looking at a nearly $15 billion problem.
A gut reaction to combat turnover may be pay increases, but many employers may still be feeling tapped out financially – they trimmed costs during the recession and could be facing higher hard costs driven by labor costs, gas prices or other commodity price increases. But there are some relatively inexpensive or non-monetary efforts hourly employers can make to help decrease voluntary turnover:
Recognition: Never underestimate the power of a sincere “thank you.” It matters: Globoforce, which studies employee recognition, found that 78% of people are motivated in their job because they routinely receive recognition for a job well done.
If you have an employee who has gone above and beyond, let him or her know that it did not go unnoticed. Look for overt ways to call out those employees who consistently deliver. It’s much more rewarding to come to work for an employer who appreciates your efforts than one who doesn’t appear to know you exist.
Training: The majority of your workforce does not want to do the same thing, day in and day out for the rest of their working lives. Offer your employees cross-training opportunities that will allow them to learn new skills and change up their days. As your employees learn more about the business, they will become more engaged in their work and more likely to reach the next level.
Some proof: At The Container Store, which says its turnover is an industry-low 10%, first-year, full-time employees are known to log more than 260 hours of formal training.
Scheduling: Snagajob third-party surveys show that hourly hiring managers need workers who can be available for a particular shift. But, hourly workers also desire stability. A study from The University of Chicago reports that “employees with less predictable work schedules report higher levels of stress, greater work-to-family conflict and more interferences with non-work activities such as scheduling doctor’s appointments, socializing with friends and eating meals together as a family.”
Keeping staff schedules consistent will lessen headaches for everyone involved. That said, the best employers also allow for flexibility when an employee’s situation changes. For example, Working Mother magazine ranks the Best Companies for Hourly Workers, and the 2012 honorees – Target, PetSmart and Best Buy among them – offer schedule flexibility using employee trading of full or partial shifts; shift time off that can be made up during the pay period; and volunteer overtime.
Hourly employers that use a combination of employee recognition, training and accommodating schedules to keep their employees happy will go a long way toward reducing costly employee turnover. Instead of looking elsewhere for that better job, your employees may find their next job within your own ranks, even as the job market continues to improve.
Rick Parker is senior VP of marketing for Snagajob, the largest hourly employment network for job seekers and employers and the only company to provide both sourcing and talent management solutions to the hourly industry. Contact him at [email protected].
Williams-Sonoma Q1 earnings slip, raises outlook
San Francisco — Williams-Sonoma Inc. reported Thursday that first-quarter profit dipped to $30.7 million, from $31.6 million last year, but results topped Wall Street estimates and the retailer has raised its full-year earnings forecast.
Sales increased 6% to $817.6 million, also surpassing analysts’ estimates of $811.7 million. Same-store sales grew 5.4% overall, driven by strength from Pottery Barn (up 9.1%) and West Elm (up 22.1%).
“We have good momentum entering the second quarter, and we have made progress on our strategic initiatives for each of our brands to help ensure that the strong start to 2012 leads to similar results for the year,” said Laura Alber, president and CEO.
The company said it will temporarily close four Williams-Sonoma stores in fiscal year 2012, along with three Pottery Barn stores, three Pottery Barn Kids and one West Elm store, all of which will be re-opened following a remodel.
In related news, Williams-Sonoma announced that it has named Anna Last, former editor-in-chief at Martha Stewart Living Omnimedia’s Everyday Food, as its senior VP and creative director.