Open-Air, Three Ways
Chris Ressa does not put a lot of stock in the word “experiential.” Though it’s become a companion to the word “retail” in the real estate industry, DLC Management Corp.’s senior VP of leasing finds it not up to the task of describing what’s too often missing at shopping venues.
“It’s too specific. It describes one thing, and not all that is really needed. I prefer the word ‘different,’ because that’s what brings people to your center,” Ressa posited. “Is there something available there — be it a trampoline park or a restaurant or a single item in a single store — that they cannot get anywhere else? That’s what building traffic is about.”
To his point: No matter if a center is open-air, enclosed, or a simple neighborhood strip center, product differentiation rules the day. Open-air centers come in many sizes and varieties, so Chain Store Age took a look at what’s new at three different properties run by three forward-thinking developers: Retail Properties of America Inc., Mid-America Asset Management, and DLC.
Last year, DLC did, indeed, sign Launch Trampoline Park to a lease at the Court at Deptford, looking for it to inject a shot of different into a fairly average power center in Deptford Township, N.J. Since purchasing the 361,000-sq.-ft. center in 2014, DLC put a full-bore renovation and remerchandising program into effect that not only reimagined what new types of formats and restaurants could build traffic, but also what traditional retail mix could increase sales. In 2015, a 60,000-sq.-ft. Burlington Coat Factory opened at the center and Party City relocated to a larger 17,000-sq.-ft. space next to Dress Barn. The Court at Deptford’s newest anchor, Hobby Lobby, opened its doors last year.
“DLC is always looking for opportunities with properties that we see as undervalued,” Ressa said. “Deptford is in the Philadelphia MSA [metropolitan statistical area]. It’s a really soaring trade area — very dense with high income — and the center has great access between two busy roads. It was a power center that was in transition.”
After allocating the 60,000 square feet to Burlington, DLC was left with an L-shaped box that Launch Trampoline fit into like a jigsaw puzzle piece. “We wanted them because of what they brought to the party,” Ressa said. “We came in and reconfigured the center in a way that made sense for the community today.”
Growing, upscale communities need their Party City’s and Hobby Lobby’s, but they also need their Ann Taylors and Sur La Tables. In Naperville, Ill., an ever-burgeoning western suburb of Chicago, RPAI used open-air retail development to, in effect, add a High Street annex to an already popular downtown.
Main Street Promenade is a 182,000-sq.-ft. mixed-use development that has melded with downtown Naperville and made a significant contribution to its roster of more than 100 national brand and boutique stores and 40-plus dining establishments. A population of 215,000 sporting $130,000 average household incomes within a five-mile radius supports such a retail collection. Main Street Promenade’s 103,000 sq. ft. of street-front retail sports the old-fashioned, hanging signs of J. Crew, Hugo’s Frog Bar & Fish House, Anthropologie, White House Black Market and the aforementioned Ann Taylor and Sur La Table.
“Naperville is a great submarket, one of a handful of suburban downtowns that actually work,” said the president of RPAI’s Eastern Division, Matthew Beverly, who as VP of investments guided its acquisition of Main Street Promenade. “It fits with our stated strategy. We don’t chase tenants or configuration. We look for the best real estate in the best submarkets.”
In terms of demographic and sociographic effects, Beverly sees two scenarios informing RPAI on just what defines a desirable submarket for the kind of retail center it provides. One is a busy and time-strapped society that is learning the advantages of live-work-play environments putting nearly all they need within easy reach. The other is dual-income households that have abandoned the traditional nuclear family dinner and TV hour and go out to eat on a regular basis, often following the evening meal with a little strolling and window shopping.
The latter is surely the dynamic that has most contributed to the long-term success of Geneva Commons, a 15-year-old Mid-America-run complex in Geneva, Ill., not far from Naperville. Unlike Main Street Promenade, which is fused to its downtown, the nearly half-million-sq.-ft. Geneva property sits a little west of downtown. And while it retains Geneva’s upscale retail flavor, it augments it with national brands such as Barnes & Noble, Crate & Barrel, H&M and Victoria’s Secret. It’s also made itself its own brand of civic center.
“I think people see it as an extension of downtown, but what draws them is convenience. You can park right in front of the store you want to go to,” said Cathy Charhut, Geneva Commons’ one and only asset manager. She helped open the property in 2002, was retained to run it when Mid-America Asset Management took over its operations in 2005, and has never left.
Geneva Town Center has long fulfilled the “be different” edict with the symbiotic retail relationship it has developed with its downtown. But in achieving that position, it’s also been a standout in the field of experiential retail.
For several years, Geneva Commons has sponsored a concert series that features local talent every Wednesday and Sunday in June. It’s become a traditional summer happening in the region, drawing thousands of people who set up lawn chairs and blankets for picnicking. At Christmas, the center does a tree lighting ceremony with horse-drawn carriage rides and pictures with Santa. Mid-America is now making improvements to common areas that will make possible a series of outdoor movie nights this coming summer.
It recently installed a 20-ft.-by-14-ft. high-definition screen that will show movies, but also serve as an advertising vehicle for the center and its tenants. Two smaller screens will be added on either side of the center’s bell tower to accommodate as many moviegoers as possible. Also coming to Geneva Commons this year is more comfortable seating, a fire feature, and two interactive art sculptures.
“We’re always trying to attract the high-end tenant with the newest and hippest item, and we were inspired by The Bean sculpture in Chicago’s Millennium Park,” said Charhut. “We don’t know what the sculptures will be yet, but we’ve sent out a call to artists for proposals.”
But different doesn’t have to be a hundred-thousand-dollars’ worth of interactive sculpture. It can be something as simple as the blow-dry bar that DLC will soon be adding at The Court at Deptford.
“It will be the only one in Deptford, and it will bring in the female shopper,” Ressa said. “We’re a consumer-based economy, and if we offer people something different, we’ll be successful. It’s why, in the age of online shopping, QVC is still very successful. I was watching the other night and bought a baseboard cleaner they were showing. Why? Because it was something unavailable anywhere else.”
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It’s no surprise the trend of opening retail spaces in historic buildings is booming and shows no sign of slowing down anytime soon. With urban redevelopment picking up steam in many cities across the country and vibrant mixed-use urban communities increasingly becoming a familiar feature on civic landscapes, opportunities for repurposing, renovating and reimagining historic spaces for contemporary retail use are abundant and in high demand. They present an appealing option to retailers looking for great space in dynamic and growing markets.
For all of the advantages that come with space in a historic building, there are plenty of challenges, as well. From design and functionality to safety and technical issues to coding and regulatory limitations, a historic space may require a number of expensive and/or time-consuming steps and solutions that can lead to delays, have an aesthetic impact and potentially affect the utility of the space.
Understanding the scope and scale of some of these challenges — as well as the strategies and best practices retailers can use to accommodate or overcome the most common obstacles associated with occupying space in a historic building — is an important first step for any retail decision maker considering such a move.
One of the most common challenges a retailer is likely to face when selecting a location in a historic building is adapting and working within the design and operational limitations that may be in place.
Many retailers have developed their own criteria and brand standards for what their space is supposed to look like and how it is supposed to operate. Those standards may include everything from the way they stage their merchandise to the overall look and feel of the facility. This might sound like a minor issue, but it can present a significant challenge when a retailer’s standards and practices butt up against historic and potentially limiting rules and regulations.
If a brand or a business is used to doing things a certain way, it can be tough to accept that it simply isn’t possible to continue doing so in a new space. The open ductwork and exposed brick that are so popular in many stores today may simply not be possible in a historic building, both for reasons of historic preservation and the difficulty and expense of modifying existing infrastructure.
Costs and complexities
Space in older buildings often comes in non-standard shapes and unusual footprints. That alone can be an impediment for some retailers, and it may require comprehensive redesign or reimagining of how the store will function. It is common in many urban markets for available spaces to be multistory units, which can be a challenge for retailers used to stores and layouts that occupy a single level. They are also more likely to be longer, rather than wider, posing additional design and layout challenges.
The challenge of a multi-story space extends well beyond the basics of store layout and customer flow. Multiple levels add a whole other layer (both literally and figuratively) of complexity regarding HVAC and other infrastructure.
In general, the cost per square foot to do any renovations or tenant improvements tends to be more expensive in a historic property than in a traditional suburban box. These are complex buildings that may have hidden issues and almost always come with more requirements and specifications. Those historical complexities can become more significant when changing uses — adapting an old warehouse to a retail space, for example.
One common expense and design and development headache that occurs in such instances involves dividing a building up into smaller spaces or individual units. Such a step is considered to be a change in occupancy, and any dividers would need to be fully functional fire walls, for example.
Changes to the façade or the exterior of the building may face particularly restrictive regulatory hurdles and proposed changes may first have to make their way through a complex approval process. In the city of Detroit, for example, that step alone can take 60 days. In other scenarios dealing with state or federal approvals, 90 to 120 days is more typical.
One of the appeals of a historic space is the potential to take advantage of historic tax credits. While such a financial benefit is certainly welcome, a historic property designation and corresponding tax credits come with a very specific set of rules about what is and is not permissible when it comes to renovating the space.
A slight deviation from those guidelines would result in punitive damage in the form of a loss of those (sometimes valuable) tax credits. Unfortunately, miscommunication between landlord and prospective tenants is all too common, and retailers may not have all the information they need in terms of design restrictions. Consequently, a question that needs to be asked and answered early on in the process is: “Are there any design limitations relative to historic guidelines?”
Most established retailers have a formal process for identifying, evaluating and selecting potential spaces, but some of that procedural standardization can be less of a help and more of a hindrance when it comes to looking at historic buildings.
Retailers need to be thoughtful and flexible as they evaluate potential sites, and they would be wise to work with an experienced consultant or other real estate partners familiar with historic properties and the issues facing retailers.
Renovating and retrofitting historic spaces for a contemporary retailer is equal parts art and science. The result, when executed correctly, can be a retail space that is both an aesthetic and experiential triumph, a space with the potential to deliver outstanding ROI for the upfront cost it takes to reconfigure and renovate.
Bob Kraemeris a co-founder of the Detroit-based Kraemer Design Group.
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GameStop Updates its Analytics Game
GameStop’s shoppers are becoming increasingly digital — an evolution that is also narrowing the window between when shoppers purchase merchandise and when they expect to receive it.
Eager to stay engaged with shoppers within this shrinking post-purchase gap, GameStop launched a new e-commerce strategy just prior to its holiday rush focused on driving post-purchase revenue and creating more satisfied customers during this critical selling period.
GameStop’s director of multichannel, Bill Graham shared his thoughts about the initiative — and expectations — with Chain Store Age.
What is GameStop doing to improve the post-purchase experience for customers?
Our strategy, which we call the “new moment of truth,” focuses on the shopping experience after shoppers click the submit button and their transaction is on the way. The post-purchase experience is just as important as the discovery and purchase portions of the journey.
For example, more than half our customers will track their package to find information about delivery and more. It’s up to us to streamline how that information is presented and to continue engaging with the customer wherever they are post-purchase. That’s why we created a branded custom tracking page that keeps shoppers in our ecosystem versus directing shoppers to third-party sites for package information.
The page, which we created with the help of our partner Narvar, lets shoppers track deliveries, view product recommendations and link back to our site to find trade-in values for their previously played games, consoles and electronics. These pages are all delivered responsively, so they can be viewed on any computer or mobile device.
How do you accurately measure customer usage?
Our Narvar product has given us a significant amount of post-purchase analytics we can learn from and act on. We analyzed activity to see what potential improvements we need to make in terms of packages arriving on time, proactively working to solve any carrier hiccups, and allowing guests to sign up for package alerts — another new service launched in November.
This is an artificial intelligence chatbot on Facebook Messenger, also through Narvar, as well as our traditional SMS/ text message package alerting. Shoppers can opt in for these services for free to receive messages about their online orders. Both messaging options have about a 20% opt-in rate, with 25% of shoppers using Messenger and 75% using SMS.
Can you share some results?
At least 30% of folks hitting our branded tracking experience are clicking back through to our website.
These shoppers are also converting back to shoppers at a competitive rate. The experience shows customers more items they may want or may have missed the first time around.