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Real Estate – in New York and Beyond

BY Katherine Boccaccio

Retailers and developers from around the country are preparing to attend the International Council of Shopping Centers’ New York deal-making convention in New York City on Dec. 6 and Dec. 7. Chain Store Age talked with Ivan L. Friedman, president and CEO of New York City-based retail real estate advisory firm RCS Real Estate Advisors, about what the industry has in store for the New York show and beyond.

As retailers prepare to attend the New York deal-making show in early December, how would you describe the current state of retail?
Retailers are now resigned to a new paradigm. Their gross margins are up and they have better control of their inventories and other costs. As a result, payroll and other SG&A expenses are down, so we’re seeing retailers that are profitable once again. But sales trends are still very much uncertain as we work against the big 2009 sales declines. In terms of real estate, we’re seeing very limited, more selective expansions by retailers, as well as controlled capital expenditures. Ultimately, retailers are still sitting on their cash.

Is New York a viable retail expansion market? What other markets should retailers be considering for their expansions?
Investment and overall opportunity in New York City are great. The ability to do a lot of business here is also great; there are plenty of available locations. But, rents are starting to creep up again and I would tell you that expansions in the city are not for the faint of heart. New York City and the five boroughs, when it comes to street locations, are still very expensive on a dollar per square foot basis. So, if a retailer is looking to open a store in Manhattan, Times Square or 14th Street, for example, that retailer is going to likely pay rents in excess of several hundred dollars to, in some cases, over a thousand dollars per square foot. We’re also starting to see landlords increase rents on currently occupied spaces where some tenants are not able to sustain the increases, so we’re likely to see additional space come on the market as a result.

Retailers should remain focused on the demographics of particular markets they’re interested in and choose locations that make sense for them on an individual basis. Some markets, demographically, won’t make sense and, of course, there are still a few markets that are suffering economically and therefore should be avoided.

As you look ahead to 2011, should portfolio optimization still be a priority for your retail clients?
Retailers should always be looking at store-level profitability. There’s always going to be a bottom 10%-20% of a retailer’s stores that are underperforming. So retailers should always be focused on optimizing their portfolios and improving that bottom 10%-20%. A number of retailers have outsourced their real estate departments to third-party providers to do this for them and are seeing some great results.

What other priorities should retailers have in 2011?

Retailers have to continue to control expenses and look at their rents as a percentage of sales, especially as landlords try to put rent increases in place. Retailers need to be cautious, making sure their rents do not become disproportionately high compared to current sales trends.

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Blockbuster touts ‘less waiting’ in first TV campaign in three years

BY CSA STAFF

DALLAS – Blockbuster has announced the launch of its first national television advertising campaign in three years. For the first time since 2007, the company will promote itself on every major network and cable networks with its campaign, "Less Waiting. More Watching." The 30-second spot debuted Nov. 22 on programs like NBC’s "Today" show and ABC’s "Dancing with the Stars: Finale."

Through the campaign, Blockbuster said it is hoping to reinforce the message that its is the place to go to get the hottest new releases on their release date, many of which are not available at Netflix or Redbox for another 28 days. The campaign also reintroduces Blockbuster as a multi-channel entertainment provider of movies.

According to the company, the campaign uses humorous situations, such as a fictional flight being delayed for 28 days, or diners being told their table won’t be ready for 28 days, to show how in most cases people would never wait that long for something. This is illustrated by the commercial’s voice over:

"You’d never wait that long. So why wait 28 days for new releases? Blockbuster has hot new titles, like The Kids Are All Right and Charlie St. Cloud, 28 days before Netflix and Redbox. Rent them in store, by mail, stream on demand and on the go. Blockbuster. Less waiting. More watching."

"’Less Waiting. More Watching.’ says it all," said James Keyes, Blockbuster’s CEO. "It reminds everyone that we are the first and best source for the hot new releases. Blockbuster has your favorite new movies on the day of the release and you can get them through multiple channels — our stores, by mail, streaming on Blockbuster on Demand and downloading to mobile for on the go viewing."

The campaign, developed by Euro RSCG, will evolve with a second TV spot that will begin airing on Dec. 7, the company reported.

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Mobile barcodes: Key ingredient in the cross-channel commerce mix for retailers

BY CSA STAFF

By Carsten Thoma, [email protected]

Mobile is not just another customer communications channel; it is rapidly evolving into an effective commerce channel. Strengthening the link between existing channels such as physical and online stores, mobile now enables customers to start shopping using their mobile devices and finish the process online, via a contact center, in the brick-and-mortar store, or even on the mobile device itself.

But customers are not just using their phones to purchase; they are looking for information across the entire buying cycle, including searching for products, locating stores, checking order status or product availability, getting product overviews and photos, reading customer reviews and product specifications, and arranging for in-store pick-up. Mobile devices enable customers to get information whenever and wherever they want. To meet these needs and help drive cross-channel commerce initiatives, retailers need to be able to communicate bi-directionally with customers and prospects effectively via the mobile medium. One of the ways to do that is by generating and enabling mobile barcode functionality.

A newer concept here in the United States, mobile barcode technology, used extensively in Asia and gaining traction in Europe, presents significant potential benefits to retailers. With this functionality, retailers can enable consumers to use their smartphones almost as a kind of scanner — but one that does much more than simply show the price of a product. Most consumers, however, may not be aware of this capability. Many of the newer phones, including the newest model iPhone, BlackBerry and Android, for example, can deliver this functionality. However, it requires an education on the customer side for this functionality to be fully maximized.

So what can your customers — and you as a retailer — do with this functionality?

To put this into context, consider the products on your store shelves. There is typically little space to explain the products. Placing a barcode on the products, which a consumer can scan with his phone and be instantly linked to a website page ensures he is then able to receive a wealth of information on the product right at his fingertips, including customer reviews, a promotion, additional product details, etc. Quicker and more efficient than requiring the consumer to type a product or model number into your main website page on his phone, the barcode can effectively help guide and encourage a purchasing decision on the spot.

Another example of how mobile barcodes can be used is in conjunction with an advertising campaign. You can include a barcode next to a product image in an advertisement. Using their mobile phone, a consumer can scan this barcode and be immediately directed to a mobile website. From there they can place the product in a shopping cart for immediate purchase or purchase from their PC later. It can take just a few minutes from a consumer reading an advertisement to turn that experience into a sale, without the consumer having to do much more than take a scan of the barcode from the comfort of wherever they are at that time. Barcodes can be included on billboard advertisements as well, with the same result. Looking down the road, it will become possible as the technology matures for retailers to be able to create heat maps to see where the billboard advertisements had the greatest impact, helping to shape future advertising and marketing decisions.

Mobile barcodes can also help drive traffic into your store. For example, a customer may purchase something online, and as a thank you, you can then email that customer an in-store coupon or voucher with a barcode. Without ever having to print out the voucher, the customer can use his phone to show that email at the register, and the store clerk can simply scan the barcode during checkout. Again, this makes it as easy as possible for the customer and helps drive sales.

Through the use of social media, your customers can also help drive sales by leveraging mobile barcode technology. Creating their own viral, community-driven marketing programs, customers may re-tweet sales offers with links to barcodes or share coupons with Facebook friends, encouraging additional sales. Using your e-commerce system, you can place controls on how long these offers may run, how many vouchers may be available, etc.

Mobile barcode functionality is emerging here in the United States, but the technology is available and affords many benefits to both retailers and customers alike and helps to link cross-channel commerce initiatives. In a “commerce anywhere” world, this presents you with a way to encourage a sale at the moment the customer is engaged with your business wherever he or she may be and enables that customer to easily and immediately make that purchase in a way that’s beneficial to them.

Carsten Thoma is president of hybris U.S. Thoma is also the COO of hybris Group and co-founded multichannel commerce software provider hybris in 1997. He can be reached at [email protected]. For more information on hybris, visit hybris.com.

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