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SPECS: Focus on the Future

BY CSA STAFF

All eyes were on Texas as Chain Store Age’s SPECS conference celebrated its 50th annual show with an opening keynote by President George W. Bush. The 43rd president of the United States, who participated in a discussion moderated by Walgreens president and CEO Gregory Wasson, was given a standing ovation by attendees.

The appearance by President George W. Bush was a highlight of the show, which was held at the Gaylord Texan Hotel, Grapevine, Texas. Attendance at the event, which is targeted to retail and restaurant professionals, architects and other specifiers involved in store design, planning, construction and facilities management, was up 25% over last year.

The show combined dynamic keynote presentations with quality workshop sessions and a lively exhibit floor showcasing the latest in store planning/design, construction and facilities products and services.

The educational program was designed to identify key trends and provide insights and innovative solutions to help attendees give their companies a competitive advantage now and in the years to come. In an acknowledgement of technology’s increasingly important role in store development and facilities, the program included a series of tech boot camps, which offered attendees hands-on knowledge of new and cutting-edge on-the-job technologies and solutions and social media tools.

SPECS offered plenty of business networking opportunities, on and off the exhibit floor. There were planned meetings during the annual SPECS Exhibitor/Retailer Face-to-Face Information Exchange, which provided the ideal forum for retailers to discuss business needs with suppliers in a direct, time-efficient manner. And there were informal meetings during workshop sessions, breaks, meals and evening receptions. Indeed, business partnering, long the hallmark SPECS, was the centerpiece of the 50th show.

The 51st annual SPECS conference will be March 15-18, 2015, at the Sands Expo at Venetian/Palazzo, Las Vegas. Look for updates on specsshow.com.

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Industry Leaders

BY CSA STAFF

Real estate is a complex issue no matter what industry you’re in. For retailers, who typically operate on slim margins and are generally the first industry to feel the effects of variations in consumer spending, navigating the tricky waters of real estate can be especially challenging.

Fortunately, there are a number of expert solution and service providers that specialize in aiding retailers in the development and execution of effective real estate strategies. The companies listed below all offer invaluable assistance to retailers in different areas of real estate management, taking the uncertainty and confusion out of a process where there is little room for error.

A&G Realty Partners

Melville, N.Y.
agrealtypartners.com

A&G Realty Partners, a commercial real estate advisory and investment group, brings experience, capital and decades of established and trusted relationships. A&G offers a comprehensive set of services that address both common and complex industry issues in today’s marketplace and combine both capital and expert strategic guidance through the entire real estate cycle. A&G is recognized for the creative solutions it applies across a broad spectrum of industry problems, particularly in growth, dispositions, lease renegotiations and due diligence.

Solution Spotlight

A&G engages in a variety of acquisition strategies, including purchasing real estate and mortgages. The company provides mortgages, equity and “rescue” capital, and participates in tactical joint ventures. Through these means, A&G looks to create the most value out of the asset. It creates value out of distressed or underperforming assets by deploying capital and combining that with the team’s restructuring expertise.

Virtual Premise

Atlanta
virtualpremise.com

Virtual Premise is a leader in best-in-class solutions for retail real estate information management. The company’s software and services help customers deliver on their business strategies by better managing their real estate portfolios. Virtual Premise solutions include strategy and analytics, portfolio management, lease administration, project management, transaction management and lease abstracting services. Virtual Premise differentiates itself by providing best-in-class software that provides superior visibility and control at a value that is unmatched in the industry. Virtual Premise is wholly owned by CoStar Group.

Solution Spotlight

As the expert in cloud-based real estate information management software, Virtual Premise software helps customers become efficient retail organizations that eliminate information silos, open stores faster, improve store expense management, better manage their existing portfolio decisions and leverage all available lease terms to their advantage.

DJM Real Estate, a division of Gordon Brothers Group

Woodbury, N.Y., and Boston
djmrealestate.com

DJM Real Estate, a division of the 110-year Gordon Brothers Group, specializes in occupancy savings, real estate dispositions, growth strategies, strategic reviews, auditing, advisory and equity investments. DJM Real Estate has serviced the nation’s most recognizable brands in healthy and distressed situations. DJM Real Estate clients have included Toys R Us, Pep Boys, Yum! Brands, Food Lion, CompUSA, BI-LO, Office Depot, CVS, Dollar Tree and Winn-Dixie. DJM Real Estate is a leader in finding innovative ways to consolidate and reconfigure real estate to achieve the highest possible value.

Solution Spotlight

DJM Real Estate specializes in occupancy savings, real estate dispositions, growth strategies, strategic reviews, auditing, advisory and equity investments.

Buxton

Fort Worth, Texas
buxtonco.com

Customer analytics firm Buxton works with retailers to provide answers to questions around growth and expansion strategies. By knowing where its customers are, a retailer can prioritize existing sites and pinpoint new store or restaurant locations, locally, regionally or internationally, with the greatest sales potential — right down to the intersection. Since 1994, Buxton has worked with more than 2,000 clients, such as Tommy Bahama, OfficeMax, Marriott, TCBY and more.

Solution Spotlight

SCOUT is a Web-based real estate and analytics platform that allows users to analyze any location in the U.S., run custom reports and visualize data on dynamic maps. SCOUT has been utilized by some of America’s leading retailers to select high-performing locations for their stores. Utilizing customer analytics, every decision is backed by hard facts and objective data. Buxton can predict store performance with great accuracy, helping retail chains allocate the right resources for each location.

Bialow Real Estate

Needham, Mass.
www.bialowrealestate.com

Bialow Real Estate is a full-service real estate consulting firm dedicated to servicing the needs of local, regional and national retailers. Based in the Boston metropolitan area with regional offices in Chicago and Atlanta, Bialow’s team of consultants are experienced real estate professionals who specialize in tenant representation only. Bialow works with retail chains and franchised companies that seek to outsource all of the traditional functions of an internal real estate department.

Solution Spotlight

The Bialow team specializes in directing all facets of a retailer’s growth, inclusive of strategic planning, market analysis, site selection, lease negotiations and coordination of the construction process on through to store opening. Bialow works in congruence with an established network of brokers throughout every major metropolitan area in the U.S. The team prides itself on providing the personalized service of a boutique firm with the strength and resources of a large organization.

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Changing Perceptions

Toward the end of 2008, it became painstakingly obvious to retailers that impulse spending was out and frugal saving was in. Faced with an imminent recession, staggering job loss and quickly depleting discretionary and savings accounts, consumers began to shift their focus to value. The impact of such a large-scale economic event and an abrupt consumer focus shift would appear to alter the fundamental realities of retail.

As the recession slowly becomes a fading memory, consumers have grown accustomed to getting good deals, and, fundamentally, customer expectations and priorities have shifted. Any stigma associated with discount retail in the past has evaporated. Today, it is the opposite: Looking for a bargain has become cool. Even the meaning of the word discount is changing. Discount has become value. Everyone and everything is shifting in favor of value, looking for ways to get value into new spaces and in front of more customers.

Not surprisingly, no category of retail has been as profoundly transformed by this shift as discounters. What was once an afterthought in the retail segment, discount retail has rapidly gained acceptance and validity in the industry, becoming a sought-after entity by landlords and shopping centers and finding co-tenancy alongside prominent retailers.

A shift in perception

Over the past few years, many major changes in retail have occurred — big brand names went out of business, and there was a tremendous amount of consolidation seen throughout the industry as downsizing or rightsizing became a common theme. As the recession continued and the importance of value increased among consumers, discount value brands made up the majority of retailers that were expanding. To compete, everyone from luxury and upscale names like Neiman Marcus and Polo, to established discount brands like Kmart, began looking to capitalize on these changes by promoting their own new and existing discount concepts.

The influence that the perception shift in value shopping has had on the industry is perhaps most evident from the shopping center tenant mix we’re seeing today — the retailers that were previously discouraged from occupying certain spaces through the use of covenants and leasing restrictions are now fully accepted into the mix. At Easton Gateway in Columbus, Ohio, for example, Dick’s Sporting Goods, Whole Foods and REI coexist happily with Saks Fifth Avenue’s discount spin-off Saks OFF Fifth. The change has been so dramatic that it has gone from some developers and landlords actively avoiding discount retailers to now actively seeking them out.

The omnichannel significance

The increasingly complex and demanding nature of retail today is also a very important, but not as obvious, aspect within the story of discount retail’s reinvention. Retailers that are finding success today are deploying cohesive, strategic execution across multiple shopping channels, such as mobile, digital, brick-and-mortar, direct mail and TV to drive value to the customer.

While it’s difficult to determine the results of some of these channels, it is obvious that there is a lot of money to be made in the discount segment of retail, and high-end retailers have taken notice. Polo, Nordstrom and Saks Fifth have always had discount spin-offs, but these retailers are no longer simply using their outlet stores as a way to dispose of unsalable goods — they are actually hiring buyers for those stores as well. Nordstrom Rack is one prominent example of a store that was once little more than a “clearance store,” but today is really just another retail channel.

Ultimately, observing and experiencing the visible and positive effects that an omnichannel approach can bring, developers, investors and retailers have discovered that discount retail is actually just another important channel to consider in appealing to a broader range of consumers.

The new face of discount retailers

What discount retailers look like today — and where they can be found — is strikingly different than just a few short years ago. While it would be a mistake to make sweeping generalizations about this diverse segment (Nordstrom Rack is quite different from Goodwill, for example), one thing that retail analysts and observers can say with confidence is that 2014 will likely see new and exciting chapters written in the continuing story of retail’s reinvention.

However, with so many preconceptions swept away, and retailers and consumers alike coming up with their own definition of value, there is a compelling case to be made that it’s hard to truly differentiate who is a discounter anymore — it has become just one more value-add retail channel in order to compete in a complete market.

Jason Baker is a principal at Houston-based retail brokerage firm, Baker Katz. Dave Cheatham is the president at Phoenix-based Velocity Retail Group. Baker and Cheatham are partners of X Team International, an alliance of retail real estate specialist with locations in the United States, Canada and Europe.

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