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Spotlight on The Tile Shop

BY CSA STAFF

With home remodeling and housing starts on the rise, The Tile Shop is in a sweet spot. The specialty retailer of manufactured and nature stone tiles reported an 8.8% increase in net sales and a 4.9% increase in same-store sales for its first quarter. With 130 stores in 31 states, The Tile Shop displays its tiles in a showroomlike environment that includes full-room tiled displays and a design studio where customers can utilize 3-D renderings to visualize their design ideas.

Chris Homeister joined The Tile Shop as COO in October 2013, and became president and CEO in January 2015. Prior to joining the company, he served as general manager and SVP of Best Buy’s entertainment business group.

Chain Store Age editor in chief Marianne Wilson spoke with Homeister about The Tile Shop and its plans for the future.

How is The Tile Shop positioned?

The Tile Shop has a unique retail offering that caters to both the trade professional and to general consumers who are looking to update their tile options. Our trade professionals include general contractors, interior designers, flooring installers and customer homebuilders.

What changes have you implemented since becoming CEO?

I’ve focused my efforts on three areas: developing our people, implementing new programs for the professional consumer and strategic store growth — all of which contributed to a dramatic improvement in financial performance. Many initiatives were aimed at encouraging the same type of entrepreneurship that fueled the company’s growth in its early years as well as improving the customer shopping experience.

How are things going?

Our initiatives are working well: Between January 2015 and June 2017, we’ve opened 23 new stores, comp-store sales increased in excess of 7% each year, and our share price has more than doubled. Further, employee turnover has significantly declined and new store financial performance has improved dramatically.

Turnover of sales associates in your most recent first quarter was down nearly 50% from two years ago. How do you explain it?

Over the last couple of years, we’ve placed a significant emphasis on ensuring that our sales associates are growing and developing by enhancing product knowledge and sales skills, expanding our sales career path, and leadership development among our current workforce. Developing great people is at the core of our business, and is the key element that has been driving our success.

I’ve also made it a personal priority to establish one-on-one relationships with store managers at each of The Tile Shop’s stores. And, I personally speak to each new store manager before she or he is selected to lead our store.

The customer is at the center of everything that we do, and I want to ensure that we have leaders in our store who share this same vision. Through these initiatives, The Tile Shop has a created a class of tenured, motivated leaders at the store level who have the skills and confidence to provide an exceptional customer experience. Just as important, they recruit sales associates and designers to the store that make this vision come alive every day. Further, a pipeline of talent is being readied to step into new leadership roles as the company expands.

What are your key priorities?

This year, The Tile Shop is focused on expanding our brand to additional key markets, such as the Southwest, to inspire homeowners and professional contractors alike to realize their home design dreams. We will also continue to build upon our success with improving the e-commerce shopping experience, as well as finding unique ways to showcase our tile offerings via innovation and technology to further enhance our customer experience.

In a challenging retail environment, The Tile Shop is thriving. What are key factors in the company’s success?

In the first quarter of 2017, we reported record sales and profits. And we’ve continued to see these record numbers due to our effectiveness of consistently providing a high customer service level, which is certainly a key to our high average order and overall satisfaction.

Additionally, our pro business has never been stronger, where we are viewed as a trusted partner with our professional customers at each store location.

Is online a priority in this niche?

More than 90% of our customers visit our website before, during and after their shopping experience with The Tile Shop. This is exactly why we’ve made significant improvements to our website over the past several years, including the launch this past year of an innovative and interactive new design tool called Design Studio that also allows professionals and general customers to customize their room design using The Tile Shop products. We’ve also improved product pages and design content so it’s easy for customers to get inspiration for their next tile project.

What is the average store size?

The size varies based upon location, but 14,000 sq. ft. is our new average showroom size.

What’s the store experience like at The Tile Shop?

We’re focused on providing a premier experience that starts with our sales team. We’ve placed significant focus on enhancing product knowledge, customer engagement and leadership development among our current workforce. The result of these efforts has been a class of tenured, motivated leaders at the store level, who have the skills and confidence to provide an exceptional customer experience.

Also, sales associates have been trained to use Design Studio to develop a blueprint of a customer’s space, and specify material requirements and design objectives.

We introduced a new store format in 2016, and it is performing extraordinarily well. It works in both urban and more traditional suburban environments. It includes more design tables and new merchandising strategies, as well as an expanded installation and accessories assortment. In addition, our professionalgrade tools have also increased greatly, which is another reason for our strong growth with this class of customer.

About how many new locations are planned for 2017?

We will be opening approximately 12 to 15 stores in 2017, as well as entering into a new priority market later this year.

We are opening strip center and freestanding stores. We are also opening in urban locations, most recently in Atlanta (Buckhead) and Washington, D.C.

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Project Profiles

BY CSA STAFF

The Neighborhoods at Butler

Location: Gainesville, Fla.

Size: 2.1 million sq. ft. (1.75 million sq. ft. with an additional 350,000 sq. ft. under development)

Developer/Owner: Butler Enterprises

Grocery anchor: Publix (West), Publix (Central), Trader Joe’s, Aldi, plus sizeable food components in Walmart, Sam’s Club and Target. Adding Whole Foods to anchor Butler Town Center (under construction with a planned opening winter 2018).

Key tenants: (Plaza) Target, Best Buy, Ross, Michaels, Joann Fabrics, PetSmart; (North) Dick’s Sporting Goods, Walmart, Sam’s Club, Lowe’s, Ashley Home Store, Total Wine, Marshalls; (Town Center) Regal Cinemas, PF Chang’s (opening 2018), Stengel Field Food Hall (opening 2018), The Residences & Terraces of Butler (apartments-opening 2018); plus the 46 restaurants and fast-food eateries throughout the project which function as a major, traffic-driving anchor.

Construction status: Butler Plaza open and operating since 1975, Butler North (98% leased) open and operating since 2016, Butler Town Center-under construction for rolling opening to begin January 2018.

The Neighborhoods of Butler are unique in four key areas:

  1. 1. The primary food consolidation in the greater Gainesville market is all in one area, which is able to support several supermarkets due to the regionality of the center. Outside of Gainesville, shoppers have to travel over an hour for the nearest Trader Joe’s, Aldi or Publix.
  2. 2. The grocery demand is partially driven by 50,000 University of Florida students who alone spend $216 million on food and groceries annually.
  3. 3. Now under development, Butler Town Center will be the first of its kind in the region, bringing the first Whole Foods and the first chef-curated food hall in a 15-plus county area in North Central Florida.
  4. 4. The property this project has built on over the last 42 years was once a fully operational air strip called Stengel Air Field, made famous by the planes that were built there and the pilots who made history with them. In the Town Center, this history will be brought to life in the imagery, architectural details, and even an actual plane that will hang extended from the ceiling of Stengel Field Food Hall.

Georgesville Square

Location: Columbus, Ohio

Size: 270,045 sq. ft. of gross leasable area

Owner: Phillips Edison & Company

Grocery anchor: Kroger

Key tenants: Lowe’s, Great Clips, GNC and Wendy’s

  • The center is approximately 11 miles from downtown Columbus and The Ohio State University.
  • Georgesville Square is one of the highest performing community center assets in the Columbus area.
  • It benefits from over 100,000 vehicles a day being located off of I-270 and Georgesville Road.
  • It is currently 94% occupied with national tenants such as Lowe’s, Great Clips, GNC, Miracle Ear, H&R Block, Men’s Wearhouse, AT&T, Arby’s, Wendy’s, O’Charley’s, and Dairy Queen.
  • The center has great frontal visibility.
  • Kroger is undergoing a multimillion-dollar renovation and small expansion adding Click-List, Starbucks, remodeling the façade, and updating the interior. Lowe’s made upgrades to the store just prior to Phillips Edison & Company acquiring the center.

Boston Commons

Location: Springfield, Mass.

Owner: Cole Credit Property Trust IV

Grocery anchor: 5 Star Supermarket

Key tenants: In initial discussions with retailers on a plus/minus 8,000 sq. ft. outparcel for new development

Construction status: Complete, future outparcel development in consideration

Specialty grocers are gaining market share as consumers seek out different options to support their goals in buying healthy foods that are quick and convenient, shopping at local or regionally-based stores with a neighborhood feel, or finding especially cost-effective options. 5 Star Supermarket is a regional grocer with one other location in Hartford, Conn., specializing in the sale of traditional Asian and ethnic grocery items including produce, meat, fish, bakery and prepared foods. This retailer made significant modifications to the space including the addition of an expanded kitchen facility to support its prepared foods offering. The availability of convenient, but “home-cooked,” fare in combination with its specialty items aligns 5 Star Supermarket with an underserved demographic in the Springfield area. The addition of this tenant will increase daily traffic to the shopping center which benefits the existing tenants.

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Top 10 Retail Center Experiences

BY Al Urbanski

The Electric Daisy Carnival drew 130,000 young people to Las Vegas on its final day last year. This summer, Billy Joel will sell out his 43rd concert at Madison Square Garden, where floor tickets sell in the $200 range. No matter the age or inclination, people still want to leave the house and be with other people. They just need a really good reason to do so. Here are 10 retail centers that have some of the best reasons:

1 Mall of America

The Bible says the last shall be first, but on this list, the first shall be first. Can you believe it’s been 25 years since the Ghermezian family erected a multimillion-sq.-ft. mall/amusement park in one of the coldest cities in America, and, in the process, threw down the gauntlet for experiential retail? Attractions today include Sea Life Aquarium, Flyover America Crayola Experience, and Rick Bronson’s House of Comedy. The latest innovation at MOA is a testament to owner Triple Five Group’s maturity as a retail experience provider. The property’s got the traffic – some 40 million visitors a year. Now Triple Five’s working on getting them to spend more time in shops with the Enhanced Service Portal. Initial results on the directory app find it has a user dwell time of just 40 seconds, versus three minutes for physical directories. That means more time to make purchases at its 500-plus stores, and isn’t that the experience retail tenants desire?

2 Brickell City’s Climate Ribbon

In one of America’s hottest towns, Swire Properties christened a new Miami neighborhood with the opening of its billion-dollar Brickell City Centre. It also set a standard for 21st-century retail center design. The literal high point of this open-air luxury marketplace is the Climate Ribbon, a sculpted, undulating canopy that catches breezes from nearby Biscayne Bay and circulates them to cool shoppers. The $30 million Ribbon – a joint project from a Paris design firm, Carnegie Mellon University, and Cardiff University – collects five million gallons of rainwater a year to aid the cooling process, making it a paradigm for green construction that combines both beauty and functionality.

3 Easton’s Fashion’s Night Out

Retailers know that if something works, keep doing it until it doesn’t. That’s why – even though the Council of Fashion Designers of America phased out its Fashion’s Night Out Event in 2014 – the party still rages on at Easton. “It’s been such a hit that we kept on going,” said Easton Town Center chief executive Jennifer Peterson, a lifelong retailer who launched the Pink brand at L Brands. “On Fashion Night, we’ll have upwards of 50 retailers hosting people and pouring drinks in their spaces.” The former retail tenant singled Easton out as one of the few venues that puts the “town” in Town Center. “Easton never closes,” Peterson said. “People are still leaving the bars at 3 a.m., and by 5 a.m. a hundred-plus mall walkers arrive.”

4 Woodbury Commons

Its bus station shuttles passengers back and forth from Manhattan’s Port Authority Terminal several times a day. Its visitor center staff can direct shoppers in 14 different languages. And now it has a 65,000-sq.-ft. Market Hall and themed sections celebrating New York State regions. The flagship of Simon Premium Outlets is a destination for residents of the Upper East Side as well as the Far East, but it recently completed a wide-scale, three-year project designed to keep a sharp edge on its world-class experience. “We have a mission – value, fashion, and experience,” Simon Premium Outlets CEO Stephen Yalof said. “And I don’t think it plays out any more clearly than it does at Woodbury.”

5 The Grove and Uber

With average sales per square foot of $2,200, the luxe retail site is No. 2 on Fortune’s list of top-grossing shopping centers. But the center’s owner, Caruso, is always improving the experience. Getting on the freeway in L.A. can be a bad scene, so Caruso partnered with Uber to remove driving from the equation. It created a permanent pick-up/drop-off location at The Grove, now Uber’s top L.A. destination with more than 2,000 drop-offs daily. Know thy customer is the lesson, Caruso EVP of leasing Kloe Colacarro said: “We have a deep belief in developing centers only in places where we know the consumer. And we know the SoCal consumer very, very well.”

6 Waterside, a Conscious Place

Trademark Property has so much faith in its new-age experiential concept that it’s branded it. Conscious Place is defined as an “experiential center of commerce, community, and meaning that seeks to host, inspire, educate, and connect community stakeholders.” Design and leasing at Waterside were driven by local input. Local artisans created furniture, games, and art on the grounds. A 6,600-gallon cistern collects rainwater used for irrigating the project’s green space, shaded by heritage oaks and housing a Community Pavilion. “We believe the bar has been raised and developers must deliver much more in the future,” Trademark CEO Terry Montesi said.

7 Taste of Turkey Creek/Battle of Bristol

Down South, football and motor sports put up a fight with the Lord Almighty for attention. Add down-home cooking and you’ve got a retail event that drew a mob to Pinnacle at Turkey Creek, Bayer Properties’ 657,000-sq.-ft. center in Knoxville, Tenn. Bayer hitched its wagon to another event, the Battle at Bristol – a matchup between the University of Tennessee and Virginia Tech at Bristol Motor Speedway that drew 159,990. Some 1,200 showed up at “Taste” to sample food from two dozen Turkey Creek restaurants and watch the game on huge screens. The event raised $20,000 for The Pat Summitt Foundation, named for the Lady Vols legendary basketball coach.

8 Starwood’s Live 360

A free ukulele class is part of Starwood Retail Partner’s Live 360 program, a community outreach initiative that spread from two malls last year to 10 this year and is now moving portfoliowide. Lots of malls have community programs, but Starwood’s are run by actual community members. “We have community input meetings and there’s always one individual who seems to be involved in everything. We hire that person to direct the Live 360 program,” Starwood Retail SVP Laurie Paquette said. Two of them are now in place, bringing locals to the mall for yoga classes, Mom’s Club stroller workouts, and mall-walking clubs.

9 Outlets of Little Rock’s Food Truck Fest

Outlet centers came into being to feed people’s appetites for luscious bargains on luxury goods, not food. Most are now feverishly adding restaurants, but we applaud the ingenuity used by New England Development in speeding food to their outlet centers with food truck festivals. The Arkansas Food Truck & Craft Beer Festival at Outlets of Little Rock was a sellout, attracting 6,000 people. Center traffic went up 112%. “Blew numbers away, awesome day,” was one retailer’s message to NED marketing VP Debbie Black, who told us social media was a key ingredient to event success. Three-quarters of festival-goers said they’d found out about it on Facebook.

10 Avalon’s Noon to Night

Forget that “Experience Avalon” is the name of its website. Avalon made this list for two reasons: (1) Staff at the North American Properties center started working on Noon to Night when doors opened in 2014; and (2) they executed a deft new take on the well-worn fashion show theme. Noon to Night is held during New York Fashion Week, but among the models on its runways are terminally ill children. The inaugural 2015 event raised $10,000 for Bert’s Big Adventure, which sends the kids to Disneyland. Last year, that blossomed to $60,000. “It ended up being the perfect blend of business and charity,” said Carla Toro, Avalon’s marketing director.

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