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In the Spotlight: Urban Development

BY Marianne Wilson

When building an urban store, be prepared for anything, and make friends with your local Economic Development Corp. early, said retailers and a developer at the “Setting Up Shop Downtown” session.

It’s critical to get the local community on board and solicit their comments early, advised Terry Pratt, senior tenant coordinator of Philadelphia-based PREIT, particularly regarding lighting and signage.

Building a store or restaurant in an urban location can require a complete change in design to fit local standards, especially if the building is historic, noted John Devine, president of Milford, Conn.-based Subway Real Estate Corp., whose stores range from 1,200 sq. ft. to 1,400 sq. ft.

Office Depot’s footprint, at around 5,000 sq. ft., often requires multiple levels and even different merchandising, said Kristin Muntean, VP strategic initiatives and innovation at the Boca Raton, Fla.-based company.

Other logistical changes for urban stores include merchandise delivery and trash pickup schedules to avoid conflicts with office workers and residents, all said.

Second and third floors can become practical, noted panel moderator Debra Hazel, a New York City-based retail and real estate consultant, as long as vertical transportation is plentiful and immediately visible.

But even with the challenges, are building stores worth it? The answer was simultaneous and unanimous from all three speakers:

“Absolutely!”

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In the Spotlight: Demographics, Retail Trends

BY Marianne Wilson

When it comes to success in retail, the old mantra of “location, location, location” has been largely replaced by “customer, customer, customer.” That was one of the themes of the SPECS workshop session, “It’s All in the Demographics.”

“Yes, it’s about demographics, but it’s more than demographics. It’s about the lifestyle embedded in the demographics,” explained Bill Stinneford, executive VP retail, Buxton, Fort Worth, Texas, which provides customer analytics for site selection, marketing and e-commerce.

Stinneford explained that a retailer can have the best location in terms of visibility, access and other factors and the most beautiful building, but if it doesn’t have the right kind of customer living in close proximity, nothing else matters.

“You have to look beyond the surface of the demographics,” he said, “and look at behavioral characteristics, utilizing all [the information] that Big Data feeds into your company’s network. The data allows you go to deeper.”

And instead of a top-down approach to understanding the data, you have to look at it from the bottom up to assess the trade value of customers in a particular area, the speaker added.

RETAIL CHANGES: Jeff Green, president and CEO, Jeff Green Partners, addressed the critical issues that will impact brick-and-mortar retail during the next several years, including the shopping behavior of the 80 million strong millennial generation. He noted that retailers need to regain relevance given the shift to online shopping.

“Retail needs to become more experiential,” Green told attendees.

Green also did some future-casting, outlining the 10 shopping changes expected in the coming years. Here are his predictions:

  • Mobile will go mainstream.

  • Delivery times will decrease.

  • Retail will be personalized.

  • Outlet shopping will continue to increase.

  • We will use our cellphone as our wallet.

  • Big boxes will continue to shrink.

  • Couponing will go high-tech.

  • Buying/sourcing local will go beyond food and restaurants.

  • In-store experiences will get better with digital engagement.

  • Retail pricing models will become more dynamic.

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In the Spotlight: Lighting Trends

BY Dan Berthiaume

Lighting plays a critical role in retail, and is rapidly evolving to meet changing regulations and customer needs. Dr. Laura Prestwood Thompson, director of the TCU Center for Lighting Education, Texas Christian University, discussed how stores and restaurants in 2025 will light their interiors and looked at the technologies and trends that will impact retail lighting during the SPECS workshop session, “Lighting 2025.”

“The quality of light is key,” Thompson said. “You create an aesthetic for your brand that impacts the customer experience.”

Looking ahead to 2025, Thompson said lighting codes will be commonplace and largely dictate what type of lighting can be used in stores. Also, as cost of energy constitutes 70% of total cost of ownership for lighting, energy-related matters and codes will become the most important factors in selecting lighting.

“You must put money into controls,” Thompson advised.

In addition, Thompson said by 2025 most retail lighting will be LED, or light-emitting diode, which is more complicated than traditional lighting.

“LED is not just a light bulb — it has a brain,” Thompson explained. “The majority of interior retail lighting in 2025 will be LED. This includes retrofitting and new construction.”

Thompson said there are several advantages to using LED lighting. Although LED lighting is still expensive up front, in the long term, it may still represent a more cost-effective investment than cheaper traditional lighting. In addition to various rebate programs, Thompson also cited the resiliency and power of LED lighting.

“You get a lot of lumens from a few watts,” she explained. “You get 13 to 15 lumens from 60 to 70 watts. This translates to high ROI from high efficacy. LED lights last 50,000-plus hours, so maintenance in changing them is lower. There is no mercury, lead or glass. They are durable and dimmable.”

Furthermore, Thompson said LED will become a mainstream lighting technology over time, as its costs come down.

“LED will be affordable for the masses in 10 to 15 years,” Thompson predicted. Part of the expansion in retail LED lighting Thompson sees in the next 10 years or so is a vast increase in its use for exterior as well as interior lighting.

“By 2025, virtually all exterior lighting will be LED,” Thompson stated. “Right now, we have serious light pollution. Light is wasted shining up or on ‘light trespass,’ which is the uncontrolled glare or light from another property intruding on a property. If the property is another retailer they probably won’t care, but if it is residential or mixed use, they will probably mind.”

Thompson also stressed the importance of natural lighting to create a rich customer experience.

“I cannot overemphasize the importance of natural daylight,” she said. “Where you can, don’t ignore it. Wal-Mart tracked sales of merchandise in proximity to daylight, and sales increased — even when they switched the merchandise around. It can come through a skylight, window or door. If you’re in a mall situation where you can’t get daylight directly in the store, a skylight in the atrium can allow you to harvest some daylight.”

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