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What’s Happening at the Mall?

BY CSA STAFF

By Glenn Brill, [email protected]

The recent announcement that Ron Johnson of Apple will become J. C. Penny’s new chief executive is a clear indication of the need for many retailers to revitalize the shopping experience. It is also a clarion call and symbolic of the challenge to mall owners, developers, and investors to create and/or revitalize shopping environments that can effectively complement and promote a retailer’s brand.

The rapid growth of online sales has demonstrated that the shopping experience itself has become a commodity that is valued in part for convenience and economy. The mail-order catalogue has been enhanced as an interactive experience, while the rising cost of gasoline, reduced or no sale taxes on out-of-state purchases and free shipping on threshold sales amounts have opened a floodgate for rising online sales. No doubt, as a retailer’s percentage of online sales continues to grow, greater demands will be placed on store margins and corresponding site selection strategies will focus on top-tier locations to meet those demands.

Today’s consumers are in a cautious mood while they try to decide if the glass is half empty or half full. Under these circumstances, call it a consumer hang-over, what will it take to get consumers, and for that matter tenants, back to the mall? While “virtual living” has its moments, malls offer the opportunity to provide real social and civic engagement. In this respect, if malls replaced “Main Street”, what will replace the mall?

As primary tenant demand has shifted to mini and junior boxes, their good credit and requirements are driving the design of the next generation of retail development. Many proposed lifestyle projects are being redesigned as an all-in-one hybrid mix of a community center, power center and fashion mall as operators seek to expand the length of the shopping day, increase repeat visits and offer retailers greater exposure to consumers earlier in the week. “Town Center” planning concepts enable developers to segment the offering and define varying shopping environments to meet the needs of particular retail segments as part of a larger mixed-use environment. While “inspirational” shoppers may be in shorter supply, tenants seek quality of life environments that correspond with consumer values.

As retailers look to invent the next generation retail environment, malls need to complement those efforts by providing an experience that will get people out of their homes and invigorate consumers with a sense of anticipation, adventure, and ease. Retailers will seek out properties that offer programming “incentives” that add value to the shopping experience. Just as urban planners have succeeded in revitalizing many central business districts, developers and owner’s need to create “attraction strategies” to expand a property’s social utility.

Event driven programming promotes a property as a gathering place, community space, and an integral part of the local and regional communities. Diverse entertainment with strong promotional tie-ins offers retailers the opportunity to actively participate. Whether it’s a “county fair” or a “Roman circus”, malls need to compete more effectively in the leisure-time experience and entertainment venues by offering an interactive social and civic environment that expands the utility of a property beyond purely shopping to become a greater part of people’s lives. As a measure of success, people need to start asking themselves and their friends “what’s happening at the mall.”

Glenn Brill is a managing director in the Real Estate Solutions group at FTI Consulting, and is based in New York City. He can be reached at [email protected] or (646) 731-1511.

The views expressed herein are those of the author and not FTI Consulting, or its other professionals.

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Fresh & Easy makes San Francisco debut

BY CSA STAFF

SAN FRANCISCO — Fresh & Easy today opened its San Francisco store. San Francisco Mayor Ed Lee, U.S. Health and Human Services Regional Director Herb Schultz, executives from Fresh & Easy Neighborhood Market and dozens of neighborhood leaders were on hand to celebrate the event. The store, is located in the Outer Richmond District at 32nd Avenue & Clement Street.

Mary Kasper, Fresh & Easy’s general counsel and VP said: "We’re thankful for the tremendous support we have received from the Mayor, the City of San Francisco and our newest neighbors. We look forward to opening in the Bayview in August and even more neighborhoods in the near future."

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CPG companies get much needed boost from technology

BY CSA STAFF

WASHINGTON — The vitality of consumer packaged goods companies is healthy again, according to a new report issued by the Grocery Manufacturers Association and PricewaterhouseCoopers on Wednesday.

Despite rising commodity costs, the CPG industry now is in recovery mode with companies refocused on a growth agenda and looking to international expansion as an opportunity to enhance both the top and bottom lines, according to the report, titled “Thriving in a Connected World.” The value of shipments in the CPG industry rose 6% to almost $124 billion in 2010 versus the prior year. Across the board, financial performance generally improved over 2009, with the manufacturing sector achieving strong median one-year shareholder returns of 15%. In addition, median earnings before interest and taxes growth overall improved from 4.3% to 12.9%.

A lot of this growth can be traced to CPG companies’ incorporation of digital technologies. “CPG companies of all sizes harnessed digital technologies in the past few years to become more productive and efficient,” GMA president and CEO Pamela Bailey said. “This study shows how food, beverage and consumer products manufacturers are leveraging innovation to optimize service to consumers and trading partners.”

To determine the best use of mobile devices across the workforce, the report suggested that workforce productivity should be viewed through three lenses: mobility on the floor where workers use their digital devices for instant information, in the field where mobile employees can make decisions on the spot with their devices and in flight where sales representatives, who historically travel to each location to analyze performance, now use mobile technology to monitor activity. The report also noted that as devices and wireless data networks grow, rich multimedia capabilities will continue to be added to business workflows, and businesses will continue to capitalize on the opportunities mobile devices create within the workforce.

”Today’s consumers are more empowered with greater control of their shopping choices with the growing array of digital technologies like smartphones, tablets and social media,” added Susan McPartlin, PwC’s retail and consumer industry leader. “And they aren’t shy about posting their feelings online about products, where they literally are handing over reams of potential insights that can create a tremendous opportunity for CPG companies that can find the patterns in the noise.”

"Thriving in a Connected World" will be presented via webcast by PwC and GMA June 29 at 1:30 p.m. EST. Click here for registration information.

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