REAL ESTATE

DSW and Ulta open at Mall at Prince Georges

BY Al Urbanski

PREIT has proclaimed the $30 million transformation of its Mall at Prince Georges nearly complete with the recent openings of Ulta Beauty and DSW. H&M opened there in 2016.

In addition to a re-curation of tenants at the Hyattsville, Maryland, property, PREIT has re-done its exterior entrances and added new ceilings, lighting, soft seating, charging stations, and food court upgrades. Natural wood was added to the interior to create a warmer and brighter environment, according to PREIT.

The big northeastern mall operator recently executed a lease with &pizza to join a string of new fast casual restaurants positioned along the mall’s exterior to draw traffic. Others include Mezeh Mediterranean, Chipotle, Five Guys, and Golden Krust Caribbean Bakery.

“MPG continues to be a standout property in our portfolio with sales of $513 per square foot, exhibiting 6% growth before many of these additions have opened,” said PREIT CEO Joe Coradino.

Connect with me on LinkedIn | Follow me on Twitter

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you worried the proposed new tariffs will affect your business?
CBRE research: Sorting out omnichannel
REAL ESTATE

Analysis: Sorting out omnichannel

BY Melina Cordero

E-commerce isn’t a zero-sum game, despite a persistent perception that online sales always come at the expense of in-store sales. Rather, as most retailers that have successfully melded the two channels can attest, each of online, in-store, and mobile commerce channels can enhance the others. Research shows that shoppers who “channel surf” across online and in-store environments tend to spend more in each than single-channel patrons.

In May, CBRE will debut its “Definitive Guide to Omnichannel Real Estate: Knowledge Center.” The online hub will provide detailed, data-supported answers to 20 key questions about the intersection of e-commerce and bricks-and-mortar retail.

What follows is a sneak peek at a report that provides some answers to those questions in an effort to bolster omnichannel hype with facts about how digital strategies benefit retailers and why stores remain a key part of their strategies.


Defining omnichannel

The meaning of omnichannel may seem obvious: Retailers selling goods online and in stores. But that’s not the end of it. For consumers, the omnichannel experience should be seamless as they move between channels. It should allow them to order an item online and return it in the store without a hiccup. The retailer’s brand, its culture, and its prices should be consistent across channels. What that requires of retailers is extensive integration of systems, personnel, and real estate.


CBRE Research — M-commerce total shares and share of e-commerceMobile mastery

Retailers should prepare for mobile devices, namely smartphones, to become the dominant platform for e-commerce in short order. Research firm eMarketer forecasts that mobile devices will facilitate $424 billion of e-commerce — a 54% share — by 2021. Driving this trend is near ubiquitous adoption of smartphones and availability of Wi-Fi. Shoppers often research their anticipated purchases online before visiting a store, and many continue their research on their phones while in the store. Several retailers have already incorporated smartphones into the shopping process. Sephora allows shoppers to try on lipstick shades virtually by using their own image on their phones. Shoppers also can use their phones to access beauty information from in-store kiosks.


E-commerce’s share

Determining e-commerce’s share of retail sales can lead to confusion because there are so many ways of calculating it. The U.S. Commerce Department tallied $453.5 billion in online sales in the United States in 2017. If that figure is calculated as a percentage of all retail sales, including food and beverage, then e-commerce’s share is 7.9%. If the scope of retail sales is limited to mall-category sales, e-commerce’s share is 26.2%. The best measure in most cases is to calculate e-commerce as a percentage of all retail sales excluding food and beverage, which put it at 8.9% in 2017.


Online’s opportunities

Retailers gain many advantages from operating online, but the primary benefits are the multiple opportunities to interact with customers and the data that can be collected to better serve them. Whereas retailers in past decades used primarily passive advertising, they now have multiple touchpoints to interact with customers through tailored online ads, proprietary apps, email, text messages, and social media. Additionally, e-commerce provides a wealth of data on the who, where, when, how — and sometimes why — of shopping habits through records of browsing and transactions. Mobile-phone tracking can reveal customer traffic patterns around a shopping center or trade area. That data then can be used for a range of analytics, including conversion rates, predictive analytics, and targeted promotions.


Do shoppers really prefer online

A common misconception by shoppers, media, and industry players alike is that consumers increasingly prefer shopping online and that e-commerce eventually will overtake in-store shopping as the dominant shopping channel. The truth: Shoppers prefer using multiple channels for a purchase. While the final transaction will take place either online or in a store, the entire process of researching, testing, deciding to purchase, completing a transaction, and receiving the item often spans both channels. A 2018 study by Forrester Research found that 38.5% of in-store purchases were digitally influenced in that the shopper browsed, researched or price-compared the item online first. In turn, the store’s role has changed beyond being solely a transaction venue to also serving as a showroom for sampling items and experiencing the brand.

CBRE Research — Percentage of offline sales that are digitally influenced


Three adaptation strategies

There’s no surefire formula for omnichannel success, but three strategies have emerged as favored options for retailers. First, retailers are focusing on improving their in-store experience, such as how Nordstrom’s Trunk Club has done with its “clubhouses,” complete with bars, personal shoppers, and semi-private living rooms. Second, many retailers use stores to fill online orders, including programs to encourage in-store pickup of online orders and returns. Third, retailers have diversified store formats to reach multiple audiences. Target and others have introduced smaller-format stores for dense urban markets. Nordstrom rolled out its Nordstrom Local concept of smaller stores focused on services. Meanwhile, more retailers are using pop-up stores to test new concepts and locations.


Reach varies by category

Retailers, landlords, and real estate investors alike are wise to be aware of e-commerce’s penetration and growth rate in various retail categories. For example, home improvement merchandise is among the smallest e-commerce categories in retail with online sales of $9.6 billion in 2017, but perhaps not for long. Forrester Research predicts the home improvement category will generate one of the largest online growth rates — nearly 20% — between now and 2022. The highest rates of e-commerce penetration last year were in the categories of computers (78% of sales were online), books (66%), and small appliances (49%). The lowest were in food and beverage (3%), home improvement (3%) and furniture (8%).

CBRE Research — Select e-commerce sales by product category


Melina Cordero
is head of retail research in the Americas for CBRE, the global real estate services company. Follow her on Twitter at @melinascordero.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you worried the proposed new tariffs will affect your business?
REAL ESTATE

Mall for One and One for Mall

It’s a turbulent time for many American malls, and several owners and operators have had success reversing the fortunes of underperforming malls by transforming them into mixed-use destinations. This can radically change a mall’s fortunes – particularly those with great locations and favorable demographics – but it is not a magic bullet. Mixed-use redevelopments take time. They come with design and development challenges, new value calculations, and complex economic, demographic, and leasing considerations.

For retailers, the process can be extremely beneficial, but also incredibly disruptive. They need to be attuned to the signs that a redevelopment is needed and cognizant of what they can do to navigate the process once it begins. Ultimately, they need to envision what the “new” mall will look like and what their roles will be in the new space. Recognizing when a mixed-use solution is a possibility, what to do when it happens, and what results can reasonably be expected are musts for strategically minded retail executives.

What to look for
Declining sales. It seems obvious, right? But the signs can be surprisingly easy to ignore. Given inflation, a steadily growing economy and continuing population growth, your sales should be going up. If numbers in your store and in the overall mall are decreasing – or even just stagnating – that’s a red flag that a change is in order.

Anchors away. Do a critical analysis of how your anchors are performing and how they are calibrating their brands to marketplace changes. Large anchors in general (particularly traditional department store anchors) have generally been slower to respond to the nuances of an evolving marketplace. Some have been more successful than others, and some have moved in the right direction, but simply selling products online does not make you an online retailer. Walmart’s online platform and digital infrastructure proves that reinvention is possible, but for every anchor brand able to reinvent itself there’s another on a glide path to irrelevance. Learn to recognize the difference and understand what it means for your mall.

Demographic erosion. This is a big one. If the demographics have abandoned you, almost nothing you do will matter.

What to do
Practice what you preach. It’s one thing to be critical of brands and businesses that are slow to evolve in a changing marketplace, but, first and foremost, retailers need to be focused on their own growth and carrying their own weight. Retail executives and decision-makers must be cognizant not only of their own efforts to bolster their digital profile and integrate e-commerce, but to appreciate what needs to happen in their brick-and-mortar locations to complement those efforts. Some retailers are being more creative and aggressive than others, pushing to integrate new services and technologies like virtual dressing rooms, in-store pickup and ordering, and next-day delivery for items/options that are out of stock in the physical store.

Right-size your shop. Stores can get smaller, but that’s not necessarily a bad thing, especially as smarter inventory management and online sales and ordering integration come on-stream. Retailers can end up with less square footage, but sometimes less is more–provided there is sufficient consumer traffic in the mall and in the store. As many retailers have learned firsthand, one of the best ways to generate that traffic is by leveraging the social and commercial synergies of new and different uses, notably dining, hospitality, and entertainment concepts.

What to expect
Disruption. Any comprehensive mixed-use redevelopment will be disruptive. That can manifest itself in lower foot traffic and lagging sales or, perhaps, even a temporary closure. Owners and developers may need to shift tenants to a different part of the mall – either to accommodate construction or as part of a permanent new reconfigured space. Relocation issues are not uncommon, and some tenants may work to negotiate rent reductions or short-term deals.

A mixed-use renovation or redevelopment can be an expensive and time-consuming undertaking. When you factor complications such as the need to potentially secure anchor approvals or negotiate anchor buyouts, things can get tricky very quickly. Retailers should have realistic expectations about timelines going into the process, and should be willing to be patient, and flexible – while still protecting their interests.

In the near-term, developers setting out on a renovation or redevelopment are looking for as much revenue as possible. Consequently, they may be more willing than usual to agree to short-term deals. The long-term strategy, however, is likely to be very different. Mall owners and operators work closely with developers and consultants to figure out how to reposition the asset, and how to build a vibrant and dynamic tenant mix that makes sense and is sustainable over the long run.

For their part, retail executives need to carefully and critically consider their place in that future, not only asking “Do I want to be here?” but also “Are they going to want me?” Sometimes what is best for all parties is the same retail brand, but a different concept: perhaps switching to an outlet store or discount model. In the end, quality mixed-use renovations and redevelopments are not just about compromises, but also opportunities. A restaurant tenant having the opportunity to expand out and create a patio or outdoor dining area is the kind of move that could liven up the public space in the newly redeveloped mall and boost sales for the retailer – the kind of win-win outcome that every mixed-use transformation tries to achieve.

A registered architect, John Schupp implements retail center renovation plans for the development services team of Avison Young. Stephanie Skrbin, a principal at Avison Young, is recognized as one of the top retail brokers in Southern California.

 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you worried the proposed new tariffs will affect your business?