Nearly two inches of rain, gale force winds and decidedly non-holiday-like moderate temperatures could not dampen the spirits of the more than 8,000 retail real estate professionals who descended upon the Jacobs Javits Convention Center for the latest ICSC New York Dealmaking session. Retail Row was filled with concepts ranging from Auto Zone to Zoom Tan, Angele Robinson-Gaylord, Starbucks Coffee’s Senior Vice President, Store Development Americas, provided insights about the company’s “Back to Starbucks Experience,” and Stenn Parton, Founder & CEO of Prism Places, expounded his theory that “for retailers to be successful, the provided experience needs to be spectacular”
Retail as the new anchor
Stephanie Cegielski, ICSC’s Vice President, Research and Public Relations, moderated a lively seminar in which Brandon Isner, Head of Research, Retail, Newmark, explained that retail is the only asset class in which the general public “chooses to spend time at,” a distinction which is at the heart of its competitiveness. “People make the choice to visit restaurants and cafés and hang out at the mall because it is fun, not because they have to,” he said. He added that “good retail adds to the allure of commercial office product” and “office workers tend to get excited when they have interesting and necessary retail and restaurants at their immediate disposal.”
CBRE Executive Vice President Charlie Coyne called attention to “non-revenue generating” amenities which act as consumer magnets at retail venues, especially those targeting families and kids. He said that savvy retail center owners are incorporating slides, music venues, parks, open spaces for kids and dogs to run around in, and breweries into their projects to position them as “the central gathering place for the local community.” Coyne added that “spaces are being activated with health and wellness classes such as outdoor yoga and concerts, to provide compelling and regular reasons to visit the retail centers on a regular basis.” He said that “it is not a problem that remote work remains high in some areas, because it just means that retail visits are shifted to the areas of the community where people are living.”
Nearly every retail product is “now at the fingertips of consumers,” explained Prism Places’ Parton, so to compete with this new reality, “successful retail needs to provide a spectacular experience.” He said that “retail is the business of competing for the time and money of consumers,” and explained that, in the past, “retail operated with a philosophy of ‘limiting threshold resistance,’ which translated to making the sale as quickly as possible and moving the customer out of the store.” But the opposite is true now, with retailers and center landlords trying new ways to encourage consumers to linger. He added that “by and large, major department stores have lost their way in the retail industry,” with shoppers preferring specialty and niche stores. “Some entire shopping centers now are the size of former large department stores,” Parton said.
ICSC’s Tom McGee with Starbuck Coffee’s Angele Robinson-Gaylord
Selling the “Back to Starbucks” Experience
Starbucks Coffee’s Robinson-Gaylord traced her career entry into the retail real estate industry following a successful stint as a business litigator and early jobs at IKEA and McDonald’s Corporation, where she credited her appreciation and value of “good leadership and empowering employees” and the creation of a solid corporate structure when building successful companies. The executive presented her views during a fireside chat with ICSC President and CEO Tom McGee. She explained that Starbucks’ program to open more stores has “been placed on hold” in select markets as the company looks to retool many of its sites in keeping with the organization’s “Back to Starbucks Experience.”
She explained that this strategy is intended to appeal to “every sense with the redesign of the interior space,” with an emphasis on “encouraging consumers to linger.” One small feature will be supplying beverages in ceramic mugs to consumers who wish to remain in the restaurant longer, to differentiate the on-the-go consumer who receives a plastic cup. The goal is to deliver drinks in “less than four minutes.” She added that the “George Jetson thinkers of the company are moving very quickly to create warm and welcoming environments, based on the vision of newly-hired CEO Brian Niccol. We are putting our foot on the gas pedal to make these changes as quickly as possible.”
Curating the perfect tenant mix
Barrie Scardina, President, Americas Retail Services, Cushman & Wakefield, encouraged retailers to “meet consumers where they are now,” which translates into providing compelling shopping experiences which consumers can savor and to “stay one step ahead using analytics.” By way of example, she compares the past, when “there never seemed enough coffee shops to satisfy the thirst of customers” to the present, where “bubble tea concepts are now everywhere” and represent the future. Scardina is encouraged by the recent “brisk apparel sales during the Black Holiday weekend” and believes that this is a strong indicator for times ahead. “History used to be a good barometer for the future, but not any longer,” she said. Instead, Scardina suggested that retailers and landlords should follow the advice of influencers.
Continental Realty Corporation’s David Donato, Roseanne Holmes and Melissa Sweeney
The Goldilocks Principle
Real estate brokerage professionals and landlord representatives lined up three-deep along Retailer Row during the first day of the show to get face time with retailers ranging from Crunch Fitness to Grocery Outlet to Joint Chiropractic to Smoothie King (the lines were decidedly shorter during Day 2). Among the most popular categories were health and wellness concepts offering the opportunity to make consumers “too hot” with sauna treatments or “too cold” with cryotherapy. Goldilocks could have related.
This is the case with SweatHouz, a contrast therapy studio based out of Atlanta which bills itself as an Infrared Sauna and Cold Plunge studio. The concept helps people recover from a strenuous workout or injury by reducing body inflammations. Take your choice of sitting in a sauna that reaches temperatures upwards of 155 degrees, or taking a cold plunge that chills the body with 50-degree technology – or both.
With more than 35 locations open now and a plan for approximately 400 more, SweatHouz is sweeping the country, according to representative Savannah Busby, because the concept “caters to every demographic and type of person,” rather than competitors in the category which target only serious or weekend athletes. The sessions also improve mental health, she said.
Not even talk about looming tariffs, bankruptcies and escalated construction pricing could diminish the enthusiasm of the energetic participants, with optimism palpable, especially given the strong start to the holiday season. Or, maybe everyone was just glad to be inside the warm confines of the convention center, with a wicked storm raging and visible through the iconic windows.
Larry Lichtenauer is President and Founder of Lawrence Howard & Associates, a boutique public relations agency specializing in the commercial and retail real estate industries. He reports from ICSC deal- making sessions three times annually. Visit www.lawrencehoward.com.
