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Monday
Aug062012

Retail Centers: Connect or Crumble 

Image source: theboutique411.com

Anyone who knows me will attest that I’m an optimist. In fact I’m genuinely excited by many things happening in today’s retail real estate market. Technology, sustainability, a renewed emphasis on experience – each of these contributes to an exciting future for the retail industry. But I’m a realist too, and another big scary trend is hard to ignore: retail developers have to figure out how to connect with their customers in every way possible, or they won’t survive. This mirrors the very same thing that their tenants are grappling with only they have it even harder. Today’s successful retailers have to engage their customers both online and in-store, and it is not at all easy to do both well.

A recent column in The Atlantic expressed that while the shopping mall prototype – envisioned by Victor Gruen in 1952 – turns sixty, it’s preparing for retirement. We wouldn’t get anywhere by standing still, so on the surface I’m okay with that evolution. The article goes on to suggest, though, that tearing down old suburban shopping malls and starting over with open-air “lifestyle centers” is the best solution for retail developers. When you consider that by conservative estimates between 20-30 percent of US landfills consist of construction debris (and I have heard much higher percentages than that) I am personally against demolition of a serviceable building no matter what the reason. But beyond this, I think that replacing one development scenario with another is short sighted and greatly oversimplifies the problem. If they want to survive, developers in the U.S. have to figure out how to maximize their current real estate assets – make them meaningful again.

The best way to create meaning and true connection with the customer is through relevance. This is not a simple task. There is no one size fits all. Relevancy is directly related to the level of your understanding of your specific marketplace now, and your ability to successfully project that for years to come. I’ll give you an example. Since its origin, one of the prototypical U.S. mall’s most significant target markets has always been teenagers. But today’s young adults shop differently than the generations before them: they’re more connected; they’re far more price savvy than their parents; and very often they’re more concerned with supporting local businesses and their community. If a retail center happens to be located in a marketplace that will serve primarily this demographic, it has to be relevant to this audience and acknowledge their preferences in order to be successful.

Let’s stick for the time being with the idea of a center that exists to serve a trade area that is primarily oriented to a younger demographic. This center would be well advised to celebrate and support small and emerging retail through traditional leasing, pop-up, kiosk and retail merchandising unit programs. Emerging retail trends, what is hot, what is new and what is in limited supply will resonate with a younger customer base. The emphasis would be on flexibility, changeability and value.

Taking an interest in small, local retail isn’t limited to merely the youthful demographic. Shoppers everywhere, at any age are becoming more and more inclined to spend their increasingly limited time and money at stores that have exceptional offerings and that provide inspired choices. These are the stores that we recommend to friends, stores that we visit over and over.

Earlier this year I was a guest speaker at Downtown Works’ annual Retail Recruiter Workshop, where I spent a day with business leaders and retail recruiters from downtown retail districts from Los Angeles, Philadelphia, Washington DC, Seattle, Austin, Chattanooga, Norfolk, and other U.S. cities. We asked ourselves “what makes great retail?” and explored the components of a truly satisfying shopping experience – of course comparing notes about our favorite places to shop, too. Consistent favorites included Opening Ceremony, for its focus on constantly changing, collaborative collections of local fashion and design; Dave Eggers826 Valencia stores, for their wonderful good humor as well as charitable connections to the local communities they serve; Watson Kennedy in Seattle, for its passionate expression of good living and gift-giving; The LAB in Costa Mesa, Calif., for its “anti-mall” statement and support of local artists; and Paxton Gate for its commitment to nature and design. What stands out in each of these examples is their consistent focus on creating customized experiences for their unique and specific target markets – they know what their customers want, and they deliver.

Watson Kennedy in Seattle

After all this, it’s important to note that being local does not have to mean being small. Consider what Target has done in the past year with The Shops campaign. By partnering with some of their favorite small retailers from across the U.S., even this gigantic brand sends the message that local matters. When customers connect with that message, they are more likely to connect with the brand that conveys it.

Target describes their promotion with the line, “the shops we fell in love with – collected and curated for you.” The word curated is so critical: they’re saying “we’re making this relevant to you.” Curation is a big part of the luxury industry’s success, but in this case we’re talking about selectivity, not necessarily exclusivity. You can make anything precious if you treat it as such. When retail developers show that they understand what customers care about, and demonstrate that they care too, they’ve taken the first step toward reviving their center, while others are stuck clinging to life support.

Maureen Boyer is co-leader of Gensler’s global retail centers practice and a senior associate in our San Francisco office with over 25 years of experience in design, project management and construction management. Maureen focuses on reinventing and redeveloping retail environments, with a balanced emphasis between architecture and interior design. Through her continuous research of ever-changing consumer behavior and shopping trends, Maureen executes a uniquely customized, integrated multi-channel solution for her clients and their customers. Contact her at maureen_boyer@gensler.com.

References (1)

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Reader Comments (4)

Great post Maureen. I've seen all the things you mentioned as well.

It seems that what we are talking about is experiential architecture - the idea that people are looking for more than simple commodity
transactions in their retail engagements. It's an extension of the decades long trend of retail and entertainment merging into a one building type that uses architecture to communicate emotional connections, aspirations and 'wants', not just supply needs.

This extends to even basics like groceries. Traditional grocery stores, lead by upscale places like Whole Foods, are focusing on the experience of shopping. This in a business that typically runs on 1-2% margins! That says something. One of our local comfort food neighborhood restaurants has gone the local source route in a very big way as well, touching on people interests in healthy living and sustainability. Then you look at Apple and the like and the entire purpose is to create that unique branded experience.

My favorite architectural quote is from Winston Churchill, who said "We shape our buildings, and they shape us". Since retail is the great American social space, what we build, and maybe more importantly what our clients are willing to pay for, shapes our communities in big, long term ways. The experiences we create affect not just the connections between retailers and customers, but they also shape the connections between all of us.

Maybe we need to raise our bar a bit.
08.15.2012 | Unregistered CommenterEd Shriver
Exactly Ed. That is what I meant about cause for optimism. Retailers and Developers are paying attention to what their customers are looking for like never before. What we are now seeing is a greater level of respect for the shopper and for the activity of shopping.
08.15.2012 | Unregistered CommenterMaureen Boyer
Maureen,

Great blog and I really like the website. By the way, redevelopment does not mean go the landfill. We are currently working on a 20 acre site which was home to a pre-cast panel manufacturer. The existing structure was demolished and the concrete structure portion was crushed for use as base course on the construction of a new hypermart (22,000 cy produced which eliminated over 1000 truck trips to bring in material, not to mention hauling off site). Several companies in our market have become integral parts of project teams - offering unique material re-use opportunities on redevelopment projects.

Anyway, my compliments on the article.
08.15.2012 | Unregistered CommenterSteve Miazga
Sharing this email I got this afternoon from my friend Kathleen Burgi-Sandell with James Cambell Co. "I also wanted to relay to you that at a lunch with a friend who is active at ICSC and works for Capital Pacific real estate in their “green” division she mentioned having just met with this retail developer from the Midwest who creates shopping centers based on community input. It made me think of your blog and the posting regarding how retail will need to change in the future. The below links you might find of interest. One is for the developer and the other pertains to a voting mechanism he uses to get community input on retailers. (there is also a link to a green article that Karla wrote ).
Kathleen


Hi Kathleen – great to see you and let’s do it again in about a month. Here’s the article I mentioned, I’m sure I probably sent to you before: http://www.westernrebusiness.com/articles/JUN12/cover2.html, but pass it along to the architect you mentioned who is interested in community driven development. The site www.popularise.com is where the people vote on what retail/service they would like to see.
08.29.2012 | Unregistered CommenterMaureen Boyer

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