The Shopping Center Group
Retail Trends and Best Practices for Recruitment
THE SHOPPING CENTER GROUP, LLC
CREDIT CRUNCH
• FINANCING
– Lending
– Value of Shopping Centers
• CONSTRUCTION
– New Construction Stall
– Completion of Existing
• THE NEW NORMAL
– Was “Location, Location, Location”
– Now “Location, Timing, Demographics”
RETAILER CREDIT RATINGS
RETAIL TRENDS
• Retailers Proforma Changed
– Rate of Return (Sales Projections and Rental Rates)
– Co-Tenancy Requirements
• Shopping Down
– Discount, Dollar Stores, Fast Food
• Backfill Existing Space
• Non-Traditional Uses
– Flea Markets, Churches, Entertainment, Schools, Storage, Fitness, Hotel to
Office
• Inventory
• Store Prototypes
• Marketing
– Rewards/Loyalty Programs, Specialty Events, Give-A-Ways
SPENDING HABITS
2009 SHOPPING HABITS REPORT*
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While the majority of consumers in North America rated their current financial situation as good (35%), fair (40%) or
excellent (7%) – only 18% rated their financial situation as poor.
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Consumers are somewhat optimistic regarding the next 12 months. Over 40% believe their financial situation will
improve over the next 12 months, while 47% believe their situation will stay the same and only 11% say their
situation will get worse.
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Over 75% shoppers report spending cut backs
– Over half on fine dining, casual dining, movie theater attendance and salon/spa services.
– Between 40%-50% reported cutting back in most retail categories. Least affected were discount, grocery and
necessities.
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Cuts due to precautionary measures more than to economic reasons (job loss or wage reduction).
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Shoppers’ perception of their financial situation had a bigger impact on their shopping behaviors
than did their income.
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75% of those with incomes of $100,000+ reported cutting back.
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Women report spending cut back more than men. Women are typically responsible for the majority of household
shopping.
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While 80% of consumers reported cutting back over the last 12 months, only 40% report that they expect to increase
their shopping behavior when the economy improves.
– Greatest likelihood of increased were shopping trips in general, department store visits and purchase of
discretionary goods.
*Source: INTERNATIONAL COUNCIL OF SHOPPING CENTERS
CONSUMER CONFIDENCE
UNEMPLOYMENT RATE %
RETAIL SALES (EXCL. AUTO)
RECENT SAME STORE SALES BY OUTLET
RECENT SAME STORE SALES BY CATEGORY
ECONOMIC RECOVERY
• The road to economic recovery throughout 2010 will remain turbulent as
many downside risks remain.
• Leasing demand levels to bottom in fourth quarter 2009, remain stagnant
in 2010
• Market rents have fallen on average 10 percent and will fall another 5 to 7
percent in 2010
• Investment transaction volumes set to increase up to 50 percent
Source: 2009 The Paramus Post “Commercial Real Estate Recovery Second-Half 2010 according to Jones Lang
LaSalle’s U.S. National Economic & Property Outlook”
RETAIL INVESTORS’ INTEREST
YOU WANT THESE
GO AFTER THESE FIRST
VALUE ORIENTED
RETAIL AS ECONOMIC STIMULUS
Retail / Restaurant
Average Annual Sales
Local Collection 2.75%
Walmart
Kroger
$ 68,000,000
$ 22,000,000
$ 1,870,000
$ 605,000
Applebee’s
Arby’s
Blimpie
Burger King
Dairy Queen
$ 2,500,000
$ 900,000
$ 1,434,000
$ 1,100,000
$ 500,000
$
$
$
$
$
68,750
24,750
39,435
30,250
13,750
KFC
Krystal
Huddle House
Logan’s
McDonalds
Pizza Hut
Subway
CVS
Walgreens
Stage Stores (Peebles, Bealls)
Auto Zone
Big Lots
Dollar Tree
Fred’s
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
26,950
26,950
14,108
89,375
57,750
20,048
11,000
199,375
258,500
51,750
41,250
93,500
49,500
71,500
980,000
980,000
513,000
3,250,000
2,100,000
729,000
400,000
7,250,000
9,400,000
2,300,000
1,500,000
3,400,000
1,800,000
2,600,000
IDENTIFY RETAIL
• Retail Lease Trac
• ICSC Events
• Franchises
• Help local entrepreneurs develop a business
• Identify peer towns with a successful local retail business
looking to expand. Who is advertising in regional paper?
• Run comparisons of similar size and type markets for their
retail businesses you don’t have. Talk to managers about who
to contact for expansion.
SITE SELECTION CRITERIA
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Existing Retail - Total GLA (Gross Leasable Space) within 1,2,3 miles (or Trade Area)
Business – Total GLA, Major Employers, Office, etc.
School – All Schools with enrollment including nearby college or university
Sales Comps – retail & restaurant sales figures
Rent Comps – current rent comps for retail & restaurants
Traffic Counts for all streets bordering the major retail corridors
Is there any proposed road construction planned?
Impact Fees, Tap Fees, Zoning
Hotels – number of rooms, year built, occupancy rate, average room rate, seasonality
Hospitals – number of rooms, employees and regional draw
Access & Signage – new traffic signals, right in / right out, signage restrictions
Liquor Licensing – is it available? how hard to get? how long does it take?
Outdoor Seating – availability, restrictions, etc.
Parking requirements – city parking ratio?
Residential Communities and Pricing – subdivisions, apartments, condos, etc.
Marketing – What media exposure and brand awareness does your market have?
Trade Area Maps – custom trade areas are crucial – drive times, regional draws, etc.
Potential Anchor Closings: Is the proposed site located in a shopping center with a weak
or financially troubled anchor (i.e., Kmart, Winn Dixie; a Walmart that may be relocated
and expanded to a Super Walmart)?
BE PREPARED FOR ECONOMIC RECOVERY
• WEBSITE
• Prepare “Elevator Speech” 60 Seconds
• Retail Marketing Materials
– Macro to Micro
– Demographics in Radius Rings & Trade Area (Polygon)
– Traffic Counts, Schools, Major Employers, Residential
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Keep information concise and relevant - KISS
Create a strategic plan for correct placement of retail
– Zoning, Traffic Signals, Sign Restrictions, Parking Requirements, Greenways,
Roadways
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Keep industry contacts informed of positive changes
– Liquor by the Drink Changes
– New Schools, Roadways, Hospitals
– Increase in Employment, Retail Sales Tax Revenue, Hotel Occupancy
•
TIMELY