The future of sports-related entertainment facilities (watch for a surge in rock climbing concepts), retailers that utilize an honor system instead of cash registers and the prospect of texting a company to order new products were among the topics covered at the recent New York Deal Making conference sponsored by the International Council of Shopping Centers (ICSC). The annual event held each December was attended by more than 10,000 retailers, developers, brokers and related retail professionals this week.
Before delving into the future, Tom McGee, Chief Executive Officer of ICSC addressed the recent past with a “state of the industry” discussion that he presented before a lunchtime crowd at the Wednesday session. “Figures point to a 4.9% increase in retail sales for the upcoming holiday shopping season based on Black Friday and weekend data,” he explained, “and more than 160 million consumers visited a physical retail store during that period. This represents 60% of all adults in the United States. In addition, 70% of all consumers participated in a click and collect experience (this figure accounts for the number of people that purchased an additional item, after picking up a product at the store after initially ordering on-line."
Tom McGee, ICSC; Tal Zvi Nathanel, SHOWFIELDS and Zak Normandin, Iris Nova
McGee also explained that on-line shopping and bricks and mortar stores work in concert, citing research that shows website traffic increases by 37% when a retailer opens a new store location. He then proceeded to moderate a discussion that included Zak Normandin, Founder and CEO of Iris Nova, the parent company of beverage brand DIRTY LEMON. “There is coming a time soon when every major brand will have a phone number attached to it,” he said. “When you use up a product, be it toothpaste, soda or shampoo, consumers will simply text a message to this number requesting a quantity of refill. It will then be delivered directly to a home or office, maybe even the same day.”
Normandin also explained the cashier-free environment that exists within The Drug Store, the company’s retail concept that markets Iris Nova brands. “People visit the store, taking the products they want and then simply text us with the quantity,” he said. “It is 100% based on an honor system, with payments subsequently processed on-line. We find that most people do, in fact, follow through with their purchase and consider the few that don’t as consumers entering our product sampling experience. We are confident they will return and be honest the next time.”
Sonny & Sons, a fast-casual concept on the campus of Purdue University, with eyes for expansion nationally, was among the handful of restaurants doling out free food samples in the Food & Fun Tasting Room. These chicken sandwiches were a hit.
He definitely sees a long-term future in bricks and mortar retail based, in part, because “people have become over-stimulated by using the Internet and crave one-on-one conversations with people.” The Drug Store is planning additional locations including sites in Chicago and Los Angeles, adding to the inaugural one in New York City.
In a seminar that examined how food and beverage offerings play a role in entertainment retail concepts, Charlie Keegan, President and CEO of KH FEC, LLC indicated that the entertainment category is becoming “over-indexed” and he views the entire sector as “outsourced group socialization.” He believes there exists three types of retail entertainment based on the types of audiences they intend to attract. This includes (1) under 10 years of age where adults are not needed, (2) millennial-based that target 25 to 40 years old where kids are tolerated and (3) concepts that need to address all age groups from grandparents to toddlers. “The trick is offering entertainment that everyone can enjoy and many times the focus is on bowling,” he said.
James Cook, JLL; Ginger Flesher Sonnier, The Ginger Companies; Sarah McNally and Charlie Keegan, KH FEC
“The best parties involve food and drinks, so that is a central part of Main Event Entertainment,” a concept that integrates video games, laser tag, bowling and billiards. Formerly President and CEO, he is now involved in a new venture in partnership with Hasbro Entertainment that centers around the G.I. Joe, Mr. Potato Head and Monopoly brands. “Forty-year olds grew up playing with the GI Joe figure and because it was so central to their childhood, it will appeal to them now as well. GI Joe, although new to eight year olds, is also extremely popular with this audience,” he said.
Lance Pinn, co-founder of Brooklyn Boulder, explained the current popularity for rock climbing concepts and, with the sport set for competition in the next two Olympic Games, believes it is on the brink of a surge in popularity. “If you can climb a ladder, you can participate and enjoy the experience,” he started. “The appeal to some is as a workout, and to others, a sport. The boutique concept is exploding and I believe it is under-served in the United States by more than 1000 facilities. We are working hard to correct that by retrofitting facilities, with certain sites requiring the elevating of ceiling heights by a considerable amount."
Placemaking has occurred “quite by accident and fueled by the needs of our customers” according to Pinn with the request for large-scale galas, Ted Talks and co-working situations at the facilities. Rock climbing will experience a boom similar to the snowboarding sector after the exposure it receives from the Olympics next summer.
ICSC attendees also had the opportunity to learn more about using Yelp, as it pertains to business owners, from Ali Schwartz, Senior Local Business Partner for the company. “Ninety-seven percent of all consumers that read a Yelp review on-line proceed to make a purchase and 51% of all people that use the site earn more than $100,000 annually,” she said. “The number one comment category deals with customer service, rather than the quality of a product. For restaurants and retailers faced with dealing with a negative review, we recommend thinking like a consumer when responding. In all likelihood, other consumers will read your words, so write a response with that in mind. You may never win the person over who made the comment, but you are likely to influence the next customer.”
Larry Lichtenauer is President and Founder of Lawrence Howard & Associates, Inc., a full-service marketing communications and public relations agency that focuses on the real estate sector. He can be reached at larry@lawrencehoward.com
