FEATURE ARTICLE, MAY 2005

SOMETHING OLD, SOMETHING NEW — ALL RETAIL
Like fashion, retail trends encompass new fads, holdovers from last season and timeless classics. 
Bob Smith

Smith

In the cyclical nature of retail business, trends also ebb and flow for the retail center. Preferences in shopping destinations swing from stylish urban settings to large, sprawling suburban malls and back. Are shoppers in the mood for downtown energy, relaxed suburban or neighborhood funky? Are they motivated by specialty shops or big boxes and mega-malls? Questions need to be asked, answers must be found.

An often-overlooked by-product of this struggle is the carry-over effect to surrounding areas, especially in tightly developed urban quarters. Shoppers are likely to spill into nearby restaurants, hotels, museums and theaters. That can mean a big boost to businesses on the periphery of a retail center when things are going well or a large drag when they’re not.

With so much at stake, what’s in vogue for shopping centers? Even in the murkiest conditions, some trends are perfectly clear: Downtowns are in, local is happening and the customer is still always right.

Destination Downtown

In the continual cycle of movement between the suburbs and the urban core, downtowns across the nation are gaining momentum and taking on renewed importance. It’s a never ending tug-of-war for shoppers that places the vitality of the urban setting at odds with the laid-back, parking-lots-a-plenty, big box malls.

In a telling compliment to the impact of urban centers, innovative developers are responding by imitating that downtown feeling in suburban developments. Lifestyle centers offering open-air and stylized storefronts mimicking downtown streetscapes are sprouting up in California, Arizona, Nevada and in the Pacific Northwest. If they haven’t reached your city yet, chances are they’re on the way.

Mom and Pops to Big Shops

In contrast to the enormous strength of national retail chains with sizeable advertising budgets is the re-emergence of the small family merchant. Call it “revenge of the locals” or credit the “buy local” movement, but clearly, the mom-and-pop shops are holding their own. What local owners may lack in experience they often make up for in enthusiasm and customer service. The type, quality and price of merchandise draws customers, even more so than simply a name on the door. The smart bet for retail centers is a balance of both the reputable chains and the hometown stars, an asset that creates flexibility, success and community connectedness.

There are specialty trends for the giants as well. A new genre of anchors is emerging as mergers continue. Big boxes like Circuit City and Best Buy — formerly known as “category killers” — are now taking pad sites that used to be reserved for department stores. And with mega-mergers like Sears/Kmart and May/Federated Department Stores underway, many centers anticipate competition will lessen as, perhaps, corporate owners stop battling themselves. In any case, retail space will open up and the large square footage department store space surely will be back on the market.

Operationally –Be Prepared

If there’s one clear retail lesson from 2004, it’s that factors outside of our control have impact, and centers had better be ready. Florida hurricanes, California mudslides and crippling snow storms in the East demonstrate that Mother Nature can wreak havoc on even the best-run operation. Flexibility, fast reaction times and strategic contingency plans are vital. If your delivery routes are blocked, what’s plan B and who on your team knows it?

And it’s not just natural disasters that have an impact. Several major retailers were hit by computer system hackers over the past year, while some were victims of unintentional interference by in-store wireless users. It’s a sobering reminder that as tempting as the newest technologies can be, folks on the front edge assume the greatest risk. The excitement of being first, fun or convenient can’t trump the need for safety and security. In fact, some are advocating new lease clauses assuring proper wi-fi use.

A tour through leading retail shops is all it takes to see that cross-merchandising is here to stay. CDs and specialty magazines at Starbucks Coffee? You bet. Plasma TVs and gourmet foods at Wal-Mart? Picasso at Costco? Of course. Expect to see more efforts by discount chains and wholesalers to cut into the niche markets of high-end retail centers. It’s a challenge to our creativity and innovation. What is your center doing to generate retailing alternatives that draw customers and lengthen their stay?

The urban environment provides a strategic advantage to work collaboratively with surrounding businesses and downtown associations to attract people to the center. Partnerships and packages with local theaters, museums and hotels, including special seasonal attractions, can increase customer traffic.

Entertainment Centers, Community Connections

Customers clearly shop not only for goods, but also for experiences. Today’s shopping centers must provide both. They are entertainment centers that become destinations by providing unique encounters.

Likewise, restaurants are no longer simply a place to grab a bite while shopping; they are attractions offering one-of-a-kind cuisine and atmosphere. Theaters enrich the movie experience with state-of-the-art seating and sound, drawing thousands to the center. Museums, amusement centers and other stimulating venues offer a vibrant destination for family enjoyment.

Downtowns have always had town squares, of course. Nowadays, retail centers also are community gathering places. Center managers who embrace this perspective have a competitive advantage.

Customer Remains King

As much as fashion and retail are constantly evolving, some things never change. Whether loyal or fickle, cautious or daring, online or in-the-store, customers are the core of all retail business. Consumer buying power drives the industry. That’s why outstanding customer service is synonymous with excellence.

Anticipating needs, responding to requests and researching behavior is an integral component of day-to-day operations and future planning. Big things matter, like assembling a unique mix of stores, offering easy access, guaranteeing steady supply flow and implementing strong, consistent marketing. Little things count, too, such as proper signage and a universal — and fair — center gift certificate.

An old adage says in fashion, what goes around comes around. Among trendy clothes are classics that never go out of style. The accessories may change, but the navy blazer remains timeless.

The same is true for retail centers. Doing the basics well never falls out of favor, regardless of the next craze. As trends point out opportunities for short-term growth they also highlight the fundamentals required to stay nimble and responsive, hallmarks for long-term stability.

Bob Smith is the general manager of River Park Square, a successful regional shopping, dining and entertainment center in downtown Spokane, Washington.

©2005 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.