Ancillary Retail

MAY 2018

Ancillary Retail magazine is the retail industry’s resource for ancillary income markets. Ancillary Retail will provide relevant news, best strategies and practical tips to help developers and retailers grow and sustain successful businesses.

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18 Ancillary Retail | May 2018 From Push Carts to Pop-Ups: The Evolution of Specialty Retail Technology, e-commerce and a new breed of consumers have influenced all aspects of the retail environment, including ancillary retail offerings, which have become more essential than ever. By Nellie Day T he ancillary retail landscape has enjoyed a colorful history over the past 40 years. Kiosks, push carts (now referred to as retail merchandising units, or RMUs) and other temporary spaces began as a way for indepen- dent merchants who didn't necessarily have the money, inventory or proof of concept to enjoy all the perks that came with an elite mall location. The concept of making ex- tra money from temporary, smaller spaces soon caught on. Larger retail players eventually hustled the more humble mom-and-pops out of these spaces, filling our malls with nondescript products throughout the '80s and '90s. "Over the past few decades, rents were driven by huge REITs and their need to have strong NOIs and, therefore, revenue from common- area programs," says Deborah Kravitz, president of Pro Retail Inc. in Los Angeles. "This led to a 'bidding' of spaces for national concepts, such as cell phone accessories, skin care lines, makeup and even holiday ornaments. The highest bidder got all of the loca- tions from a developer and then 're-sold' them to operators. This pushed out a lot of the local mom-and-pop businesses." While these specialized spaces hosted quality tenants to be sure, this "high- est-bidder" environment also led to missed opportunities for retailers to connect with consumers. Rather than offer the most viable, valuable products, many RMU offerings were simply driv- en by the almighty dollar in the quest for higher rents and higher profits by devel- opers. Luckily, savvy shopping center owners realized this lack of originality and unique prod- ucts was a problem, particularly as the retail atmosphere began to change. "It became harder for shopping center owners to bring in the small, local startups due to these higher rents, and the barrier to entry was raised," Kravitz continues. "Now, the shopping center world is going back to get those busi- nesses from fairs, festivals and pop-up locations. They're trying to re-train these concept creators to show them that the mall is once again a good place to grow." Same Duty, Different Day The purpose of ancillary retail — and the entire shopping center, for that matter — hasn't changed. It still provides a large selection of compelling products, services and experi- ences that fulfill a need or enhance one's enjoyment. Ancil- lary retail owners maintain the same goals they have had for decades: to get their brands and products in front of the masses without committing to long-term space. Incentives for shopping center owners remain the same as well, as they can maximize their rentable square footage, activate dead zones and provide a wide selection of ever-changing merchants and merchandise that keep consumers coming back for more. "Every demographic survey has shown that today's consumer still wants to phys- ically shop — they enjoy the socialization of our centers," says Catherine Loy, vice president of specialty leasing, pop-up and permanent kiosk leasing at Starwood Retail Partners in Chicago. "But they don't want cookie-cutter, either in the store offerings or in merchandise. These pop-up, seasonal and short-term tenants offer something that is different, that has been created by that company and has to be bought now because that retailer may not be there in a few weeks." ON THE COVER Starwood Retail Partners' Battle of the Pop-Up winner h. flynn at Gateway Mall in Lincoln, Nebraska. Catherine Loy Starwood Retail Partners Deborah Kravitz Provenzano Resources Inc. and Pro Retail Inc.

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