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.

Issue link: https://ancillaryretail.epubxp.com/i/981995

Contents of this Issue

Navigation

Page 44 of 46

WHAT'S ON MY MIND 40 Ancillary Retail | May 2018 Pop-Up Retail: Back to the Future? Specialty leasing needs to focus on cultivating short-term retailers and providing ongoing support to help them succeed. By Deborah Kravitz P op-ups, pop-ups everywhere! At least once a day, a news sto- ry "pops up" about a pop-up. Of course, most of these stories focus on the headline-making brands: Google in New York or Tiffany & Co. in Los Angeles. Pop-up retail, however, has been around for as long as there has been retail space, whether it has been called 'temporary in-lines' or 'short term leasing.' These stores are fun, unique and add value to locations, whether in shopping centers, airports, or trans- portation hubs. But what they are not is incubation retail. They are not the result of a grown-from-the-ground- up business that has been tended to carefully and given the opportunity to create a concept that has longevi- ty. What shopping centers, both large and small, need now more than ever are merchants that will find a home, build their business and become a multiple-store retailer, a long-term op- portunity or both. Specialty leasing has been a place for entrepreneurs to test concepts, launch brands, or expand almost as long as malls have been built in the United States. Many companies have recently "popped up" to be online matchmaking services for short-term space, but use of these pre-suppos- es that a merchant understands the economics, has visual merchandising help at their disposal, and the ability to understand and choose from the myriad of possibilities from these marketplaces of space. Some retailers may be at that place in their growth; however, the original idea of retail de- velopment still holds true. We must go out and seek new concepts, and be able to show owners these specific op- portunities in person. Startup retailers do not have the resources or funding for launch par- ties or PR agencies, not to mention celebrities or influ- encers who Insta- gram about their openings. Startup retailers may be coming from home parties, fairs, small local locations, or e- commerce. They are not typically co - ming with investor dollars or the ability to pay 'street' real estate prices, mar- ket rents and ancillary charges. When specialty leasing started in the United States, the barrier to entry was low, as 'carts' were a way to open and test a location and business. Over time, the financial demands of the REITs, as well as national 'bid' deals, drove the threshold too high. Many new concepts came, but were treat- ed the same as a national or regional deal, and paid rents that were not ten- able for a new startup. I sat at a sem- inar 15 years ago, and when queried about the future of specialty leasing, heard the owner of a large developer state that there would always be mer- chants who wanted to be in his malls, and pay his rents. That has proven untrue; as mall walks through fourth quarter last year saw many vacant RMUs, dupli- cate products, and empty store spaces even in "A" malls. Those "merchants that would always come" have gone elsewhere. Some are online, some on Etsy, but many are in alternative sell- ing locations — fairs, festivals, and small centers — where the barrier to entry is still very low, there is no percentage rent, and they can choose when and how to open. The shopping center business still needs to focus on canvassing, on reaching out to find and develop small businesses. There needs to be personnel at the shopping center level that understands retail/services/food & beverage. Training specialty leas- ing personnel is critical, but extends beyond sales. The core problem with a sales approach is having 'sold' the new business on opening and then leaving them try to figure out how to succeed is not incubation or retail development and usually leads to a vacancy. Every new business that comes to a shopping center as a short-term mer- chant is a business that could benefit all of us as landlords. We are all re- sponsible for helping them, whether it's with advice and counsel on prod- uct selection, pricing, visual display, understanding margins or even direc- tion on where they should open. Each of us is responsible for both this short- term and long-term growth. Each of us is also, therefore, responsible when this merchant fails due to lack of in- formation. We all lose then, as finding and developing a new merchant is time-consuming and costly. Pop-ups can be a channel for both directions: both the international brands that create a buzz, as well as the new, fledging business. Landlords need to understand the difference, that while one comes with the deep financial pocket to create an amaz- ing space, bring publicity, pay mar- ket rents, and is usually a marketing play, it is the small business that needs these opportunities even more. And we need them more than ever. Deborah S. Kravitz, CRX, CLS, is a principal in the retail real estate consulting firms of Provenzano Resources Inc. and president of Pro Retail Inc. (PRI). She is also a speaker and trainer on pop-up retail and leasing in retail management, visual merchandising, leasing, product development and retail training. In addition, Kravitz is a founding member of Ancillary Retail's editorial board. Deborah Kravitz Provenzano Resources Inc. and Pro Retail Inc.

Articles in this issue

Archives of this issue

view archives of Ancillary Retail - MAY 2018