- Posted at 6:16, December 10, 2013
- By Russ Bleemer
Moderator Chase B. Welles of Shopping Center Group, Atlanta
Continuing with the concluding Part IV from today’s International Council of Shopping Centers' overview session (the previous part is here):
The panel discussed extensively the online threat to bricks and mortar, and uniformly discounted E-commerce as a negative. "Good retailers are on it," said Equity One’s Tom Caputo, noting that using stores for E-distribution is now commonplace.
"Differentiate yourself," Caputo added, "there are customers who are going to want the in-store experience.”
Said Caputo, "Smart retailers will move very quickly with [differentiating] what’s a commodity that doesn’t need to be in your store."
Moderator Chase Welles of Atlanta's Shopping Center Group suggested that, for example, group pilates classes would need a storefront, but many goods can and should be shipped or delivered.
M&T Bank’s Michael Weinstock was optimistic about retail financing opportunities. But he said that rents and development costs were rising even in "affordable" locations, and it was getting harder to project returns.
Welles asked Weinstock whether the difference would increase between urban and suburban prices and profits. Weinstock--alluding again to the theme of the session, the benefits of urban density--said that the difference already was profound. For example, he said, developers don’t worry as much about tenancy in many urban areas, whereas succession in the suburbs is harder.
Fairway Market's Aaron Fleishaker countered that “the city doesn’t run on forever,” and not every neighborhood is as ritzy and stable as Madison Avenue. The result, he said, “is that you now have competitors killing each other in some neighborhoods.”
Citing his own company's flagship Upper West Side store, he said that Citarella, two Whole Foods outlets, and Zabars, among others, provide stiff competition. “We’re not the only game in town,” he said.
Said Fleishaker, “There will always be flagship stores . . . but when you have to cut prices to compete, you can only pay so much in rent.”
He sternly warned that landlords need to be aware of the competitive markets of their tenants.
Moderateor Chase Welles nodded in agreement, and said that real estate professionals have seen “drug store wars and bank wars,” among others.
Banker Michael Weinstock agreed, and said in retail developments, adding “local flavor” helps, like an outlet for a well-known local pizzeria.
On the supermarket front, Matt Casey said that "in suburbia, there are very few 'A' locations left, but specialty stores like Trader Joe’s and Whole Foods will move in.”
He projected continued decline in the numbers of A&P and Pathmark supermarkets, but he said Shop Rite would continue to expand, alluding to his earlier reference to the coming Newark, N.J., store.
The Q-and-A session that followed the hour-long panel focused on, among other things, dollar stores. The panel praised the formula, and said the chains’ food sales often are direct competitors with supermarkets.
Panel members noted that food retailing has spread well beyond traditional supermarkets in big retailers, citing food product sales at Staples and, more recently, Bed Bath & Beyond.
The discussion ended with a lament for local retailers because of customers’ long-instilled, and now app-fueled search for the best deals. The “lack of loyalty in a customer” is a big business decision-making factor in retailing operations, said Fairway Market’s Fleishaker, adding, “It’s difficult for local people to survive. People will walk across town to save 10 cents on a can of tuna.”
“Every day you have to distinguish yourself,” said Fleishaker. “This applies across retailing, not just food.”