Expanding brands find themselves relying on secondary markets and second-generation spaces. Commentary: Physical stores stand to gain by engaging, inspiring customers
STORE SPACES
10
Home furnishings retailer Lovesac extends it sustainability commitment to store expansion, remodels.
13
Sam’s Club opens cashierless store; customers pay with app.
12
Preview of SPECS 2025, Chain Store Age’s annual event for store development and facilities management. California’s Vallarta Supermarkets to deploy on-site renewable energy microgrid. 15
Paul Weinschenk is the president of retail at the Fairfax, Va.-based Peterson Companies.
SHOW SCOOP
Real estate developers and managers share how they’re managing in the era of sparse space as they prepare to head to the ICSC New York show.
Paul Weinschenk on building the future of retail real estate
Todd Caruso on going where consumers are headed
Adam Ifshin on the importance of store openings and renovations
Matthew K. Harding on re-shaping centers for today’s consumers
Naveen Jaggi on retail real estate’s map of the future
Adam Salgado on the new New Rochelle
Anthony Cafaro Jr. on the merits of middle markets
Revolutionizing instore experiences with AI
Retailers leveraging AI to automate, personalize and simplify workforce management tasks.
NYC Must-See Retail
From a Japanese value fashion brand to a natural foods grocery giant, New York City was abuzz with new store openings this past year.
As retailers, developers and others in the retail industry travel to Manhattan for the ICSC New York event in December, here are my picks for some of the city’s new must-see stores.
Balenciaga: And now for something completely different …. the luxury brand’s new, 9,795-sq.-ft. U.S. flagship is located in a landmark building constructed in 1908. The interior features the “most comprehensive example of the brand’s Raw Architecture concept,” according to the company.
The store holds true to the concept, which is meant to be reminiscent of construction sites and abandoned spaces and is built using existing elements. Original lime-wash bricks, concrete masonry, cement panels, bare drywall, exposed plaster, stucco, steel and glass are all included in the space. (110 Greene St.)
Dyson: The British brand, best known for its bagless vacuum cleaners, bladeless fans and and high-tech hairdryers, opened a sleek, ultra-modern outpost in SoHo. Designed to enable customers to get hands-on with Dyson technology, the store includes styling stations to try the company’s latest beauty products and an interactive customization wall for its line of headphones. (155 Mercer St.)
GU: The lower-priced, more trend-driven sister brand of Japanese apparel giant Uniqlo made its U.S. debut with a 10,225-sq.-ft. two-level location in SoHo. GU (pronounced as the letters “G” and “U” and derived from the Japanese word for “freedom”) features women’s and men’s clothing, shoes, bags and accessories. (578 Broadway)
Hoka: The on-fire athletic footwear brand made its flagship debut with a 9,000-sq.-ft. store on Fifth Avenue. Designed to reflect the brand’s origin in the French Alps (and complete with a rock wall), the outpost offers an immersive experience that includes digital foot-measuring services, product demos, dedicated programming and events. The lower level includes a gathering space for athletes. (579 Fifth Ave.)
Leica Camera: A destination space that is part retail store and part photo gallery, Leica Camera offers an immersive experience where customers can explore photography and purchase the camera maker’s full range of products. The space also features a photo gallery, a photo studio where visitors can test and experiment with Leica’s technology, and a library. (406 W. 13th St.)
Serendipity3: One of New York City’s most iconic restaurants moved into Times Square for its second Big Apple location. Famous for its “Frrrozen Hot Chocolate” and other decadent desserts, the new Serendipity3 is a sight to see. It has a bold and colorful design that brings the brand’s long-time Andy Warhol connection to life through reproductions of the artist’s signature pop art depicting Marilyn Monroe, the late Queen Elizabeth II and more across its walls. (157 W. 47th St.)
Warby Parker: The eyewear brand has given its first permanent store — a pioneer of online brands entering brick-and-mortar — an art-filled makeover. First opened in 2013, the revamped location includes a permanent exhibition paying tribute to more than a dozen talented artists that Warby Parker has featured in its stores over the years. (121 Greene St.)
Whole Foods Market Daily Shop: Designed for dense metropolitan markets, Whole Foods launched its first “quickshop” smaller-store concept on the Upper East Side, with two more Big Apple locations in the works. The new format will range from 7,000 sq. ft. to 14,000 sq. ft., about a quarter to half the footprint of an average 40,000-sq.-ft. Whole Foods store. (1175 Third Ave.)
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BRAND MANAGEMENT
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Deck the Malls: Stores Are Back
By Jill Standish
Peak holiday shopping season is here. But as people look for the perfect gift for friends and family, six in 10 don’t know where to start and seven in 10 are worried they’ll make the wrong choice and regret it. That’s according to Accenture’s Annual Holiday Shopping Survey, of 1,500 U.S. shoppers, which also found almost three-quarters (73%) of consumers would welcome inspiration.
Inspiration comes from being able to browse for ideas and can quickly turn into a purchasing decision. In fact, research from Gies Business College, found that retailers focusing on inspirational content can improve overall sales by as much as 31%.
This is where retailers with physical stores could stand to gain this holiday season. Accenture’s survey found that almost half of holiday shoppers — rising to 53% of Gen X consumers — prefer to visit stores so they can see and assess products firsthand.
This comes as Accenture’s Life Trends 2025 research highlights people’s desire to balance technology with sensory-rich, in-person interactions. The research found that more than four in 10 (42%) of respondents said their most enjoyable experience in the previous week was a physical one, while only 15% said it was a digital one.
The research also found consumers have been engaging in more in-person activities in the last 12 months. When it comes to shopping, more than four in 10 (42%) value face-to-face interactions with retailers, rising to 56% when it comes to buying groceries. This holiday survey backs this up, with four in 10 consumers saying they appreciate personal customer support.
There’s a bigger picture here too. Retailers can have the best merchandise, the best store layout, the best holiday ad campaign, the best pricing and promotions. But everything comes down to that connection between the store employee
and the customer. One way retailers might think about fostering that connection is to empower their store associates to act as “inspiration champions,” displaying their expertise to inspire and advise shoppers.
THE ROLE OF THE STORE
As pillars of a retailer’s brand identity, there is an enduring value and “halo” effect that comes with having a store. On one hand, they offer an unparalleled way to legitimize the brand and build trust with local communities, on the other, they offer sources of inspiration and convenience for customers.
Innovative retailers recognize this. They are applying creativity to store layouts, maximizing sales for each square foot of their allocated selling space. One way they are driving footfall to stores is by providing additional services such as a dedicated area for gift wrapping or personalization services.
season. It’s why they’re increasingly offering startup brands the opportunity to sell via pop-up stores-in-store.
They also understand the need to create a compelling reason for customers to visit, whether that’s the tactile experience of being able to touch and feel the product, feeling a sense of exclusivity and personalization with ‘VIP-style’ experiences or being able to tap the expertise of store associates.
Just look at Saks Fifth Avenue. This holiday season, the luxury retailer is offering customers one-of-a-kind holiday experience packages. These range from the chance to be part of the audience for an episode of “Saturday Night Live,” to a private shopping appointment with tickets to a Broadway musical.
Retailers can have the best merchandise, the best store layout, the best holiday ad campaign, the best pricing and promotions. But everything comes down to that connection between the store employee and the customer.
In a season that’s particularly tied to nostalgia and tradition, offering shoppers the experience of seeing Santa, of listening to holiday songs as they walk the aisles, or the chance to receive inspiration and advice from a friendly and knowledgeable store associate shouldn’t be overlooked.
A TIME TO SHINE FOR DEPARTMENT STORES
Then there’s the role of department stores. It is fair to say they have faced challenges in recent years. However, during the holiday season, they can really come into their own.
Successful department stores understand the unique role they can play in curating a balanced mix of established brands, emerging labels and in-house lines, particularly during the holiday
DRIVING CONNECTION
To ensure that the future for stores—and shoppers—is a bright one, retailers need to take what’s best about the traditional store and integrate innovative technologies and community connections. You can see this in everything from Whole Foods rolling out more small-format stores, to the way Wayfair’s new Chicago store integrates QR codes for seamless shopping.
Regardless of the reason consumers choose how and where they spend this holiday season, retailers can play an active role in creating a deeper connection with customers while developing strategies to drive new revenue opportunities.
Jill Standish is the global retail lead for Accenture.
The Retail Space Conundrum
With availability at an all-time low, brands now turn to second-generation spaces and secondary markets
Construction of new retail centers remain at a virtual standstill. According to CBRE’s Cost Consultancy Group, building costs range from $300 to $500 per square foot for multi-tenant pad sites. Very few markets—mostly those in fast-growing Sun Belt states—are able to command asking rents that will justify new builds.
Consumers, meanwhile, continue to spend. In October, the Bureau of Economic Analysis reported that personal income in the United States is rising by a monthly rate of 0.3%, and that personal consumption expenditures are increasing at a 0.5% clip.
“It all starts and ends with the consumer,” said Adam Ifshin, CEO of DLC Management, owner operator of 60-plus open-air centers that range from Maine to Florida and west to Texas. “The U.S. consumer is incredibly healthy. Wage rates are rising at two times the rate of inflation. Consumer credit is incredibly well-behaved. And consumers have come to realize that e-commerce can satisfy only a modest portion of their needs efficiently.”
Shoppers are engaged, but so is nearly all of Class A space in retail real estate. What’s an expanding retailer to do?
“The slow flow of new construction, redevelopment, and capital expenditures has dampened tenant turnover and rent growth,” said Todd Caruso, CBRE’s retail investor leader. “To stay primed, owners must keep their brand experience fresh. Those who concentrate on attracting more consumers, more often, and with greater sales volume will reap the rewards when space becomes available.”
Caruso has observed that retail brands that cling to familiar property formats and co-tenancies now are relying on location analytics such as Placer.ai to target possible new locations.
“Today, brands are moving past their traditional mindsets,” Caruso observed. “As they expand, they are more agnostic to property format and consider locations they might not have earlier.”
That can pay off for leading brands that find themselves in secondary markets with unexpected benefits.
The Niles, Ohio-based Cafaro Company owns and operates more than 30 million-sq. ft. of middle-market, super-regional malls—most of which draw traffic from as far as 20 or 30 miles away.
“We are always prepared to reconfigure second-generation space to accommodate major brands,” said Cafaro.
Despite the high cost of construction, some developers continue to build—and to not renew certain leases — to increase the allure of their properties.
At its Fairfax Corner project in Fairfax, Va., Peterson Companies invested $110 million in the construction of 36,000 sq. ft. of new retail space that will house an enlarged, 19,000-sq.-ft. Arhaus and an Apple store. It has also made significant changes to its food and beverage lineup.
Shoppers are engaged, but so is nearly all of Class A space in retail real estate. What’s an expanding retailer to do?
“Top-performing middle-market centers are destinations unto themselves,” said Cafaro co-president Anthony Cafaro, Jr. “In the Eighties, we built Spotsylvania Town Center, an enclosed mall and open-air center at the interchange of I-95 and Route 3 anchored by Costco, Macy’s, Belk, and Costco. Later, on the same interchange, we built The Village at Town Centre, an open-air lifestyle center with multifamily residential. Now there’s 5 million sq. ft. of retail-based real estate there.”
Last year, Meijer and Bass Pro Shop outposts opened at Cafaro’s 3 millionsq,-ft Eastwood Mall in Niles. This year, Dave & Busters and Sierra each have or will be opening and three locations in Cafaro properties.
As is the case with most high-level developers, Cafaro strives to keep its tenant rosters up to date and is willing to reinvest in converting second-generation space. At its Governors Square Mall in Clarksville, Tenn., Home Goods and Burlington will be filling portions of closed Sears location.
“In the past year, we have opened 53,000 sq. ft. of new tenants,” said Peterson COO Paul Weinschenk. ”We have an upscale barbecue brand called Ruthie’s that has a loyal local following opening soon. King Arthur Baking Company will open its fourth physical location at Fairfax Corner. Sweetgreen will be opening at the property very soon.”
Peterson is also embarked on a wide range of physical improvements across the 42-acre property to make it easier to navigate.
“The project is getting the time, attention, and money that it needs to remain relevant on the long-term horizon in Fairfax County, one of the nation’s richest,” Weinschenk said. “Fairfax Corner is only 20 years old, but much has changed in retail in those two decades.”
For more on this topic, turn to the SHOW SCOOP section, starting on page 17.
Lovesac operates about 300 locations nationwide.
The Lovesac Company has extended its sustainability commitment across its enterprise.
Lovesac, best known for its adaptable modular couches (“sactionals”), currently operates approximately 300 retail showrooms and an e-commerce site. Under its “Designed for Life” philosophy, the home furnishings company is committed to creating sustainable products designed to evolve with customers’ needs over the long term, ultimately reducing the amount of furniture discarded into landfills. Now Lovesac is applying the philosophy to its store development strategy.
Chain Store Age spoke with Shawn Nelson, Lovesac founder and CEO, and Justin Cruse, senior director of construction and design, about the brand’s expansion plans and how sustainability will direct the company’s future trajectory
What is the Lovesac in-store experience?
Our 300 showrooms, which average 1,000 sq. ft. each, features a simple color pallet. Since we are selling the biggest object in the mall, we are very focused on “demo marketing,” which is best done in person.
The showrooms carry sectional pieces, as well as beanbag seats. We encourage shoppers to sit on the couches and learn how to connect and modulate the pieces into different configurations. There are thousands of combinations and our showrooms provide first-hand inspiration for design, as well as how to upgrade existing pieces and change styles. In fact, 90% of our customers have visited one of our showrooms at one point.
We also offer a strong omnichannel experience that blends our online and physical store experience. Online, we integrated augmented reality and virtual reality technology with photography to mimic our showroom experience — making discovery and the
Lovesac: Built to Last
Retailer extends sustainability commitment to store expansion, remodels
By Deena M. AmatoMcCoy
shopping experience seamless, unique and customized.
Tell us about the Designed for Life initiative.
Nelson: Our Designed for Life initiative, which is rooted in sustainability, started as a product development framework. We create merchandise that is built for replacement, recycling or easy repair so it won’t end up in a landfill.
Additionally, our woven upholstery fabric is created from recycled water bottles that are chopped into flakes then melted into chip that is spun into yarn. Now we are extending this foundation into all aspects of our business, including store development.
How does sustainability fit into Lovesac’s building and remodeling strategy?
Cruse: There are different facets of sustainability in our expansion strategy. For example, whether opening a new store or remodeling an existing space, salvaging existing building architectures across retail centers is a priority for us. We are also leaning into sustainable building and design materials.
Also, when using wood or tiles, we opt for reputable sustainable sources. For the past several years, we have also been installing LED lighting in our showrooms. To date, 80% of our chain has LED lights, and each showroom has approximately 50 fixtures.
The next piece of our sustainability strategy is focused on energy management systems. We are currently running a pilot in 14 stores that integrates EMS with our HVAC equipment. This enables us to remotely manage and control systems, manage nighttime versus daytime set points, and closely monitor efficiency levels to ensure we are not wasting energy. Since launching the pilot in 2023, we continue
to see improvements, and plan to roll out the solution chainwide during the first and second quarters of 2025.
What are your long-term sustainability goals?
Cruse: Over the next few years, we will be focusing on more sustainable design. In recent remodels for example, when possible we reused existing materials to reduce waste. As we look ahead to new remodels, we will be leveraging more sustainable materials and supplier sources, and of course continuing our energy management system rollout.
The wellness of our showrooms and durability of materials are top priorities, so renewable hardwood floors, ceramic tiles and wood fixtures are top considerations. Overall, we want our showrooms to last the life of our leases, which are traditionally 10 years or shorter.
What do you expect Lovesac’s footprint will look like a year from now?
Nelson: We have been opening between 30 and 40 locations each year, and there are still plenty of new territories where we can grow. To further boost our growth, we are opening shop-in-shops in Best Buy stores. So far, we have a presence inside 50 Best Buy locations.
In September, we launched our “Lovesac Roadshow” event, which involves operating pop-up stores in Costco locations. The pop-ups, which are open for 10 days at a time, feature furniture exclusive to Costco members. We introduced the first locations in mid-September and we will open additional pop-ups at Costco stores across the country through November.
We are always trying new ways to get product in front of shoppers through new channels. It is always an advantage to have direct access to shoppers in different ways.
The only industry newsletter dedicated to store planning & design, construction, and facilities management.
the latest news on retailers’ expansion and remodeling programs, new store prototypes, green initiatives, facilities updates and more. Find out who’s opening stores and where. CSA Store Spaces covers retail development and facilities management inside and out.
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DOCK LIFTS VERSUS TRUCK TAILGATES: Tailgates and their maintenance are more expensive than dock lifts. Tailgates reduce truck payload and increase vehicle wear Tailgate platfor ms are smaller and do not offer handrail protection available on dock lifts, more risk for operators and cargo.
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Countdown to SPECS 2025 Begins
Store development, facilities management to take center stage at annual show
By Deena M. AmatoMcCoy
Decision-makers from the nation’s top retailers and suppliers involved in the planning, design, construction and maintenance of stores, restaurants and non-traditional concepts will head to Grapevine, Texas, March 9-11, 2025, for the 61st annual SPECS Show — the premiere conference for the store development and facilities maintenance industry.
The Chain Store Age event, which will be held at the Gaylord Texan, serves as a forum where retailers can learn, share ideas, develop business partnerships and find innovative solutions they can put to use back on the job.
The SPECS community is made up of retailers from across all sectors of the industry, from discounters, specialty stores and supermarkets to convenience stores, home-improvement centers and more. Restaurants and specialty concepts as well as non-traditional retail, including the financial and health care sectors, will also be represented.
“Each year, SPECS brings together the nation’s leading retailers and suppliers across store development and facilities management,” said Gary Esposito, SPECS VP, and chairman and group publisher for Chain Store Age. “SPECS 2025 is no different and we are looking forward to our March event.”
“SPECS will continue to adapt and innovate as the industry evolves, providing our community a forum where they can learn more about the solutions needed to successfully operate and maintain stores in this ever-changing retail landscape,” he added.
The annual event will combine dynamic keynote addresses, targeted educational content and plenty of opportunities for networking. Another hallmark of the show, the SPECS Solution Center/ Exhibit Hall, will spotlight products and services designed to maximize operational efficiencies and provide a better
in-store experience.
SPECS will give attendees the insights they need to stay on the forefront of the ever-changing retail industry, with 30 sessions across seven laser-focused tracks. Developed by and for retailers, the sessions will explore the latest trends and innovations transforming the design, construction and maintenance of physical stores and restaurants. Also on the agenda: talent and personal development.
Some of the educational sessions on tap for SPECS 2025 include:
Accelerating the Permitting Process;
New Retail Store Concepts;
Addressing the Skill Trade Gap;
SPECS TO HONOR WOMEN IN STORE DEVELOPMENT AND FACILITIES
Chain Store Age will unveil the 2025 slate of Retail’s Top Women in Store Development and Facilities during a special awards program at SPECS 2025 in Grapevine, Texas.
The awards, which will be presented on March 11, will honor the achievements of female retail executives in store development and facilities management. (The awards honor women who work directly for a retail, restaurant or non-traditional specialty concept.)
AI’s Impact on Facilities Management; and
Adaptive Resuse: Bringing new life into used buildings. (To see the complete agenda, go to specshsow.com)
In addition, SPECS will serve as the backdrop for CSA’s annual Breakout Retailer Awards, which recognizes retail, restaurant and non-traditional specialty concepts that are investing in brickand-mortar growth and innovation. Executives from the winning brands will share insights into their companies during a panel discussion.
As always, SPECS will also feature plenty of business partnering, collaboration and networking opportunities. Attendees can foster important industry connections during sessions, at meal functions, evening receptions and in the SPECS Solution Center. They can also participate in one-on-one meetings at the Information Exchange.
Want to take advantage of all that Chain Store Age’s annual SPECS event has to offer? Register now for SPECS 2025 at www.specsshow.com/2025/begin or scan the QR code.
Sam’s Club Tests Digital-Forward Store
New club eliminates fixed checkout in favor of app-based payment
By Marianne Wilson
Sam’s Club, the Walmart-owned membership club, has opened a store in the Dallas suburb of Grapevine, Texas, that will serve as an innovation center to test new initiatives — tech and non-tech — from which it will apply learnings at current and future clubs.
One of the first things shoppers are likely to notice in the new 150,000-sq.-ft. club is that there are no traditional checkout counters or self-checkout kiosks. Instead, customers ring up their purchases using the retailer’s app-based Scan & Go tool, which allows members to use their mobile devices to scan items as they shop, complete payment and skip the checkout line entirely. Employees will be stationed at the entrance to assist customers who may be unfamiliar with the app. To help members quickly exit after
finishing shopping, the store features three automated “exit trusses” (arches) that use artificial intelligence and computer vision to digitally check a customer’s cart and verify their online receipt. The standard Sam’s Club location has only two.
The area typically occupied by the checkout has given way to a dedicated space, described as an “omnichannel showroom,” that showcases Sam’s online-only items. Members can scan QR codes and go straight to the items in the app. At opening, a 12-ft. Christmas tree, a Mercedes SUV and a sectional sofa were among the items on display.
Additionally, approximately 6,000 sq.ft. of space has been dedicated to getting online orders ready for fulfillment, either via pickup or delivery. That’s four times
the standard fulfillment space allotted in other Sam’s.
Other fulfillment-area features include the use of refrigerated totes for online orders and high-speed doors for faster picking. Sam’s has also added a dedicated manager and two team lead positions for fulfillment.
Outside, shoppers will find 32 dedicated parking spots for curbside pickup, more than double the 14 to 16 spaces found at most clubs.
The store is also piloting an “experiential merchandising” layout that includes a large sushi island in the fresh department, gourmet cheeses, a floral department and a “quality assortment” of wine.
Sam’s is testing a host of other features in its new club, including:
A pizza robot that can produce more than 100 pizzas per hour;
Fresh tortilla machine in bakery;
Cubbies in the café for quick, convenient order pickup;
Vertical tire carousel for increased storage in the Tire and Battery Center;
The biggest cake case in the company to make restocking easier for associates;.
Reimagined café designed in conjunction with a restaurant expert to allow employees to cook and serve more efficiently; and
Automated forklifts in the receiving area.
Automated “exit trusses” use AI and computer vision to digitally check a customer’s cart and verify their online receipt as they exit.
An upfront area showcases items that are available only on Sam.com. Customers can scan QR codes on the items and go straight to the items in the app.
Grocer Partners for Clean Energy
Vallarta Supermarkets to deploy on-site renewable energy microgrid
By Marianne Wilson
In what could serve as a model for mid-sized grocery operators, a Californiabased chain will take advantage of microgrid technologies to reduce energy costs and carbon emissions.
Vallarta Supermarkets has partnered with GreenStruxure to design, build, operate and maintain an on-site renewable energy microgrid at its store in Oxnard, Calif., under an energy-as-a-service (EaaS) agreement. The solution will utilize solar panels, battery storage and advanced energy management systems to deliver clean energy, providing 60% of the energy needed to the location,
The project will help Vallarta avoid significant energy costs from the first year of operation and protect it against rising
utility prices, offering the supermarket operator greater control over its energy expenses and future-proofing its operations against market volatility. It also will lower Vallarta’s carbon emissions by 60%, aligning with its sustainability commitment.
“By partnering with GreenStruxure, Vallarta Supermarkets is taking significant steps towards sustainability and reducing our environmental footprint,” said Joel Silva, CFO at Vallarta Supermarkets, which operates approximately 55 stores throughout California. “We look forward to offering this service to additional locations in the future.”
Vallarta Supermarkets will receive the outcomes of the project — zero-carbon energy, peak demand management
and optimized use of energy from the grid and its onsite system, along with complete performance insights — through GreenStruxure’s AI platform, BeyondtheGrid.
“This project is a valuable example for other mid-size companies and supermarkets looking to lower their energy costs and reduce their environmental carbon footprint by transitioning to affordable and clean energy,” said GreenStruxure, a joint venture of Schneider Electric and Huck Capital.
GreenStruxure said it is currently developing microgrids for other locations to strengthen Vallarta’s bottom line and enable the company to better serve its customers, the company said.
Warby Parker has given its first permanent store — opened 11 years ago — an art-filled makeover. Opened in 2013 in Manhattan’s SoHo neighborhood, the revamp includes a permanent exhibition paying tribute to more than a dozen artists that the brand has featured in its stores during the years. There’s also a mini-print vending machine where customers can get surprise prints (custom-made for the store) for just four quarters each, with the proceeds going to a non-profit art group that works with pediatric hospitals. … Digitally native on-trend fashion brand Princess Polly will make its New York City debut in early 2025. The Australian-born, Gen Z fave, now part of A.K.A. Brand Holdings, will open a two-level, 8,000-sq.-ft. store in Manhattan’s SoHo neighborhood. … Vuori, the Southern California-inspired performance activewear brand, opened a 4,000-sq.-ft. flagship on London’s Regent Street. With more than 60 U.S. stores, Vuori is looking to have 100 stores in the U.S. by 2026 and about 50 in global markets. … Fastgrowing Swiss athletic brand On has added two flagships to its U.S. store fleet, including a 4,596-sq.-ft. store housed in a registered 1930s landmark building in Manhattan’s Flatiron district. The 4,553-sq.-ft. Chicago flagship pays homage to Chicago’s rich industrial and design history. … Millennial- and Gen Z-focused online fashion retailer Revolve is operating a holiday shop at The Grove in Los
Angeles from Nov. 14 through Jan. 4. Along with apparel, footwear, beauty products, accessories and gifts, the shop will feature meet-and-greets with talent, curated edits and workshops designed to enhance consumer engagement and brand loyalty. … Primark has signed a lease for its first store in Manhattan, a 54,000-sq.-ft. flagship in the Herald Square neighborhood. The value fashion brand is also entering Texas, opening in December at La Plaza in McAllen, Texas. Four additional stores are in the works in the Lone Star State. … Amazon is testing a small-format grocery store concept, called Amazon Grocery in a building in downtown Chicago that also houses a Whole Foods Market. The 3,800-sq.-ft. store offers about 3,500 products, featuring national grocery brands or household essentials that are not available at Whole Foods.
Warby Parker
Walmart Doubles Down on Community Solar
By Dan Berthiaume
Walmart continues to increase its commitment to solar power.
The retail giant is investing in a 3-million-sq.-ft. clean energy portfolio developed by Solar Landscape that will put solar panels on the rooftops of 74 commercial buildings in Maryland and Illinois. The commercial rooftop projects are currently under construction and expected to become operational in 2024 and 2025. They will create nearly 43 megawatts (DC) of solar capacity for the surrounding communities, enough power to serve the equivalent of more than 3,600 homes.
Approximately half of the portfolio is designed to reduce energy costs for
low- and moderate-income households. In total, Solar Landscape estimates that the projects will save subscribers about $1 million annually on energy bills.
“Our investment in this community solar portfolio is aligned with our purpose to help people save money and live better,” said Frank Palladino, VP, renewable energy strategy for Walmart. “Once operational, these projects will enhance grid infrastructure in dozens of communities in Maryland and Illinois, while expanding access to affordable clean energy and helping thousands of households save money on energy bills.”
By placing community solar projects on commercial rooftops in densely
populated areas, known as load pockets, where it can be difficult to generate new power using traditional means, the portfolio will add significant value to the electrical grid. This reduces the need for additional transmission, furthers equity in the clean energy transition, and accelerates development.
Solar Landscape and Walmart plan to explore follow-on investments and opportunities in the domestic community solar space. Once complete, the Maryland-Illinois portfolio will help avoid the emissions of nearly 40,000 tons of carbon dioxide annually, equal to almost 40 million pounds of coal burned, according to the Environmental Protection Agency.
The new investments will add to Walmart’s existing portfolio of more than 600 onsite and offsite renewable energy projects already in operation or under development in more than 10 countries.
SHOW SCOOP
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Todd Caruso on going where consumers are headed
Adam Ifshin on the importance of store openings and renovations
Matthew K. Harding on re-shaping centers for today’s consumers
Naveen Jaggi on retail real estate’s map of the future
Adam Salgado on the new New Rochelle
Anthony Cafaro Jr. on the merits of middle markets
“Skate to where the puck is going, not where it has been.”
Hockey great Wayne Gretzky’s advice is an appropriate mantra for retail brands and landlords. The retail industry needs to go where consumers are headed—and put them at the center of every decision.
The U.S. retail market is grounded in strong fundamentals, as its relative low vacancy rates show. Still, turbulence around interest rate movement has slowed new construction and cut into capital for repositioning and redevelopment. At the same time, consumers continue to shift where they spend their time—and their dollars. Where does that leave the retail industry?
Keeping up with the consumer will take some skillful navigation for: Retailers. For at least a decade, retailers have turned to location analytics in site selection. Even so, many held to familiar property formats and co-tenancies—until now. Today, brands are moving past their traditional mindsets. As they expand, they are more agnostic to property format and consider locations they might not have earlier. Some, for example, are expanding from malls to openair centers, and the reverse is also true.
Owners. On the flip side, some owners, developers, and investors are determining the highest and best use for their real estate based on where the consumer wants to shop. In the process, they are reverse- engineering the way they attract retailers.
Instead of holding to a traditional merchandise mix, owners are pursuing the categories and brands that reflect the needs and wants of consumers in the property’s trade area. With a blend of data and storytelling, an owner can show retailers why its property is a great fit for their brand, even if the location marks a departure from the norm. This approach expands the pool of retail brands as well as non-retail uses. It also means developers and investors must build relationships across a broader real estate landscape—a landscape that will take innovative approaches to navigate.
Fresh approaches for properties. The slow flow of new construction, redevelopment, and capital expenditures has dampened tenant turnover and rent growth. To stay primed, owners must keep their brand experience fresh. Those who concentrate on attracting more consumers, more often, and with greater sales volume will reap the rewards when space becomes available.
Meanwhile, these four approaches can help owners, property managers, and leasing teams raise asset value.
TODD CARUSO on going where consumers are headed
1. Find the highest and best use. Advisors like CBRE’s Location Intelligence team can help owners dive into the data on consumer profiles, demographics, and buying habits. Predictive modeling keeps properties on pace with changes in what consumers want and what the market offers.
Expanding retailers are more agnostic to property format and consider locations they might not have earlier.
2. Ramp up events and social media. The right social media program and calendar of events can boost retail foot traffic. From a 10K charity run to a concert series or a holiday celebration, an event can engage existing shoppers and attract new ones. Likewise, social media can spread the word while raising the property’s profile overall.
3. Look into pop-up shops. If a zone in the property needs more traffic, a pop-up or temporary lease is an option. The right brand could evolve into a long-term tenant. Some digitally native startups are testing markets with pop-ups before committing to bricks and mortar. On-site consumers become the focus group those retailers need before making a longer-term commitment.
4. Add revenue with digital media and corporate sponsorships. When economic headwinds slow rent growth, revenue sources like digital signage and corporate sponsorships can boost net operating income, which, when capitalized, increases property valuations—all while captivating consumers.
Consumers at the center. What do these approaches have in common? The consumer. The highest and best use focuses on consumer preferences. Events and social media connect consumers and communities. Pop-up shops let consumers experience a new brand. Digital media gives consumers a flash of information and entertainment.
Retail can be wildly diverse. But it all comes together when we put consumers at the center—wherever they go next.
Todd Caruso is CBRE’s retail investor leader, Americas.
When a store opens for business, everyone benefits – the retailer, the landlord, and the community. The same can be said for when a store is renovated. It’s a big reason why our teams at DLC, NWS Architects, and Renovo Construction are specifically focused on getting stores open – or reopened as the case may be – as quickly as possible. We want those registers ringing. When a store is signed and not open, you haven’t accomplished the goal in the eyes of the consumer. The American consumer remains incredibly resilient despite how hard we’ve been hit by inflation. Wages are rising at nearly two times the rate of inflation. Consumer credit is especially well-behaved.
Retailers with quality balance sheets and top-flight management know this and are anxious to continue to expand. They also are smart enough to renovate their existing locations to keep them relevant and welcoming to their customers. For example, Walmart is a great believer in keeping its stores up-to-date in order to meet the needs of their loyal customers. As a result, in just one quarter this year, their top line growth nearly equaled TJX’s entire annual total revenue.
At a recent event that I attended, a slide about retail bankruptcies over the past five years was shown. It occurred to me that the brands on the list uniformly had compromised balance sheets and top-level management that had been slow to adapt to current consumer needs and wants.
American consumers are highly conscious of what they want to achieve for their families. They have money to spend, and it has become clear to them that e-commerce can satisfy only a modest portion of their needs. They continue to rely on brick-and-mortar stores for value. That is vouched for by the average 94% occupancy rate across the 70 plus open-air centers in DLC’s portfolio. We’ve leased over 125 anchor boxes in the last six years with the overwhelming majority of them being taken by value oriented retailers who are singularly focused on delivering value every single day to their customers.
To stay current and in favor with their customers, retailers should plan to renovate their stores every seven years, because most of them are beaten up from high traffic by then. Consumer expectations have changed – and will continue to do so, driving retailers’
ADAM IFSHIN on the importance of store openings and renovations
consistent need to evolve. We hear so many retailers say they are refreshing the brand, investing in their store experience. These are code words for the need to renovate, and shoppers will surely know when a store is due.
And it’s basic things that make a big difference. For example, if a shopper goes into a store and takes her toddler into a restroom that’s disgusting, if it takes too long for her to check out, she might be making her last visit.
When retailers say they are refreshing the brand or investing in store experience, those are code words for the need to renovate. Shoppers surely know when a store is due.
To get the job done, clever retailers use their own capital to finance renovations, and most use pre-approved vendors for renovations. Long lead-times are necessary if the job includes HVAC, refrigeration, or electrical upgrades. National brands try to do all their stores in a single market at roughly same time and are good at planning equipment purchases for these all-at-once renovations at the best prices.
At our properties, we are seeing this play out, and in more and more instances, tenants of all sizes are relying on our in-house team of architects and GC to complete that renovation or roll-out to get open faster.
It’s a sign of the times – stay current or get left behind. We work with many great retailers that know they have to invest in their stores and we are able to partner with them. After all, their store is a shared investment.
Here’s to registers ringing everywhere this holiday shopping season.
Adam Ifshin is the founder and CEO of Elmsford, N.Y.-based DLC Management Corp.
For more than 70 years, North Plainfield, N.J.-based Levin Management Corporation (LMC) has served as a premier commercial real estate services provider in the Northeast. Its 125 leased and managed properties total more than 16 million sq. ft. of space.
To demonstrate how LMC continues to keep its centers relevant to today’s consumers, CEO Matthew K. Harding sat down with Chain Store Age to tell us about its redevelopment of the 420,000-sq.-ft. Blue Star Shopping Center—itself in business for the last 70 years on busy U.S. Route 22 in Watchung, N.J.
The remaking of Blue Star will transform a legacy shopping center into a modern marketplace leader.
Before we get into what’s happening at Blue Star, Matthew, tell us a little about Levin’s operating philosophy.
Sure. Levin Management is a distinctive organization within our sector. Our vertically integrated platform offers in-house construction management – which sets us apart from many of our peers – along with leasing, property management, marketing and more. We take a lot of pride in creating synergy among retail space users, shopping center properties and local communities.
We are at a transitional time in retail real estate. Available space is at an all-time low, so more brands are chasing fewer opportunities. Consumer preferences continue to shift, and retailers are working hard to meet a new level of demand for service and convenience. Be it through redevelopment, place-making or strategic re-tenanting, we are focused on doing what it takes to best serve retail space users – and their customers.
So how are we seeing this play out at Blue Star?
It’s an ambitious, multi-million-dollar redevelopment. For many years, we had a 44,000-sq.-ft. ShopRite on the property. But, with the community growing and the market changing, we knew that
MATTHEW K. HARDING on re-shaping centers for today’s consumers
upgrading our anchor tenant was critical, and a larger, next-generation ShopRite would be the best possible solution.
Over time, we used short-term leases to mothball the extra space we needed to do it. We secured approvals from the municipality. We started bringing in additional tenants and re-working deals, including a larger lease for ShopRite. Construction is now underway on a new 72,000-sq.-ft. store for our grocery anchor, which remains operational in its existing space.
When the store opens next summer, we will reconfigure the vacated space to create multiple units.
Are additional renovations being made at the property while this is underway?
The ShopRite expansion catalyzed a full redevelopment at Blue Star. We are underway with façade updates and the creation of a new outdoor common area with seating, as well as extensive landscaping redesigns property-wide. There will also be upgraded lighting, parking lot refurbishments, and the incorporation of infrastructure to support EV charging stations.
Ultimately, this project will transform a legacy shopping center into a modern marketplace leader. And tenants are responding. Several existing retailers have re-committed to the property, we just inked a lease with Planet Fitness and are in negotiations with additional national brands.
Does LMC’s long presence give it an advantage in undertaking a project of this scope?
We have been at this since the late Philip Levin started building shopping centers in 1952, and maintain long and fruitful relationships with both national and local retailers.
We have seen it all – from the rise and fall of anchor tenants, the e-commerce phenomenon, and, most recently, a global pandemic that shuttered doors for hundreds of retailers deemed “non-essential.” Our team maintains an owner’s perspective and a long-term view, and offers an expertise that clients find invaluable when it comes to revitalizing and – in some cases – reinventing or repurposing properties to accommodate constant change in this fluid industry.
Matthew K. Harding is CEO of North Plainfield, N.J.-based Levin Management Corporation.
Word has gotten around among tenants and locals that something exciting is happening at our Fairfax Corner project in Fairfax, Va. That word is true.
In this year’s May-June Show Scoop in Chain Store Age, we told the story of a $110 million expansion that will include 36,000 sq. ft. of new retail space. Arhaus—which has long been in this center along with brands such as REI, Ikea, and Chico’s—will be moving into a larger 19,000-sq.-ft. space. It’s a new design for them that includes a 4,000-sq.-ft. terrace on which they will display outdoor furniture.
We were intent on filling space next to Arhaus with a singular brand, a name that would resonate, that would beckon to consumers and elate our other tenants. We searched our competitive retail real estate market intensely and, in the end, found what we were looking for just 500 yards from Fairfax Corner, across Interstate 66.
On Nov. 9, we were able to confirm the word that others had been quietly circulating: Apple.
Peterson Companies’ sizeable expansion investment created for us an opportunity to rethink Fairfax Corner. It’s only 20 years old, but much has changed in retail in those two decades. Consumers can sit at home, buy something on Amazon, have it delivered the next day, and then return it the day after for free if they don’t like it. Placer.ai can tell us exactly where a center’s customer bases are situated, and give us their demographic information. Once popular tenants fade and must be phased out. Rising food-and-beverage brands serve as anchors that can extend business hours and dwell time.
Fairfax Corner is getting the time, attention, and money that it needs to remain relevant on the long-term horizon in one of the nation’s richest counties.
PAUL WEINSCHENK on building the future of retail real estate
Carving out new space.
In the past year, we have opened 53,000 sq. ft. of new tenants, many of them trending food and beverage brands. Soon to open is Ruthie’s All Day, an eatery celebrated for its southern inspired comfort food that has a loyal local following. . King Arthur Baking Company--which sells top quality baking ingredients and equipment and gives baking classes online—has opened its fourth physical location at Fairfax Corner. Sweetgreen will be opening at the property very soon.
All of these changes at Fairfax Corner have led us to initiate physical improvements around the 42-acre property. We are making it easier for guests to navigate.
One finicky limitation put upon us by our local county was that we could only use generic category names, and not brand names, on directional signs inside the project . So a sign pointing people in the direction of our Cinemark theater would only say “Theater.” After living with that limitation for years, we fought them on it given the much more competitive retail landscape, and they ultimately around to seeing it our way and are letting us use brand’s names.
Fairfax Corner is a project we have developed and planned for the long term. The project is getting the time, attention, and money that it needs to remain relevant on the long-term horizon in Fairfax County, one of the nation’s richest.
Tenants there are super-excited about the arrival of Apple. And we, by the way, at Peterson Companies are super-excited to be joining them. We will soon be leaving our headquarters at Fair Lakes, the suburban office park development we did decades ago and moving into the office component at Fairfax Corner, giving employees the opportunity to be part of a walkable and engaging environment filled with retail and dining options just steps from our new home.
Paul Weinschenk is the president of retail at the Fairfax, Va.-based Peterson Companies.
In a recent survey conducted in 10 countries this year, JLL found that two-thirds of shoppers prefer shopping in person to shopping online. Retailers in the U.S. have drawn the same conclusion. Class A retail space has never been harder to get. Fast-expanding brands are shrinking their standard footprints to fit into second-generation space and are venturing into secondary markets. New construction is at a standstill. Rents are rising.
How long will this go on? Not forever, surely, because “premium” retail space is in the process of being redefined.
To get a handle on what the future might hold, JLL conducted a series of interviews, workshops, and brainstorming sessions as a part of our “Future Vision” program. We imagined possible futures and how they could impact how we live, work, and shop.
More, but smaller, stores
One conclusion we drew was that shopping could encompass a merging of digital, physical, and hybrid activities. With deeper knowledge made available through digital channels, classic brick-andmortar brands might one day find themselves less concentrated in specific zones and instead sprinkled through the environment with smaller stores.
And large stores stocking 100% of a brand’s merchandise could employ new and less expensive delivery methods to fill local orders. In Dallas, Walmart is offering autonomous delivery by flying drones within a 10-mile radius of a growing number of Walmart stores. The retailer intends to eventually offer drone delivery to up to 75% of residents in the region.
The California Department of Motor Vehicles recently granted Nuro approval to test its third-generation R3 autonomous delivery vehicle in four Bay Area cities. Nuro’s driverless vehicles don’t have seats, windows, steering wheels, or pedals. They don’t carry passengers, just goods. And they contain temperature-controlled storage units to hold food.
In this possible future, retailers may shrink store footprints in neighborhoods where drone-drops and driverless delivery have taken hold. They will also have to think about what technology partnerships they’ll need to make to successfully roll out such a complex initiative. And while technological advances could cause customers to make fewer trips to stores, they could also increase their brand loyalty with highly personalized services.
NAVEEN JAGGI on retail real estate’s map of the future
Online AI assistants can offer an apparel shopper a menu of suggested outfits inspired by his or her past purchases and body type.
The shopper arrives at the store having already trialed the store’s inventory via a virtual fitting on their digital twin. Such apparel purchases would be more likely to fit and thus less likely to be returned or thrown away.
In the near future, retailers may shrink store footprints in neighborhoods where drone-drops and driverless delivery have taken hold.
What to do
Reduced-size store formats have not been uncommon in recent years. In 2023, Ikea opened a 52,000 sq. ft. store in downtown San Francisco and has a 66,000-sq.-ft. location in downtown Toronto. Three years ago, Aldi debuted its Aldi Corner Store in Australia that is about half the size of its standard 13,000 sq. ft.
Here are some questions retailers should be asking themselves in the coming years:
How might we further incorporate AI into our operations to personalize and optimize the shopping experience today?
What technology partnerships should we explore today to be prepared for tomorrow?
Is there an opportunity to right-size or improve the design of our store prototypes to meet new shopping habits?
Are we using modern, robust predictive models to guide our new store site selection?
What strategies can we explore to be ready for future environmental regulations and to meet our own sustainability goals?
How can we make our products a part of the circular economy? Making the most of technology is about awareness, acceptance, and adoption. Some companies jump right in, some wait and see. In retail real estate, the time has come to attempt the jump from accepting to adopting.
Naveen Jaggi is the president of Retail Advisory Services at global real estate services provider JLL.
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Everyone—and I mean everyone, not just real estate pros—knows that the core value of great real estate is location. New Rochelle easily stands out in this regard. Thirty-five minutes from midtown Manhattan on the Metro North train. I-95 running through the center of town. Our waterfront parks and Municipal Marina provide boaters, fishermen, and bathers glorious access to Long Island Sound.
Our downtown was home to the first Bloomingdale’s outside of New York City. The New Rochelle Mall, also known as the Macy’s Mall, drew shoppers from all across the area.
The presence of Iona University, The College of New Rochelle (which closed in 2019) and Monroe College (now Monroe University) in our city brought a fun and youthful flair to downtown. In an effort to calm things down, the city government had effectively put a moratorium on new cabaret licenses and experiential retail like fitness uses and outdoor dining hoping to allure more regular retail.
Instead, it had the opposite effect. Downtown New Rochelle—historically very vibrant in Westchester County—fell into a state of decline.
In 2015, our Downtown Redevelopment Initiative was approved to meet demand for multifamily housing in the region, and new residential towers began rising on our skyline. Our award-winning formbased zoning attracted more than $2.2 billion of funding from private investors, setting in motion the construction of 32 residential projects containing over 10,000 units of housing. Today, 6,500 of those apartments are completed or under construction.
Our concurrent thought was, “Where are all those new residents going to shop, eat, and be entertained?”
In October, we began to answer that question with the approval of our “Downtown Retail Strategy,” a placemaking plan that will re-sculpt our central core with new restaurants, entertainment attractions, and retail brands for the city’s growing population and make it a regular destination for our nearby neighbors in Bronxville, Larchmont, and Mamaroneck.
New Rochelle’s plan for the creation of what is called the Vanguard District is to expand upon New Roc City--an existing 1.2 million-sq.-ft. entertainment, retail, and residential complex at the epicenter of our Downtown Retail effort. Our plan includes:
A package of incentives to make it easy for tenants to locate in New Rochelle.
ADAM SALGADO on the new New Rochelle
Retail friendly zoning to modernize outdated code restrictions and remove barriers that previously prohibited bars and experiential businesses.
Streetscape beautification and safety improvements including street furniture, parklets, decorative plantings, increased maintenance and cleaning, lighting upgrades, placemaking, and safer pedestrian connections.
The establishment of a $2.25 million tenant improvement grant program to provide support for physical improvements and relocation costs for retail brands looking to occupy spaces in the district.
Our City Council has approved a guarantee that all building applications meeting the city’s criteria would be approved within 90 days of their submission.
The Vanguard District seeks to attract a diverse range of new uses — from bars and gyms to live music venues and outdoor dining spots: think Gourmet Garage, Uniqlo, CB2, or Tacombi Tacos. Our adjacent Municipal Garage holds more than 2,000 spaces, allowing thousands of consumers easy access to this updated footprint and a vibrant cultural scene of community events throughout the year.
Real estate directors in the retail industry will find out one thing about the City of New Rochelle: We know how to get it done quickly. We are applying the same principle to retail that spurred on our building boom: a streamlined and predictable roadmap forward. Our City Council has approved a guarantee that all building applications meeting the city’s criteria would be approved within 90 days of their submission and that tenant improvement grants are available to new tenants wanting to retrofit existing properties.
New Rochelle is pulling out all the stops to attract the right retailers, restaurants, and nightlife to benefit its thousands of new residents, existing residents, and visitors. We invite you to be part of our next chapter.
Cheers!
Adam
Salgado is the development commissioner of The City of New Rochelle
We are at a time when in-demand brands eager to expand into major markets find themselves forced into the role of the searcher in a game of real estate hide-and-seek. This is especially true if they are intent on Class A space, which is virtually nonexistent.
Top brands have extended their searches into secondary markets they’ve never served. Cafaro owns and runs several regional and super-regional malls in smaller markets, such as the 1.5 millionsq.-ft. Huntington Mall in Barboursville, W.V. and the 700,000-sq.ft Kennedy Mall in Dubuque, Iowa, and we’ve had the opportunity to introduce several leading brands to the advantages of dominant middle market shopping centers. Among them:
Secondary markets don’t mean secondary sales. Top-performing middle market centers are destinations unto themselves. Cafaro has cultivated its portfolio of over 30 million sq. ft. of super-regional malls to be the epicenters of retail commerce and activity for 20, 30 and at some centers nearly 40 miles.
Top middle market centers are destinations unto themselves. Our super-regional malls are the epicenters of retail commerce for 20, 30, and--at some centers--nearly 40 miles.
In Fredericksburg, Va., we first built Spotsylvania Town Center— an enclosed mall and open-air center at the interchange of I-95 and Route 3 anchored by Costco, Macy’s, Belk, and JCPenney. Later, we expanded the center and built The Village at Town Centre, an open-air lifestyle center with multifamily residential and food and beverage offerings that include Firebirds and Bravo. There is also a 75,000-sq. ft. theater and bowling center operated by EVO Entertainment.
Other developers arrived, saw our complex, and today you find more than 5 million sq. ft. of retail and restaurants at this interchange. Less retail crime. Most of our sites have crime rates lower than one finds in major metros. Our malls and centers tend to be the
ANTHONY CAFARO JR. on the merits of middle markets
most crowded venues in town, and local police forces pay close attention to us.
At some of our sites, we partner with Flock Safety license plate camera scanners that integrate with local police communications systems to alert every cruiser on the street within seconds of potential or actual criminal acts in progress. Having a strong relationship with local law enforcement--along with leveraging technology to combat crime and retail theft--deters would-be criminals and motivates them to look elsewhere to commit crimes.
I can’t say that all middle markets are great opportunities for retailers. Many shuttered and deteriorated regional malls closed due to over-leveraged debt. They then were acquired by low-end players uninterested in reinvesting in the assets and whom nobody wants as their landlords.
Reinvestment is crucial. The No. 1 thing we do at Cafaro is continually reinvest. Typically, we don’t just own the enclosed mall; we also own the majority of the surrounding outparcels and peripheral development, rarely selling. We are always prepared to reconfigure second-generation space to accommodate major brands.
At our Governor’s Square Mall in Clarksville, Tenn., we recently completed a multi-million-dollar renovation of a former Sears box in which we were able to place HomeGoods, Burlington, and Dave & Buster’s. At Millcreek Mall in Erie, Pa., where we had virtually no vacancy, we carved out a 17,000-sq.-ft. space for Sierra that has interior and exterior entrances.
I think we do a better job than most by paying attention to our customers. For example, all our malls offer convenience carts that make it easier to carry purchases through the mall (and shop more). We still have customer service centers at each of our centers.
While high-tech gadgetry gets a lot of attention these days, shoppers still like to be able to walk up to an actual person who will not only direct them to the store they’re seeking, but offer a smile. Those small but important touches make middle market properties like ours more attractive than ever.
Anthony Cafaro, Jr. is co-president of the Niles, Ohio-based Cafaro Company.
A New Era For Retail
Revolutionizing in-store experiences with AI
By Kelly Pedersen
In the ever-evolving landscape of retail, staying ahead of the curve may no longer be a luxury but a necessity.
Retailers today face myriad complexities, from shifting demographics and technological disruptions to channel evolution and heightened customer expectations. Amid these challenges, AI is emerging as a game-changer, offering innovative solutions that enhance the in-store experience for customers, employees, and business leadership.
Addressing Customer Pain Points with AI
Many customers today demand seamless, efficient, and personalized shopping experiences. However, several pain points can deter customer satisfaction, such as inaccurate item availability, differing online and in-store prices, and long fitting room wait times. AI-driven solutions are helping to swiftly address these issues:
Personalized notifications and geofenced alerts: By leveraging AI, retailers can send tailored notifications to customers about new collections and sales. Geofencing technology can alert associates when customers arrive in-store, allowing for an immediate, personalized greeting.
Mobile check-in and customer profiles: Retail apps can prompt customers to check in upon arrival, providing associates with access to their profiles and preferences. This data enables a more personalized shopping experience.
Enhanced product availability: AIdriven product availability maps allow customers to locate items in nearby stores, confirming they can find desired products without hassle.
Streamlined fitting room experience: AI can help revolutionize the fitting room experience. Customers can view wait times, reserve fitting rooms, and even receive personalized styling recommendations based on their profiles and past purchases. RFID can even help change the soundtrack based
on the style of clothes brought in.
Checkout Innovations: AI enables seamless checkout processes, such as mobile payments and self-checkout options, reducing wait times and enhancing customer convenience.
Empowering Associates with AI
Retail associates play an important role in customer satisfaction. However, they often face challenges like insufficient training, inadequate product knowledge, and disjointed communications.
AI can help transform these pain points into strengths:
Associate devices and notifications: Equipping associates with AI-enabled devices can streamline their tasks. These devices can automatically load transactions onto customer profiles, collect preferences and centralize notes, ensuring associates have all the information needed to provide exceptional service.
RFID technology: Radio-frequency identification (RFID) technology can simplify inventory management, automatically updating counts and helping associates locate products quickly. This reduces time spent searching for items and improves time spent assisting customers.
Interactive digital signage: Digital signage equipped with AI can provide product information, market trends and dynamic visuals, empowering associates with the knowledge they need to answer customer inquiries effectively.
Relationship management platforms: Next-gen platforms can log interactions between clients and stylists, providing valuable insights and reports to store leadership, enhancing overall service quality and consistency.
Enhancing Store Management
For business leadership, AI offers tools that bring clarity and efficiency to store
operations, helping drive better decision-making and performance:
Planograms and inventory management: AI can design optimal store layouts based on inventory, fixtures and dimensions, increasing space productivity. RFID-based maps further assist in efficient product placement and retrieval.
Dynamic promotions and pricing: AI can monitor and adjust pricing and promotions in real-time, helping consistency across online and in-store channels. This eliminates customer confusion and enhances trust.
Computer vision for queue management: AI-powered computer vision can monitor checkout lines, alerting associates to open additional registers as needed, thus reducing wait times and improving customer experience.
Automated fulfillment centers: AIdriven robots in fulfillment centers can process orders rapidly, helping with timely deliveries and satisfied customers. This is particularly beneficial for buy online, pick up in-store (BOPIS) orders.
The Future of AI in Retail
The integration of AI in retail is not just about addressing current challenges but also about paving the way for future innovations. From AI-driven body scanners that create virtual avatars for trying on clothes to customizable fitting rooms that simulate real-world lighting, the possibilities are endless. Retail executives must embrace AI not merely as a tool but as a strategic partner in shaping the future of retail. By addressing customer and associate pain points, streamlining operations, and providing valuable insights for leadership, AI holds the potential to transform the in-store experience into one that is efficient, personalized and delightful for all stakeholders.
As we stand on the brink of this AIdriven evolution, the retail industry has an unprecedented opportunity to redefine itself, creating experiences that resonate with the modern consumer and setting new standards for service and innovation.
Kelly Pedersen is partner, U.S., retail leader, PwC.
Making Customer Access a Valuable Product
Retailers have an unusually direct relationship with their customers, which holds value for brand partners and advertisers. Paradoxically, as retailers get physically more removed from their customers through websites, apps, texts and emails, they get closer in terms of better understanding what they want to buy, when they want to buy it and what types of incentives will nudge them from consideration to purchase.
Increasingly, interested third parties want in on the action. When constructed and executed correctly, partnerships that provide access to customers and customer data to entities such as brands and social media networks can benefit retailers, customers and the third parties.
Here are a few examples:
Retail media networks
Retail media networks enable advertisers, which can include both endemic advertisers who sell their products through a retailer or non-endemic advertisers who do not but want to expand their promotional target base, to directly message shoppers based on their behavior with a retailer.
This can include timed, personalized messages delivered via in-store kiosks, smart carts and other devices, shopping apps or at checkout or even through channels such as connected TV. If retailers properly calibrate the promotions, shoppers will receive timely and valuable offers on products they genuinely need.
However, retailers should take care not to inundate any one customer with too many offers in too short a time over too many different channels — or to deliver promotions that don’t suit the shopper’s needs.
And of course, customer privacy must be respected to avoid the creepiness factor (nobody wants to feel like a brand is looking over their shoulder) and to abide by all laws and ethical boundaries.
Social media/metaverse environments
Since customers are already there, it’s not a surprise that retailers and brands are setting up shop (so to speak) in digital worlds, selling virtual and even physical merchandise.
And it’s not just hip, youth-oriented companies — Walmart and Miller Lite beer have both developed metaverse shopping and socializing spaces.
Following the same guidelines as with retail media networks, this type of partnership is truly a win/win/win. Consumers are already visiting virtual environments in large numbers.
By offering promotions and shopping opportunities, retailers can take advantage of the presence of some of their customers while social and metaverse platforms can potentially attract new users and give existing users more reason to spend time with the availability of their favorite retailers and brands.
Influencers/celebrities
Similar to the relationship between retailers and social/virtual world platforms, influencers and celebrities can offer retailers a source of customers while also obtaining a storefront and the chance to reach a wider audience and potentially convert new followers.
A perfect recent example is the holiday merchandising partnership between pop superstar Taylor Swift and Target. The discounter offered two exclusive Taylor Swift holiday releases (a book and an album).
The purchasing power and sheer size of the Swiftie audience is legendary, but Swift can still pick up some new customers/followers among the broad and deep Target customer base while Target gives her a well-established mechanism to get products to consumers. And clearly, consumers won’t complain about more access to Taylor Swift.
Dan Berthiaume dberthiaume@chainstoreage.com
Tuesday
The premier newsletter showcasing technology and multi-channel, seamless retailing.
From e-commerce and mobility to in-store technology and social media, Connected Retail keeps retail executives in the know about the fast-paced, ever-evolving world of retail tech.
AI and Workforce Management
Retailers are deploying artificial intelligence for variety of workforce tasks
Artificial intelligence is permeating every area of the retail enterprise, and workforce management is no exception.
While workforce management is one of the most human-centric workflows in retail, it is also ideally suited to AI-enablement. Tasks such as recruitment, training, scheduling and management of day-today activities occur at a massive scale. And AI actually makes it possible to perform workforce management with a high degree of individualized attention.
Here’s a look at how Chipotle, Tractor Supply Company and Just Salad are leveraging AI to automate, personalize and simplify different workforce management tasks.
CHIPOTLE –HIRING
Chipotle Mexican Grill is streamlining the process of hiring new employees with artificial intelligence. The fast-casual restaurant giant is deploying the Paradox conversational hiring system in a phased approach across more than 3,500 restaurant locations.
The platform uses conversational AI, which leverages machine learning and natural language processing to communicate with people in a more human-like manner — to assist general managers at Chipotle stores with administrative tasks such as collecting basic information from candidates and scheduling interviews.
An AI-based virtual employee that Chipotle has nicknamed “Ava Cado” chats with job candidates, answers their questions about Chipotle, collects basic information, schedules interviews for hiring managers and sends offers to candidates who are selected by managers. Ava is multilingual and can communicate with candidates in English, Spanish, French and German.
Chipotle expects the solution to reduce the amount of time it takes to hire an employee for an in-restaurant position by as much as 75%, as well as decrease time-tohire, reduce job advertising costs, increase
hiring for hard-to-fill roles and improve candidate experience.
TRACTOR SUPPLY COMPANY – STORE OPERATIONS
Tractor Supply Company has rolled out the Co-Pilot AI platform from store operations technology provider Quorso in an effort to simplify daily work for store-level and field managers while driving sales, customer service and other key in-store performance indicators.
The Co-Pilot solution provides store and field managers with personalized, top-priority actions and intelligent workflows designed to improve store operations. These data-driven insights can address a wide range of issues including out of stock inventory, planogram execution, product attachment and customer service.
In addition, the solution provides managers with a real-time view of the results of their actions. Tractor Supply’s deployment of Quorso Co-Pilot is part of a larger effort to improve store operations and customer experience with advanced technology
JUST SALAD – CORPORATE COMMUNICATIONS
Just Salad is integrating generative AI into its internal communications and document management solutions. The fast-casual restaurant chain recently exclusively shared with Chain Store Age how it is implementing the Google Gemini generative AI chatbot within an established Google Workspace platform that includes solutions such as Docs, Gmail and Sheets to enhance corporate communications and operational efficiency.
The biggest takeaway that Just Salad has seen is that Gemini for Workspace has saved its employees time, enabling them to reinvest this reclaimed time in other things.
In addition, with Gemini in Gmail, employees can more quickly get through email or alleviate time spent on other
mundane tasks, and instead focus on products, people and all the other things Just Salad needs.
The retailer has also seen a lot of internal interest in the Gemini web chat, which has made generative AI accessible to all of its Workspace users, allowing them to start learning how to interact with large language models. According to Just Salad, this has been an important part of its AI adoption strategy for corporate team members.
STUDY REVEALS GAPS IN FRONTLINE WORKER TRAINING
Retailers are integrating AI into workforce management as employees look for more transparency in training and daily responsibilities.
Forty-percent of frontline workers reported that they are unsure of their job expectations, according to a survey of employers and frontline workers by talent development software company Schoox and Lighthouse Research & Advisory. Less than one-quarter (24%) were confident they have the right training.
Less than one-third of workers feel their employers effectively communicate essential updates and information, which leads to “stress and uncertainty” among employees.
In addition:
Only 52% of retail workers feel like their company is invested in them as employees;
Less than half (40%) said they do not get the right kind of training to do their jobs;
Nearly half (48%) would consider external opportunities at another company, while only 42% would consider an internal move; and
Thirty-percent of retail employers are more likely than other frontline industries to say their workers would prefer to learn new skills by connecting with mentors.
Chipotle is automating - and humanizing - hiring with AI.
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