Shawn Massey, CCIM, SCLS

Experience Counts! ROI on your Retail Brand

The last week of March I was in New Orleans not for the Final Four but to attend the ICSC Gulf South event!  I was very pleased with the optimism from the crowd of attendees.  I wish attendance had been greater, but 350+ participants were treated to one of the best keynote speakers I have heard in awhile at an ICSC event. I tend to be skeptical when someone outside the immediate retail real estate industry is speaking. 

The keynote presenter was Cliff Courtney who is the executive vice president of Zimmerman Advertising in Ft. Lauderdale, Florida.  He was one of the most prepared and engaging speakers I have had the pleasure to hear.  He obviously did his research and put forth an excellent presentation on the retail experience as it relates to CRE and branding that was current and put it terms that are relevant to our industry.

The gist of his talk can be summarized from the introduction in the ICSC program.    

 HOW TO BE A ROCK STAR! Setting the stage, turning up the volume, and conquering the world starts with knowing more about retailers than ever.

Will the internet kill brick and mortar? Are you maximizing your property’s value proposition? Do you know what retailers REALLY make sense for your location? And how much do you really know about your market area’s true customers?

 I probably will not do justice to his in person talk and dynamic visual presentation although some key points are worth summarizing herein;

 Creativity ups your brand!

 There is high ROI on training your employees and both the right training and attention to training will make a difference.

 You need to de commoditize your brand or has he put it “Rock Your Brand”

 The idea of brands with cult-like followings is not an entirely new concept, but understanding the power of cult brands and how to actually leverage a brand’s cult-like status to drive revenue is.

 Wal-Mart original value proposition was “Always Low Prices” then they were beat on price by Costco and others.  There new value proposition is now “Save Money – Live Better” You can always get beat on your price and location, but you cannot be beat on your brand.

Attention, wannabe dot-com entrepreneurs: It’s time to start thinking inside the    box, as your future will indeed include a key and open-for-business sign, not just a cloud and front end. But the mother of all seismic shifts will see online empires taking their game to the streets.

Amazon will likely open its first store in Seattle and highlight high-margin items, offer Kindle support and enable same-day delivery when you swipe your Amazon Prime app.

EBay had a pop-up store in New York and London’s West End last December

Here’s what the Amazons of the world understand: Brick and mortar delivers the unbeatable combination of instant gratification and tactile familiarity. (Try sampling a burrito on the web or trying on jeans.) Brick and mortar gets you endless media reach, such as Starbucks’ cups and store signs. Brick and mortar brings all the senses into play, creating a stronger brand experience and richer memories. Nordstrom’s legendary customer service can’t be replicated online even with 1,001 live-help windows.

The big winners will be cross-platform retailers as they push themselves into multiple and integrated consumer touch points, orchestrating advertising, media and operations to form a killer value proposition.

It’s not disruption anymore; its eruption, where even the most unlikely pure-play online brands add the touch-and-feel element of your corner store.

This is it, right now, as the most successful retail brands build on convenience, enabled through technology, delivered to your fingertips, available to touch in-store and to purchase anywhere in the world.

The fact is, even with the rush to e-tailing and social and digital integration, the best e-commerce pure plays understand the need to offer live shopping experiences to copy the poster child for retail-destination brands — Apple and its mind-blowing $7,500-per-square-foot juggernaut of a retail experience.

Apple’s retail stores are the poster children for bricks-and-mortar retailing done right. In sales per square foot, retail’s magic metric, Apple posts sales of $7,500, leaving other high-end merchants such as Tiffany ($3,070), Coach ($1,776) and Best Buy ($880) in the dust. What’s the secret of their success?

The star of the show is not the space. It’s what’s in that space.  What’s in that space is a world-class customer experience. And that experience is not just about the product.

“The customer experience is part of the whole value proposition,” he said. “It’s really about a fanatical attention to detail. When you’re in an Apple store it’s all about the customer.”

Instead of going through the store like a pinball, you’re greeted and your customer experience is architected to route your visit the best way. They stay focused on your needs. And they’re also good listeners. Value does not have to be economic all the time.

Three pillars support the Apple experience, Courtney said. One of them is the Apple product list. Though Apple doesn’t pin its hopes on its products alone, Apple’s wares clearly have a magnetic charm.  “You could put those products anywhere in a mall and get a crush of people,” Courtney said.

The second pillar is Apple’s skill at marketing across channels. There is little difference in the customer experience between Apples online and in its bricks-and-mortar stores, other than the ability to play with the products. “They’re flawlessly consistent,” said Courtney. “They know who they are.”

The third pillar and key driver of Apple’s customer service success is the people who work in the stores. They’re probably the best employees in the country,” Courtney said.  “First and foremost, they hire people who are Apple fanatics. Companies need to see people as a competitive advantage. No matter what someone sells, I can probably buy it somewhere else.” And purchasing, he said, is not as price-sensitive as some would suggest.

Are people starting to feel differently about brick-and-mortar versus online shopping? It seems that convenience has a way of pivoting the advantage back and forth between the two. Perhaps that’s why more experts believe the Amazon.com’s of the world will eventually build storefronts.

As retail brokers, developers and owners you need to look beyond the just the Halloween pop up stores and encourage these retailers to include pop up stores for “Back to School” and “Black Friday” etc which provide even greater opportunities.

Value propositions trump consumer confidence and will trump location.

Obstacles are just variables with some that will be real and some that you will use as excuses.

Do you really know who your client’s customers are?  It has moved well beyond pure demographics to a more Freaknomics Based Model with hidden indicators of who their customers really are and how this will affect your property and their retail location

My take away from this excellent presentation at the ICSC luncheon is one of optimism that bricks and mortar retail is here to stay!  You cannot deliver a donut, coffee or a burrito on-line.  There will always be a need for retail space.  This is important to me as a retail broker.  I learned that I need to align myself with retail clients who understand the need to deliver that “retail experience” to its customers and help them grow their brand and store count.

E-commerce vs. Bricks and Mortar Update

 2011 bricks and mortar sales were up just over 3.5% over 2010 while e-commerce had risen by approximately 15%.  This followed a similar pattern from ’10 over ’09 and just slightly less of a delta between ’09 and ’08.  Although that indicates that the compounded increase of e-commerce from year to year will be about four times that of traditional bricks and mortar, it’s important to note that they started from a hugely disparate base.  As of today, e-commerce $194 billion in 2011) still represents less than 4.6% of total sales ($4.5 trillion in ’11).  Although on the surface, the trend is scary, there are several positive ways to look at what’s happening with technology and retail.  First of all, e-commerce is but one of the elements of what’s now being referred to as multi-channel retailing.  A true multi-channel strategy covers purchases from a store, purchases from a website, telephone ordering, mail orders, interactive television, catalog ordering and comparison shopping sites.  The aim of multi-channel retailing strategy is to maximize revenue and loyalty by offering customers choice and convenience.  Not all bad.  Basically, its brand building through customer outreach that meets the customer’s changing expectations.  The retailer of the future will make their stores more customer friendly, more fun to shop and avoid confusion at all costs.  They’ll offer more pickup and delivery, more personalization and more customization. As such, to better serve our clients’ needs, we’ll have to be more customers friendly, more fun to work with and we too have to avoid confusion at all costs.

In summary, I am reinforced that “EXPERIENCE” counts in retail and that we need to look further on how to achieve the ROI on our personal brand.  This can be not only for the retailers that we work with, but for ourselves and how we deal with our retail and developer clients! 

ICSC please keep great speakers in the mix!  You hit it out of the park with this speaker.

I hope you will check out future weekly commentary at

www.RetailRocksintheMidsouth.com.   If you enjoy the commentary please subscribe online.

Cheers,

Shawn

Shawn Massey, CCIM, SCLS is a partner with The Shopping Center Group a 3rd party retail real estate advisory firm in their Memphis office, an adjunct professor in the graduate real estate program at The University of Memphis and a co-founder and Chairman of the Board for the Memphis Business Academy charter schools (K-12grade) in the Frayser area of Memphis.  

For all your retail real estate needs (tenant representation, landlord representation and property, investment & land sales) I hope that you will choose The Shopping Center Group and me to represent you and your business.  We understand that representation is a privilege and that you have a choice!

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