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9 Retailer Comments Real Estate Pros Should Hear, From Rent Payment to Consumer Data

Retailers had a lot to say during ICSC’s recent virtual Next Gen Summit. See the hot takes below.

Photo Courtesy of Total Retail.

On whether to pay rent

“Coming up on April rent, we had mixed views on whether we should abate rent or pay rent, and I recommended that we continue to pay rent, as financially painful as it is to pay rent while you’re not operating a business and have no revenue. … I was able to convince our leadership and our board that taking the long view was the right thing to do. It kept our leases out of default, and over time, taking the long view, we will get value back for doing the right thing and paying rent.”

—Ulta Beauty senior vice president of growth and development David Krueger

On e-commerce’s effects on brick-and-mortar

“If we’ve been traditionally 15 percent to 16 percent of total sales online, are we going to be 25 percent? Are we going to be 30 percent? … Who knows where it’s going to balance out? But what we do know is: Online is absolutely here to stay, probably more active than it was before. Curbside is here to stay, and landlords, get on it because it is going to be an issue and it is going to be more active than it’s ever been before. And then bricks-and mortar is very important … for certain segments to then figure out … like maybe you’ve got to do some fulfillment direct to customer out of your retail store. How do you set up for that? How do you make sure that the selling rate, if you see it’s different online versus your bricks-and-mortar, can handle the inventory changes? How do you make sure you’ve got staffing with the right skills in the right places so that you are with the product where your customer wants you to be?”

—The Container Store vice president of real estate Valerie Richardson

On tenant improvement allowances

“Many landlords are trying to conserve cash, and we’ve had to really modify and flex to the market conditions, taking space as is. Fortunately, Ulta is a financially strong company, and we’re financing more of our work. Of course, the rent has to be proportionately lower with this type of deal. But we’re taking less allowance or even no allowance and taking spaces as is, making a larger investment on our part but at a lower rent so the numbers can still look good and make a good return on investment.”

—Ulta’s David Krueger

On consumer data

“We are able to understand who our customer [is through] our loyalty program … and also that we do installations for a lot of our customers in their homes, so you’re able to get home addresses. … And all that information is then translated to a third party that anonymizes it, but we can still see: ‘Oh gosh, in this particular trade area, we’ve got people coming from 10 miles away, whereas in another trade area we’ve got people coming from only two miles away.’ … We can track movement from where people live, where people work, where people shop. [We then] use the Mosaic profiling methodology, which basically groups together like-kind households, whether it’s married or single, whether it’s married with children, what kind of income levels are they in, what kinds of professions they work in, what kind of education do they have. And it also blends together lifestyle information — do they own a boat, do they travel internationally, do they drink wine — and purchasing information — do they typically shop at a Crate & Barrel or a Pottery Barn or a Williams Sonoma. … We can then synthesize down and look at it from a map standpoint, geotechnically, and see which classifications of customers tend to shop in our store the most frequently, spend the most money. Who are the ones that we should talk to when we have a kitchen sale? Who are the ones that we should talk to when we’re going to do a closet-organizing project? And it allows us to be more surgical with our communications with customers or to blast a certain area maybe that has a lot of look-alike customers but they’re not shopping in our store for some reason. So there’s a lot of three-dimensional analysis that goes into placing a new store or then supporting an existing store.”

—The Container Store’s Valerie Richardson

On retailers co-locating

“With real estate being so risky, brands might be more willing to open within another concept where they don’t take as much of the buildout risk and signing-the-lease-themselves risk.”

—Stretched co- founder and CEO Amanda Freeman

On building consumer trust during COVID-19

“If a consumer or guest wants to go into your sto

re, they want to feel safe. They want to see team members, employees in masks. They want to see hand sanitizer at the door. They want to see cleaning routines, carts being cleaned. That trust factor with the consumer is huge short term, and if that’s not happening, people will not come back. … It’ll be interesting to see how many of those patterns stick post-COVID.”

—Target vice president of real estate Laurie Mahowald

On location selection

“When I choose locations — I have 30 different locations right now between Stretched and SLT — the key is traffic flow and then co-tenancies. … I don’t like to be right near a direct competitor, but I do like to be around other fitness and recovery businesses. … You’ll all attract like-minded clients. We obviously have to consider parking in suburban locations. We also go after a certain demographic, and we know that we need business throughout the day, not just pre-work and post-work, so we try to go where people live and work. Obviously with offices being in question, locations will be more challenging.”

—Stretched’s Amanda Freeman

On retail’s value to the broader world and its post-COVID prospects

“It creates value for communities, for customers, for public entities. … There are careers being created every time a store is opened. There is so much value that is created by putting the right property in the right place at the right time with the right tenants. It creates that commerce, that community, that I think very few other industries can do. So yeah, this is a bump in the road. It’s a little unsettled right now, but I feel really strongly that the companies that come out of this are going to be better, are going to be stronger, are going to be more nimble to act on opportunities and will provide even greater value than that same company might have coming into this pandemic.”

—The Container Store’s Valerie Richardson

On retailers ready to make deals

“This is a going to be amazing time to sign leases, so if you have cash, people will certainly be expanding because there will be deals to be had.”

—Stretched’s Amanda Freeman

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