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  • By Thomas S. Onder, Esq., Stark & Stark

Optimism grows as retail environment responds to consumers

The National Retail Federation forecasts that 2017 will provide $83.6 billion in back-to-school spending - a 10 percent increase from last year. The Federation reports that their numbers follow a pattern that looks much like 2012, when pent-up buying provided a similar boost in back-to-school spending, leading to higher holiday spending. This forecast, coupled with a much better economy, with lower gas prices, unemployment, and inflation, bodes well for the end of 2017 and the start of 2018. Non-Traditional Tenant Offer Opportunities Traditional tenants like grocery stores and apparel look to do better this year. However, the trend toward non-traditional use tenants, such as restaurants, fitness, medical, educational, hotels, and entertainment continues. Non-traditional use tenants can help drive traffic for shopping centers both physically with “boots on the ground,” and also with “pushing” consumers to the shopping center through use of social media. Social Media Increasing Traffic/Sales Increasingly, consumers are using social media during their shopping experiences through platforms like Facebook, Instagram, and Twitter. For savvy social media-minded retailers and landlords, this is an opportunity to bring additional consumers into the shopping center to view products, ask questions, and make purchases and internet-purchase returns. The key to any sale is engaging the consumer and earning his or her trust. Shoppers are now using “five star” rating systems and online reviews to distinguish between retailers and products online. Focusing internet presence, mobile apps, and social media to engage consumers online and earn their trust can get them to your center. Exceptional service, amenities, and other incentives can get them to return. Centers and retailers can offer consumers the opportunity to test products, take classes, as well as hold in-store events and hands-on demonstrations. This experience model can provide immeasurable growth for tenants/retailers who embrace the changing shopping experience. Including so-called showrooming and webrooming in your marketing or sales strategy to draw internet shoppers to shopping centers can increase traffic and sales. Showrooming consumers examine merchandise in a store and then buy it online. Webrooming consumers research a product online and then buy it in a store. Tailoring your marketing, advertising, and sales approach to these shopping techniques can help draw customers to your center. Right-Sizing Tenancies The last two years have seen an increase of retail tenant bankruptcies, based on changing demographics, shopping habits, competition, and high debt ratios. Despite the filings, many of the retailers are emerging with a “right-sized” footprint of stores and on-line presence. In any event, tenant bankruptcies can be seen as opportunities for shopping centers to re-vamp centers with new concepts, including non-traditional use tenancies. The Amazon Factor In addition, everyone is awaiting with baited breath, the effect of Amazon’s acquisition of Whole Foods and how it will affect the shopping experience. For years, grocers have been trying to perfect the “groceries to your door” concept, with little success. If Amazon can do what it has done for online shopping with groceries and also add its physical footprint to the shopping center, then it will truly be a game changer. It is a game well-worth watching. If you are an owner, developer, and/or landlord, it is important to understand how these changes will affect your shopping center. Stark & Stark’s Shopping Center and Retail Development Group can help. Our attorneys regularly represent owners, developers and/or landlords throughout the country, in leasing, buying/selling, 1031 Exchanges, refinancing, as well any enforcement activities, including protecting landlords in retail tenant bankruptcies. Thomas S. Onder, Esq. is a member of the International Council of Shopping Centers and a Shareholder and member of the Commercial, Retail and Industrial Real Estate, Litigation and Bankruptcy & Creditors’ Rights Groups of Stark & Stark.

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