Posted on February 19, 2015
The 30-Minute Interview
Steven B. Greenberg
Credit: Chester Higgins Jr./The New York Times
Mr. Greenberg, 67, is a founder and the president of The Greenberg Group, a real estate advisory and brokerage company based in Hewlett, N.Y., that focuses on retailers. Clients include the luxury brands Gucci and Façonnable.
Mr. Greenberg started the firm with his wife, Louise, the chief executive, in 1987.
Interview conducted and condensed by
Q. How does your role in the company differ from that of Louise?
A. She’s on the marketing side and heads up client recruitment. Her team researches leading retailers around the world and approaches them and explains to them what we do. Once we secure clients, then it comes over to my side. We run research, strategic planning and deal making.
So if it falls under marketing, it goes to Louise, and if it falls under client services, it goes to me.
Q. How did The Greenberg Group come about?
A. Louise and I had started a retail chain, built it up, then sold it. It’s not around anymore — it was Olympic Village, a competitor to Footlocker. So we sold the company, and I had been back in business school and decided that I would create a retail service company.
We only represent leading retail brands. Clients have been Gucci, Lacoste, Façonnable, Lalique; Barnes & Noble, Eddie Bauer — almost exclusively public companies who are always expanding.
Q. Tell me a little more about your services.
A. It’s all about demographics and psychographics.
When someone retains us, we go through a 60-day period of analyzing their business: what works, what doesn’t work; do they perform better in a different climate or a different part of the country. Then we write a strategic plan and present it to them that says: This is how many stores we think you could have; these are the best markets to be in. Once they approve that, then we physically start to look and investigate space within those markets. So it’s really a very analytical process that takes a little bit longer but ensures their success.
We have a very sophisticated software system that is able to slice and dice all this information to the client’s best advantage.
Q. You must travel a lot.
A. Three days a week. That’s why we’re married 45 years — we’ve actually only been together for 21.
Q. How much of your business is in the New York area?
A. New York metro makes up about 25 percent of our total business.
And that’s why we’ve been able to avoid many pitfalls in the economy. Because if the economy is bad in Vegas and Phoenix — as it was in 2009, 2010 — we just didn’t go into those markets. We shifted to Miami or to Houston. And of course New York seems to always bounce back more quickly than any other market.
Q. So business is good?
A. Phenomenal. We had about a 30 percent jump in revenue in ’13 over ’12.
Q. What has been your largest transaction so far this year?
A. The Crocs deal on 34th Street. We net-leased a building, so it’s about 20,000 square feet.
Q. What’s the range in rates for retail leases in Manhattan these days?
A. They start at high and they go to ridiculous.
Frankly, I don’t know how some retailers can make a profit. We have on many occasions suggested and advised clients not to do deals, because we can’t figure out how we’ll make money. Now quite possibly a Tom Ford and somebody who has a big perfume business is using these stores as loss leaders. But with rents now in Madison Avenue anywhere from $1,000 to $2,000 a foot, and Fifth Avenue at $3,000 a foot, it’s questionable how many of those stores are really profitable.
All the big deals I’ve made in New York — the Lacoste deal on Fifth Avenue, the Lalique deal on Madison Avenue — stood on their own merit and always made a handsome contribution for the company. It was never an ego trip.
Q. Are you concerned about the growth in online shopping?
A. Our clients do use both channels. And we use the online sales for our clients, because it tells us where there are pockets of strength. One of our clients is Penguin, the brand, which is owned by Perry Ellis, and so we just opened a store on Broadway in NoHo, and a lot of that came from information that we gained through their online business.
Q. Do you like shopping?
A. I’m a big shopper, yeah. I wear Ralph and Armani.
Q. So I understand that you ran the Boston Marathon last year.
A. I’ve done it 17 times.
I ran it last year in 4:04, and I finished four minutes before the bomb went off. I crossed the finish line and jumped in a cab to go to my hotel, and that’s when the bomb actually went off. So in that four minutes I was able to leave. I didn’t know about it until I got to my hotel. I think that God propelled me on that day.
Q. Will you be running it next week?
A. I pulled a muscle so I gave back my number. I’ll do it next year.
Louise Greenberg, CEO of The Greenberg Group, Still Banks on Personal Connections Amidst a Virtual World
Posted on July 18, 2013
HEWLETT, N.Y. — In today’s technology-dominated business environment, a focus on relationships often gets lost in translation.
When you meet Louise Greenberg, CEO of The Greenberg Group, a NY-based real estate advisory firm to the nation’s leading retail brands, you can’t help but notice her warmth, impeccable style, passion for retail, and captivating, inspiring spirit.
For Louise Greenberg, client recruitment and ultimate business success is about creating one-on-one connections. She joined her husband Steven during 1997, and has since personally landed many prominent brands as clients including Crocs, Penguin, Lacoste, Faconnable, Puma, Ports 1961, Roche Bobois, Vince, White House/Black Market, Maurice Villency, Stuart Weitzman, and Anne Fontaine, among others.
There is no form of technology that can yield this type of success.
What makes this challenge more daunting is the fact there is only one executive who would hire The Greenberg Group – the CEO. If Louise can’t convince the chief executive, then she will not succeed in her mission.
According to Greenberg, following are 7 key ingredients to her success:
- Live the product – personally visit and shop the retailer’s stores.
- Quickly highlight why they should hire you – in 10 words or less.
- Attend conferences – those that cater to your target audience.
- Avoid email – deals happen in real time, face-to-face.
- Network creatively – know what is on the CEO’s agenda.
- Research the company – understand management style and changes.
- Keen intuition – be in the right place at the right time.
“There are certain intangibles that are irreplaceable to the process of landing a meeting with a high-level executive who may have no idea why he or she needs to immediately hire your firm,” says Louise Greenberg. “It does take some luck – but there clearly are ways to make your own luck.”
The Greenberg Group (Hewlett, N.Y.) is a leading real estate advisory firm that specializes in providing market research and analysis, sales forecasting, site selection, and deal negotiation for several of the nation’s premier retailers.
Posted on April 8, 2013
Steven B. Greenberg Says Retailers Still Hold Cards When Seeking New Store Locations
Steven B. Greenberg, president of The Greenberg Group, states the retail real estate market for 2011 still presents unique opportunities for retailers due to available space and rents that have yet to rebound.
Speaking as a featured panelist at Telsey Advisory Group’s 3rd Consumer Conference, on March 29, 2011, Mr. Greenberg commented, “Now is still an opportune time for the well-financed retailer to expand and take advantage of great space from store closings and subsequent vacancies. The retail sector is showing signs of sustained growth, so the window on this type of leverage will start to fade.”
Mr. Greenberg said, “Our clients, while still conservative in their expansion plans, have been able to secure very favorable deals that will contribute greatly to their long-term profitability. We are justifiably more focused on the bottom line than ever before — ROI and four-wall contribution are our top priorities.”
He concluded, “Highly accurate sales forecasting is crucial — retailers should know sales of their next new store before they sign the lease. We accomplish this through proprietary sales forecasting models.”
The Greenberg Group (Hewlett, N.Y.) is a leading real estate advisory company that specializes in providing market research and analysis, site selection, and deal negotiation for several of the nation’s premier retailers. You can visit them on the web at www.thegreenberggroup.com.
Posted on April 7, 2013
For The Greenberg Group, representing tenants is part analytical, part gut feeling and part personal relationship.
by Randall Shearin
When you are in the tenant representation business, there is no more ultimate goal than servicing the client the best way possible. For The Greenberg Group, doing so means having employees that are committed to retail 120 percent. Shopping Center Business recently spoke to President Steven B. Greenberg to understand his company’s interesting approach to the tenant representation business.
Steven Greenberg joined the real estate industry in a very roundabout way. After he retired from playing professional tennis in 1975, Greenberg started a small chain of athletic footwear stores. He expanded the chain throughout the New York area during the next 10 years. As the owner of a moderately sized chain, Greenberg wore a variety of hats, from staffing to buying to inventory control. One of the problems he had was real estate. Since the chain was small, it couldn’t afford an in-house real estate director. When he needed legal advice, he went to an attorney; when he needed financial advice, he went to an accountant. Greenberg kept asking himself where he could find real estate advice. In the mid-1980s, there weren’t any real estate advisors, and tenant reps were practically unheard of.
In the late 1980s, Greenberg sold his retail company. There was a year-long quiet period where he ran the company for the new owners, but at 34, Greenberg knew he had to plan what he was going to do for the rest of his life.
After the quiet period was over, he returned to New York University to take business courses. He also took courses in economics, demographics and geography. He decided to put together a group of extremely bright, analytical type-A people who would work exclusively for retailers. Seventeen years later, The Greenberg Group is one of the top retail tenant representation firms in the U.S. All of the company’s 12 employees have an MBA or higher degree.
We take a scientific, data driven approach towards site selection,says Greenberg. It goes far beyond site selection. We only work on a long term, contractual basis with our clients.
The client who put Greenberg on the map was Barnes & Noble. He rolled out the first superstore for the company in the early 1990s. The Greenberg Group continued to work with Barnes & Noble until the company reached size after 20 of the stores were open and successful, and plans were launched to open hundreds more where it needed an in-house real estate department. Greenberg also did work for chains like Phillips-Van Heusen during its formative years.
About 9 years ago, the company made a strategic decision to only focus on upscale and luxury tenants. At the time, a fair portion of its clients were luxury tenants, and that was where the company was spending most of its time. The research that these clients demanded, to guarantee successful stores, took a greater investment. The return, however, was also greater. Since that time, Greenberg has carved out a niche for itself in the upscale and luxury brand segments of the retail market. It has worked with clients like Waterworks (8 years), Puma (4 years), Gucci (6 years) and Lacoste (7 years), among many others.
We have a very close relationship with The Greenberg Group, says Bob Siegel, chairman of Lacoste. We communicate with them many times during the week, meet with them at least once every 3 weeks. They are a partner to everything that we do and often develop many ideas that we haven’t thought of.
The Greenberg Group’s assignments typically start with the company performing strategic planning for the retailer. Along with the client’s senior management, The Greenberg Group develops a program that looks 3 years, 5 years and 10 years down the road. When that process is carefully done after 6 to 12 months, it then stays on and executes the plan.
Steven Greenberg (left), president of The Greenberg Group, with Bob Ross, vice president of retail for Lacoste (right), in front of the new Lacoste boutique at Fashion Show Mall in Las Vegas. One of the company’s biggest success stories to date is Lacoste. The Greenberg Group was hired by Lacoste about 8 years ago to help relaunch the Lacoste brand in America. It helped locate the company’s first stores in influential areas like Madison Avenue, Bal Harbour and Worth Avenue. Today, Lacoste is one of the most sought after tenants in the shopping center industry. The company’s stores perform at over $2,000 per square foot. The Greenberg Group isn’t linked to Lacoste on a deal-by-deal basis. Instead, The Greenberg Group’s success is linked to Lacoste’s success. This ensures total dedication and loyalty to the client. As a result, Greenberg and Lacoste have continued their partnership, careful and uncompromising about their real estate decisions.
Finding good employees is another way that Greenberg ensures success to its clients. Greenberg likes to hire people who have a finance background, who have an MBA and who have spent 3 to 5 years in an industry crunching a lot of numbers.
We prefer people who are less emotional about things and more analytical, says Greenberg. That said, site selection is a science and an art form. You can’t do site selection strictly by demographics. A lot is involved about feel. I traveled over 100,000 miles last year looking at sites. When I get a report that says the economy is great in a market, the demographics are excellent, I still have to go out there and look at it, talk to shoppers and spend time closely analyzing the location.
The Greenberg Group’s environment is extremely entrepreneurial. No employee is watched over. Instead, they are relied upon to get the job done for the client. The employees are account based and do not compete against one another. They share information but all company data is open for review by any employee but kept highly confidential within the company’s domain.
The company has strict criteria as to when it will endorse a deal for a particular location. It wants to make sure that, economically, the store will be profitable for the retailer in the first year. The gross occupancy costs must be the proper percentage as it relates to sales. The return on investment must meet a certain level as well.
The Greenberg Group has gone out of its way to gather specific data for clients. For Sean John, owned by Sean Diddy Combs, The Greenberg Group actually performed pedestrian counts in front of possible locations for the store. The Greenberg Group has also acquired data lists of people who own and lease luxury cars. For a client like Lacoste or Waterworks, knowing where the Mercedes and BMW owners and lessees are within a particular market can help the decision for the next location. The company also has a program that can generate a database of sales of homes over $1 million. Using such databases has helped The Greenberg Group identify markets like Montecito, California, Winnetka, Illinois, and Aspen, Colorado, as locations where its luxury retailers should be. For Waterworks, it purchased a list of subscribers to certain magazines, like Architectural Digest and Elle Décor. These lists contain subscribers who are more apt to purchase the architecturally forward bathroom fixtures and services that Waterworks sells.
When we did work for Gucci, we identified a number of niche pockets of wealthy people, says Greenberg. We had already done New York, Chicago, Boston, Dallas and the larger markets and we had to pick away at the submarkets, the playgrounds of the rich.
Since The Greenberg Group is dealing with luxury tenants whose locations must be dead on to achieve high sales goals, the company spends a lot of time with each client. Since most of its clients are opening an average of five to 10 stores each year, the site selection process also is more intricate than for most retailers.
Puma, a Greenberg Group client, is creative with its real estate, like this store on Chicago’s Rush Street. Puma is another company with which The Greenberg Group has had great success. Popular in the 1970s and 80s, the company faded in popularity after Nike came on the scene. In the 1990s, Puma changed direction and reinvented itself from an athletic shoe company to a hip, fashion-forward lifestyle company. Today, Puma shoes and attire are more apt to be seen at a nightclub than on a playing court. The company has been very selective with where it places its stores. It has 40 stores that were opened over the last 3 years. The stores are very creative in their use of real estate, and their modern architecture fits the line’s image. On Chicago’s Rush Street, for example, Puma leased an older building, took the building down to the steel and rebuilt it.
Greenberg was able to partner with top local brokers on behalf of Puma to assist in finding top locations in national markets,says Tom Ulrich, vice president of retail for PUMA North America. They also went the extra mile by visiting and signing off on each location prior to presenting their recommendations to Puma.
One client that the company does have that is expanding at a rapid pace is KaBloom. The floral retailer is opening 50 locations during 2005 at upscale strip and lifestyle centers around the country.
For Steven Greenberg, every day is a new challenge he looks forward to approaching.
I just can’t wait to get here every day, he says. I have enjoyed every career I’ve had, from tennis to being a retailer and I just love the tenant representation business.
Posted on April 6, 2013
In today’s technology-dominated business environment, a focus on relationships often gets lost in translation. Client recruitment and ultimate business success is about creating one-on-one connections. There is no form of technology that can yield this type of success.
Founded in 1987, The Greenberg Group is a real estate advisory firm that specializes in providing market research and analysis, sales forecasting, site selection and deal negotiation for several of the nation’s premier retailers. The firm exclusively represents retail brands nationally, acting as the tenant representative during negotiation with landlords.
There are seven key ingredients in securing new retail clients:
- Live the product – personally visit and shop the retailer’s stores. Understand the brand, as well as the culture of the company. Believe in the brand and the prospect of your firm representing it. Recruit new clients that are aligned with your beliefs and way of doing business.
- Quickly highlight why they should hire you in 10 words or less. Speak in the CEO’s language – focusing on increasing sales, profitability and return on investment. Differentiate your firm and its approach from competitors. For The Greenberg Group, we spend considerable resources on a research department that can forecast sales within 6 percent. Once you have his/her attention, demonstrate how you will solve unaddressed needs.
- Attend conferences that cater to your target audience. Network creatively. Be “in the know” when it comes to the industry and changes within it. Be educated on trends and what’s ahead next. Where’s your next opportunity for growth? Often, in-person connections are the best way to get this information. For us, we became pioneers in placing our clients in outlet centers, which helped them drive sales through a previously untapped revenue stream. This came ahead of their competitors.
- Avoid e-mail – deals happen in real time, face-to-face. We all get thousands of emails each week. This mode of communication clearly is oversaturated, even more so for a top executive. Visit stores in person. Plan trips in connection with important events like fashion week. Read media outlets such as Women’s Wear Daily, or industry blogs, which will discuss upcoming venues that may attract CEO attendance.
- Know what is on the CEO’s agenda. Who is in his/her inner circle? Research and comprehend the company’s business strategies – both short- and long-term, as well as domestic versus global. Which new customer segments are they seeking to reach? How can they expand their footprint? What are platforms for growth?
- Research the company to better understand management style and changes. Clients expect you to know their business almost as well as they do. How has the retailer’s history and success evolved? What is their mission statement? What challenges have they overcome? Analyze their real estate portfolio to determine both successes and errors.
- Keen intuition – be in the right place at the right time. Don’t wait for the phone to ring. Know which clients are a good fit for your business, and go after them. Create opportunities by being proactive and passionate. Identify the decision maker and just do it.
There are certain intangibles that are irreplaceable to the process of landing a meeting with a high-level executive who may have no idea why he or she needs to immediately hire your firm. It does take some luck – but there clearly are ways to make your own luck.
— Louise Greenberg is the CEO of The Greenberg Group, a Hewlett, N.Y.-based real estate advisory firm. Her role is to specfically expand the company’s client base by generating new clients that meet The Greenberg Group’s criteria to represent on the real estate front. For more information, visit www.thegreenberggroup.com.
Posted on April 5, 2013
Holiday Survey: Shopping Early and On the Cheap?
by Evan Clark
Retailers are squaring off with both their consumers and their landlords this holiday season, and so far they’re winning only half the battle.
A new survey from Accenture showed that, even though more shoppers might come out on Black Friday, consumers generally plan to make gift purchases early this year with a focus on discounted goods. And the Federal Reserve’s Beige Book showed consumer spending was weak in most of the country in September and early October.
Already, projections place holiday sales at about even with last year’s dismal take and well below 2007 levels. Meanwhile, stressed-out stores are asking for deals from their landlords and getting them.
Accenture, which surveyed 526 consumers last month, found that 69 percent expect to do the bulk of their holiday shopping by Dec. 7, up from 60 percent last year.
Fifty-two percent plan to shop on Black Friday, up from 42 percent last year, but 86 percent of consumers said they would not be moved to buy this holiday season unless goods were marked down by at least 20 percent.
“We have seen a ‘shift to thrift’ across all income levels during this economic downturn and breaking that habit will be the greatest challenge for retailers this holiday season,” said Janet Hoffman, managing director of Accenture’s retail practice.
Accenture said apparel made it onto 56 percent of shopping lists.
For at least this holiday season, Wall Street seems content with the weak sales projections since stores have cut costs enough to shore up bottom lines. Stocks rose early Wednesday, but a late-afternoon sell-off pushed the S&P Retail Index down 1.9 percent, or 7.59 points, to 383.27. The Dow Jones Industrial Average surrendered the 10,000 mark, dipping 0.9 percent, or 92.12 points, to 9,949.36.
As stores trumpet cost cuts, tight inventories and gross margin expansion to analysts, they’re crying poor to their landlords and demanding lower rents.
U.S. retail vacancy rates rose to 10.3 percent in the third quarter from 10 percent in the second quarter as rents fell 0.3 percent, according to real estate information company Reis Inc.
“The rent declines observed over the past year have brought rents back down to the levels of those achieved two or three years ago,” said Ryan Severino, Reis economist.
The number of leases being signed began to decline about a year ago as the financial crisis roiled, said Steven Greenberg, founder and president of retail real estate advisory firm The Greenberg Group Inc.
“You were able to count on the Gap and Chico’s, on people like Ann Taylor to do 50 or 100 transactions a year,” he said, noting those days are now gone.
A few chains are beginning to make their strategic moves, positioning themselves for growth when the market rebounds.
“Those retailers that are very well-financed and can weather the storm for the next year or so can take advantage of some really spectacular lease transactions,” Greenberg said.
The Fed’s Beige Book, based on anecdotal reports from around the country, did turn up some signs of improvement in consumer spending, but the overall trend showed weakness.
Chicago contacts said consumer spending continued to fall, but noted the rate of decline had slowed. Richmond retailers reported flat or declining sales. Sales in Dallas remained unchanged, but observers noted an unexpected weakening of sales at value-based retailers.
Retailers in Philadelphia reported steady sales in September, although they were below year-ago figures. There was also a pick-up in back-to-school shopping. In the district, the report said, “Some apparel specialty stores reported that sales picked up better than expected for the fall shopping period, but on balance area retailers indicated that the sales rate has not fundamentally improved compared with the summer months.”
Posted on April 5, 2013
By Adrianne Pasquarelli
Bloomingdale’s is finally catching up to many of its upscale competitors and entering the outlet store arena. Parent company Macy’s Inc. announced Thursday that the upscale retailer will launch an outlet division this year, with four stores opening in the summer and fall. More are expected for 2011.
“Bloomingdale’s Outlet stores are an opportunity to expand our presence in new and existing markets, as well as to remove clearance from full-line Bloomingdale’s stores in a timely manner,” said Michael Gould, Bloomingdale’s chief executive, in a statement.
The first Bloomingdale’s outlets, which will each take up about 25,000 square feet, will be housed in the Bergen Town Center of Paramus, N.J., Miami’s Dolphin Mall, Potomac Mills in Woodbridge, Va., and Sawgrass Mills in Sunrise, Fla. The retailer has hired Arnold Orlick, who was chief executive of Fortunoff and a former executive at Macy’s Inc.’s predecessor Federated Department Stores Inc., to run the outlet business.
Bloomingdale’s is one of the last upscale department stores to explore the outlet business. This spring, Nordstrom will open one of its off-price Nordstrom Rack stores in Union Square, and the chain is rumored to be negotiating for a second location on Fifth Avenue. The Rack division has been far outpacing its full-line parent, with same-store sales rising 3% for the quarter ended Oct. 31, compared with the same period of 2008. The Nordstrom chain reported a 4.2% decline for the same stretch. Another competitor, Saks Inc., is also planning to expand its outlet division, Off 5th. Chief Executive Stephen Sadove said he expects to add about five additional outlet stores per year.
“That’s where you’ll see growth,” Mr. Sadove said.
According to real estate experts, a store in an outlet mall costs about 30% less to rent than a full-priced space. The construction and build-out at such centers is usually sparse and inexpensive.
“Today’s consumers are flocking to outlets,” said Steven Greenberg, president of real estate advisory firm The Greenberg Group, Inc., noting that his company is working with several leading brands about developing an outlet strategy.”
The race to outfit more upscale outlets stems from shoppers’ tight-fisted reaction to the recession. Many department stores spent 2009 drastically reducing their inventory, some by as much as 20% in order to avoid deep markdowns. But shoppers are still flocking toward value, so experts say having an off-price division is a good way for retailers to unload excess.
After 11 months of same-store sales declines, Macy’s Inc., which includes Bloomingdale’s, posted a 1% same-store sales increase for the month of December.
Posted on April 5, 2013
If the saying is true that the rich are always with us, those hoping to be or feel rich are stepping back from shopping at luxury stores right now.
The slowdown in sales seen for some time at mid-priced chains is affecting higher-end retailers as well. Though Tiffany reported sales increases, the gains are from overseas stores and its New York City flagship. In its most recent quarter, Neiman-Marcus reported a 2.5% comp-sales decline.
For the first time, we’re seeing a slight softening in the luxury market, said Steven Greenberg, a Hewlett, NY-based leasing consultant who represents a number of luxury chains. A lot of aspirational people are good luxury shoppers for $400, you can buy a small handbag at Louis Vuitton. Those are the customers we’re seeing affected right now.
Yet owners of high-end centers report that their projects remain strong, because of their location, opportunities for expansion, and a healthy tourist business.
The markets where we do have luxury and better properties are some of the best in the world, said Anne Singleton, vp-luxury leasing of the Macerich Co., Santa Monica, CA, which owns such high-end properties as Scottsdale Fashion Square near Phoenix and Tysons Corner Center outside Washington, DC. The San Francisco Bay area is still great, as is Southern California. Phoenix has proven itself as a luxury market, though not as mature.
The deBeers and Harry Winstons want stores in the right locations, added Debra Gunn Downing, executive marketing director of South Coast Plaza in Costa Mesa, CA.
Another critical component is merchandise, one that developers do not control, said William Taubman, COO of Bloomfield Hills, MI-based Taubman Centers. Developers are in the business of leasing and presenting retailers. If retailers are doing their jobs, they can continue to attract the more affluent shopper.
Where there is newness, people will pay, Taubman said. No one is questioning the cost of an iPhone.
In addition, these retailers also have a secret weapon Greenberg says: outlet stores.
For Coach and Polo, it’s a windfall, Greenberg said.
In addition, centers with a strong tourism base have something of a cushion, as the weak dollar is encouraging travelers from Europe, Asia, South America and even Mexico and Canada to take advantage of U.S. goods that are instantly on sale. Though the numbers are impossible to track, center managers report anecdotal evidence of increased numbers of affluent shoppers from Canada and Mexico, in particular, taking advantage of a favorable currency exchange.
Because the hotels are so inexpensive, people are bringing empty suitcases, said Kate Cavaliere, senior manager of tourism for Macerich.
And property management has been working hard to promote the projects to tour operators and discriminating travelers, expanding on a trend of several years.
We have always been a strong destination for tourists, and we spend a lot of time cultivating them, South Coast Plaza’s Downing said. Right now, we see this as a low-hanging fruit opportunity.
Developers are creating packages that feature private fashion shows, and extra services. South Coast Plaza will even close a store for a couple of hours for the most elite shoppers to browse privately. The lesson: even the wealthiest shoppers like something extra.
Everyone likes a special offer. And both Carmel Plaza and Scottsdale Fashion Square have personal shoppers who take care of their every need, Cavaliere said. They just loved that.
The result is that the better centers remain well leased, though rents are becoming more flexible, Greenberg says. Taubman reports strong leasing at his centers and South Coast Plaza boasts a 98% occupancy level, with several high-end tenants, including luxury jewelers including Harry Winston and deBeers, as well as designers Oscar de la Renta and Calvin Klein, opening this year. That continued expansion allows the luxury centers the chance to avoid compromising the integrity of the project by leasing to lesser space, Taubman added. And all emphasize that this is just another retail cycle, that smart companies will take advantage.
There’s a healthy regeneration going on, Greenberg said. I wouldn’t want to be a multi-brand mid-priced retailer right now. But it’s a great time to reinvent your center.
Posted on April 4, 2013
Just Say No: Retailers provide creative strategies for bypassing sales.
‘Sale’ has become the bad four-letter word amongst retailers. Some say constant discounts establish a false sense of what merchandise should cost and that shoppers are constantly on the lookout for a better bargain. “You can’t resort to the ‘sale’ word because your customers are going to ask for it all the time,” notes Jill Hathaway, owner of Hathaway Shoe in Kansas City, MO, and J. Hathaway Shoe Boutique in Leawood, KS. Ed Habre, owner of The Shoe Mill in Portland, OR, explains it like this: If a retailer is operating within standard profit margins and continues to sell on sale and reduce profits, he’ll have less money to invest in his merchandise. Not only that, but repeat sales hurt the brands as well, giving shoppers the idea the product doesn’t deserve its original price.
Constant sales are a no-no at Kemp’s Shoe Salon & Boutique in Vero Beach, FL, says co-owner and president Meg Offutt, so the retailer devised an alternative plan to get rid of hard-to-sell product: It opened an outlet. Appropriately named Kemp’s Too, the idea was born in the retailer’s previous Boca Raton location when the founder decided to use an extra room to house discounted shoes. Every afternoon, an employee would open the room for a few hours and let customers shop; the idea became such a hit that it turned into an overcrowded mess. Eventually, the staff decided that opening a separate outlet location was the best option.
“The most profitable and productive way to dispose of excess inventory is in outlet stores,” asserts Steven Greenberg, president of retail real estate advisory firm The Greenberg Group. Based on information from a recent study, he estimates 45 percent of women shop at outlets while 35 percent shop at malls. “The outlet industry is the fastest-growing sector in retail”, he adds. Greenberg points to Neiman Marcus and Saks Fifth Avenue, which have addressed this by opening at least a dozen outlets between the two retailers in the last two years.
If an outlet isn’t feasible, retailers note there are certainly other ways to shed excess inventory without plastering the store windows with discount signs. This year, Hathaway, a firm believer that sales shouldn’t be the end-all, be-all, lured in customers with a feel-good promotion. She and area retailers were blasted by poor weather this winter, which kept shoppers at home and merchandise on the shelves. Together, the retailers (about 20 in all) joined the American Heart Association’s Go Red For Women campaign and pitched in gift cards totaling $1,000, which customers could win if they bought a $5 raffle ticket. “I wanted to drive customers to the store,” Hathaway says, noting that the 10-percent donation to the nonprofit for every purchase enticed shoppers to buy. Hathaway also participates in a ‘shopping party’ called Haute Market, an event that attracts women across the Kansas City metro area. Several times a year, local retailers bring select items to a collective trunk show and fashionable women buy tickets to shop, drink cocktails and hang out with their girlfriends. Hathaway has found Haute Market to be a good opportunity to sell styles she’s having a difficult time turning in her store. “I’m not waiting for the consumer to come to me,” she says. “I’ve [automatically] got 800 women coming by my booth.” She offers a 10-percent off coupon at the event, which she hopes will bait the attendees to visit her brick-and-mortar locations.
At Sole Comfort in Albuquerque, NM, owner Peg Lucas-Swisher believes in the idea of ‘push money,’ or offering cash rewards to salespeople for selling product that isn’t moving. For example, if a shoe retails for $100, then she’ll give the salesperson $10 for a successful sale. “It’s an incentive for them to work a bit harder,” she notes. This way, Lucas-Swisher doesn’t have to mark down the product, thus eliminating the possibility of devaluing her merchandise. She’s also held contests where the staff member who sells the most shoes in a given period will get a paid day off work.
Retailers say it doesn’t hurt to ask vendors for markdown money or see if they’ll take back product that’s a dud. Lucas-Swisher says wholesalers have agreed to exchange non-performing product for core items she knows have sold well in the past. It’s sometimes the best option, she says, even if it’s necessary to order more in the end. (For exchanging 10,000 pairs, she explains, a retailer might have to order 12,000.)
There are, of course, instances where the buy was so bad that the style will just continue to collect dust. In these cases, retailers recommend donating to a charity, such as industry nonprofit Soles4Souls. The gift won’t necessarily free up cash flow, but retailers can earn a tax deduction, and perhaps some good karma. Participating in local charitable events, like the sit-and-fit The Shoe Mill recently held for Portland’s homeless population, is also beneficial in moving out old stock and it can gain locals’ respect for the retailer.
In the end, if a retailer feels markdowns are necessary, then Ted Hurlbut, principal at retail consultant Hurlbut & Associates, suggests a three-pronged approach when it comes to clearing out merchandise with a sale. He says it’s important to focus on eliminating the ‘best of the best’ first, then go for the middle tier, and lastly, dispense of the ‘sludge’. “There’s a certain toxicity associated with it,” he says of the latter, noting that it devalues surrounding product and possibly the store. “It’s the least desirable product. Don’t waste energy on trying to sell it.”
Minimizing the number of sales is key, retailers say, although some are adamant that all sales should be eliminated. When kept to a handful per year, like an end-of-the-season or semi-annual sale, Habre says it’s not always a bad thing. “It generates good will,” he explains. “It’s a ‘thank you’ to customers.” Most importantly, Lucas-Swisher concludes, “Nothing is worth anything until it’s sold.”-Melissa Knific
Posted on April 3, 2013
(Reuters) – Shoe company Crocs Inc (CROX.O) posted a second-quarter profit that beat Wall Street on lower costs and strong sales, especially in the Americas region, and forecast a strong third quarter, boosting shares 9 percent after market.
Second-quarter revenue increased to $228 million from $197.7 million year over year. New products introduced in spring-summer of 2010 accounted for 31% of first half sales.
Posted on April 2, 2013
By TERRY PRISTIN
It was planned when the local real estate market was very hot, and now the Crossroads of Cresthill, a modest-size strip mall of 44,000 square feet in the Chicago suburbs, is almost completed. But the developer, Gierzyck Midwest, has managed to nail down only a couple of small tenants. The 10,000-square-foot anchor it hoped to land, Menards, a hardware retailer, was lost to another shopping center a mile away.
So Gierzyck is offering prospective tenants something that may become more common in future months: free rent. And not just while the store is being fitted out but even after it opens, said Dan Tiberi, a senior associate at Gierzyck. It s our way to get more people to look at our center, he said. With the market taking a turn for the worse, we decided to address the problem.
In larger shopping malls, operators have not yet had to resort to giving away their space to attract tenants, but most landlords are facing mounting challenges these days. Vacancies are up, retail sales have been disappointing, and long established chains like Mervyn s, Linens n Things, Boscov’s and the Sharper Image have filed for bankruptcy protection, raising the specter of more dark spaces with fewer potential tenants to replace them.
Some 6,500 chain stores are expected to close this year, the largest number since 2001, according to the International Council of Shopping Centers, a trade group. When stores close, neighboring stores may be entitled to exit or to have their rent lowered.
Retailers like the Gap are not only curtailing their expansion plans but are also trying to squeeze their stores into smaller spaces to reduce rental costs. The popular Cheesecake Factory restaurant chain is experimenting with a smaller prototype. American Eagle is asking landlords in poorly performing shopping centers for rent reductions.
Retailers are making an enormous effort to focus on the bottom 10 percent of their portfolios, said Michael S. Wiener, the chief executive of Excess Space Retail Services, a company based in Lake Success, N.Y., that helps tenants shed excess space or restructure their leases. He said his business was up by 50 percent this year. About half the vacated spaces are likely to be subleased, but many empty boxes in second-tier markets may not be desirable for years to come, he said.
For strip malls, the vacancy rate is 8.2 percent, the highest since 1995, and the average asking rent declined by 0.4 percent from the first quarter of the year to the second quarter the first drop this decade, said Sam Chandan, the chief economist for Reis Inc., a New York research company that tracks the top 76 metropolitan areas.
The vacancy rate for regional malls is 6.3 percent, the highest since 2002. Though mall rents rose by 0.2 percent from the first quarter to the second, all retail rents are down when inflation is taken into account, Mr. Chandan said. New centers that opened in the first half of this year were just 62.8 percent occupied, on average, compared with 72.1 percent for those that opened last year, he said.
With all the problems in retail real estate, the default rate remains low for loans issued to mall owners that were packaged with other mortgages and sold to investors as commercial mortgage-backed securities.
Realpoint, a credit rating agency in Horsham, Pa., has tracked 127 mall loans that are delinquent or in default, including a $22.2 million mortgage on Midway Mall in the Dallas suburb of Sherman, Tex. Like many older malls, Midway, which is managed by Simon Property Group, the largest operator in the country, was unable to withstand competition from a nearby new open-air center, Sherman Town Center, and is nearly half vacant.
In the face of a prolonged housing crisis, the decline in consumer spending, and the lack of construction financing, developers have been forced to abandon, postpone or scale back projects.
Don Chapman, a managing director at Ariel Preferred Retail Group of Williamsburg, Va., which owns seven outlet centers across the country, began lining up tenants a year ago for a $90 million outlet center he plans to build in Rockford, Ill., but is finding that lenders are insisting on onerous terms, including more equity as well as personal guarantees from the developer. Our thinking was that we would be in the ground by now, said Mr. Chapman, who plans to continue seeking tenants. It s taking longer than we anticipated.
Brian M. Smith, the chief investment officer for Regency Centers, a national strip mall developer and operator based in Jacksonville, Fla., said the company revised its development strategy in the spring of 2007. We saw it coming, Mr. Smith said. We dropped $400 million worth of projects and totally revamped our pipeline.
Regency shelved plans to build shopping centers in areas where new housing developments had stalled. Instead, the company focused on affluent areas where land costs and strict zoning regulations limit competition, he said. A broker who represents national retailers, Walter T. Wahlfeldt, a senior vice president at Jones Lang LaSalle, said tenants had begun exercising their right to back out of their leases when the developer has been unable to secure an anchor tenant. The consequences of the economic downturn vary from region to region. Las Vegas and Orange County, Calif., are suffering from problems related to the subprime debacle, but retail vacancies remain low because these markets were so strong to begin with, said Hessam Nadji, a managing director at Marcus & Millichap, a national real investment brokerage based in Encino, Calif. Mr. Nadji said he expected those markets to deteriorate, while San Francisco, San Jose and San Diego were likely to remain healthy.
But all retail sectors are losing business, including the newer open-air centers that cater to well-heeled shoppers, known in the industry as lifestyle centers. The difference with this downturn is that it s affected all forms of discretionary retail spending, said Malachy Kavanagh, a spokesman for the shopping center trade group.
Paul Morgan, an analyst at Friedman, Billings, Ramsey & Company who specializes in real estate investment trusts, said the lifestyle sector became overheated in recent years as developers rushed to build them. There will be a significant correction, except for the very good ones, he said.
And shopping centers that are limited to large and medium-size stores a Home Depot, say, with an Office Depot and a Circuit City may have bigger challenges than grocery-anchored strip malls with smaller stores, said Nicholas K. Vedder, an analyst at Green Street Advisors of Newport Beach, Calif. One vacancy has more of an economic impact, he said. It might be difficult to find someone to fill that space.
Steven B. Greenberg, the president of the Greenberg Group, a company in Hewlett, N.Y., that represents national retailers, said that some of his clients were getting rent discounts of as much as 20 percent in some top malls.
Tenants fall into two groups, Mr. Greenberg said. One group is hiding under a rock waiting for things to settle down because sales are not good. The other group sees an opportunity to strike better deals and get real estate that was not available before.
Posted on April 1, 2013
Steven Greenberg once built indoor tennis clubs. Then he launched an athletic footwear chain.
And 23 years ago, he started a Hewlett-based firm that advises major national retailers — with a client roster that has included Barnes & Noble, Gucci and Lacoste.
A frequent business traveler logging more than 100,000 miles a year, Greenberg, 63, runs marathons to raise money for the Dana Farber Cancer Institute and other causes.
He has three sons and three grandchildren.
Besides data and numbers, are there other, more nebulous, factors that determine [what makes a good retail] site?
“As much as there’s a scientific part of it, and an analytical part of it, there’s also the physical intuition part of it. There are different cultures here within America.
“People in Green Bay, Wis., are different from in Dallas, Texas. Their buying habits are different, the kinds of cars that they drive, what’s important to them is different. Those subtleties, those art forms, are all part of what we do.
“No piece of real estate ever gets endorsed until somebody from our company has gone out and visited, spent time in the community, talked to the community.”
You told Newsday in 1996 that Long Island was “not overstored.” What about now?
“In 1996, it wasn’t. From ’96 to 2006, it seems like Long Island went to the all-you-can-eat buffet and stuffed themselves. What’s happened is we’ve had a big flush-out. Retailers have gone bankrupt — more than I would like — which means that in order to keep space leased, rents have fallen considerably, somewhere between 20 and 30 percent.”
Are you hiring now?
“We’re actually in the middle of a recruitment process . . . we must have gotten 50 applications. Our primary candidate is an MBA grad who’s been out in the market for maybe three years. One of the unique features about us is, we don’t hire people who come out of the real estate business. We would rather hire a very bright individual with a type-A personality and train them ourselves.
“It’s essential that they have strong financial skills and that they have an analytical way of thinking and problem-solving. I’d rather have those components — and they come out of maybe accounting or consulting, even a marketing background — and then they go through a 14-month training program with us before they actually start working with a client.”
What would you change about Long Island?
“Like any major metropolitan area, it’s become congested, but since I came from Brooklyn, that doesn’t bother me. If you could lower my taxes, that might be nice — but you know what, I wouldn’t want to lower my taxes at the risk of lowering services.”
Are there [retail] clients that you frequent yourself?
“Oh, sure, I shop at all of our clients,” he says with a laugh, quickly adding, “equally.”