OBSERVATIONS & CONVERSATIONS
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While we’ve seen a bit of reluctance in our industry to fly, the total attendance at recent ICSC events has been good. |
It’s a weird world right now and the play book is
written in invisible ink. Trying to do business when we’re at war is a new
experience for most of us. I talked to a few companies about future dealmaking
events and less than a handful out of dozens decided not to fly to the
Southeastern States show in Atlanta or the Midwest Dealmaking in Chicago. Most
of the people that said they were passing on Chicago and Atlanta are from the
New York City area, so I can understand them having the jitters about being far
from home. One company supplied the person that opens their mail with gloves,
because of the anthrax scare. People in high-rise office buildings are being
disrupted by false alarms of all sorts. Everyone is concerned about their
financial future. Consumer confidence is at a seven-year low, and retailing is
being directly affected. While we’ve seen a bit of reluctance in our industry to
fly, the total attendance at recent ICSC events has been good.
I was talking to a woman that’s a workaholic and leases a boat load of space
every year, about our dismal spirits and compared stories on how we went
shopping to help relieve the tension of everyday life. She left work early and
went to shop at a lifestyle center near her house, fully determined to buy
whatever she wanted. She gets out of her car to find the store of her choice
yellow taped off due to a Hazmat investigation, which by the way was a false
alarm. Thoroughly rattled, she got back in her car and went home even more
frustrated. Lorri Ochoa from our office recently attended the ICSC Fall
Management & Marketing Conference in Orlando and most of the discussions focused
on three points: 1) security, security, security 2) marketing in difficult times
3) replacement tenants to help fill the vacancies expected in the next six to 18
months. In the past, security would have never been the most addressed issue in
operating shopping centers. Malls haven’t seen their glory days in a while. The
last thing they needed was to deal with extraordinary measures like placing
concrete barriers in front of their main entrances to deter car bombs and higher
operating costs, because they need security more today. If a marketing director
or retailer mailed a date sensitive advertisement in the last three weeks
anywhere in the Northeast, they probably already know that it’s been a total
bust, because of the postal disruptions. Also it’s been really tough writing ad
sales copy these days, trying to walk that fine line of urging people to buy,
yet being sensitive to our situation. (It’s like telling people to sing “If
you’re happy and you know it, clap your hands,” but they’ve been wringing their
hands to the point they’re rubbed raw). Retailers aren’t running holiday ads
yet, and why would they be in a hurry to have 30 seconds on TV sandwiched
between one depressing newsbreak after another and another. I’ve talked to a few
wholesalers that feed me information on which retailers are getting the most
heat from factorers and the list is getting longer. It’s costing weak retailers
even more money to operate, because their ability to get credit for the holiday
season is more expensive.
The psychological mood of the moment in our country doesn’t lend itself to being
joyful and carefree, spending money frivolously, congregating in mass numbers,
traveling freely, feeling invisible and planning for a plentiful future. So as
the people steering the course for retailing in America, the driving force
behind our economy, how do we combat and overcome these problems? From all these
people I’ve chatted with no one has yet to come up with ideas or solutions. I
called a direct mailer and retailer of uniforms, to get his advice about the
postal delays and he suggested mailing from a region of the country that the
anthrax scare has not affected. As I’m writing this, post offices have been
inspected from Florida to Oklahoma to Indiana to New York and Virginia. The
postal disruptions have had some impact on cash flows with landlords in the
Northeast not receiving rent checks and I’m sure there are a few like me that
are enlisting Telechek so we can accept checks by phone or fax, rather than
relying on the mail. A couple mall developers canceled Halloween at their
centers. I did go to the Princeton Marketfair in Lawrenceville, NJ and to their
credit they had about 50 decked out kids, with parents in tow, around 5:00 on a
Sunday making sand sculptures, painting pumpkins, dancing and listening to a DJ.
It was definitely a welcomed sight to see. Another move I saw to stimulate
business was a letter the chairman of BCBG sent to its “valued customer” list
with a $100 check toward any purchase of $200 or more. It’s the high-end
retailers that will get snookered if the cloud doesn’t get lifted soon and at
least some are fighting the good fight. I heard a real estate macher at an arts
and crafts chain was ecstatic with their business, because so many people are
staying home and desperate for something to occupy their preoccupied minds.
While Ted’s out of town I take a lot of his calls, and we’ve had a slew of
dollar stores call us in the last few weeks about a shopping center that we
haven’t been the leasing agent on for more than five years. (We just assume the
landlord never bothered to take down our sign because calls have been coming in
for years from locals and this would be typical of his attitude toward common
area maintenance. I’m sure he hasn’t visited the center since we stopped working
on the account - just had to vent). Low-end and discount retailers seem to be
the least affected in the past few months.
Now it’s essential that you visit your centers, shake hands with your tenants
and kiss their babies ... you want to know if the family’s all right and are
they having problems making payroll. Keep your eyes open to every kind of
potential tenant. You’re going to have to release space, and in some centers
this maybe the first time they’ve had vacancy in a long while. I recently saw
firsthand an example of what not to do, especially in this climate. A broker
friend of mine is working on three deals with tenants of 150,000 sq.ft. each,
close to half million square feet in three different centers that could be
generating income within six months of signing a lease. The landlord’s leasing
agents took more than 72 hours to return phone calls from the retailer’s broker.
Marketing alternatives should be explored. I’m putting together a campaign for a
national developer to send E-mail updates on their space availability to a list
of retailers that have agreed to receiving E-mail (it’s not spamming). The list
will be a few hundred initially and when you compare this with their monthly
mailing to 500 retailers at the total cost of $1,000, they’ll cut their
marketing cost dramatically if the campaign works. All of us would like to hear
your ideas and suggestions on what you’re doing to drum up business, keep your
centers leased and the customers shopping. Drop me E-mail at ann@dealmakers.net.
Until next month,
Ann O’Neal, Publisher