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Retail’s back on track, if the 30,000 people (and 143 new exhibitors) expected at ICSC’s annual RECon conference in Las Vegas today are any indication. Bisnow will be on the ground for the next two days, bringing you coverage of the biggest retail event of the year.
Kimco Realty Corp CEO David Henry
“We’re out of space,” said a proud David Henry, CEO of Kimco Realty Corp, who’s been nominated as ICSC’s next chairman. The good news: there’s hardly any shopping center development right now and international retailers are interested in expanding into the US—and this cross-border attentiveness will only further help shopping centers, he says. But the industry still faces challenges, including the lack of an online sales tax, economic-driven decreases in store footprints, and the continually struggling mom-and-pop niche.

Walmart Realty’s Carole Baker, Terranomics Retail Services’ Tina Essegian, JLL’s Margaret Caldwell, and Prudential Real Estate Investors Collete English Dixon
Video may have killed the radio star, but retail stores are still holding on against online outlets like Amazon, we learned yesterday from Walmart Realty senior director of realty sales and leasing Carole Baker, Terranomics Retail Services VP Tina Essegian, JLL managing director of retail capital markets Margaret Caldwell, and Prudential Real Estate Investors VP of transactions Collete English Dixon during an interactive session discussing the online shopping trend. In order to survive, retailers have to adapt to and embrace technology instead of having an “us vs. them” mentality, Tina says. People still like the social aspect of retail, with 78% of the population still shopping in stores, Collete says. (When people start sending their holograms to the store, will that still count?) on Motorola Droid X smart phone
We’re seeing a new frugality that will persist and determine where people spend their money, Carole says, with more people using smartphones to make decisions. Over 73 million people (31% of mobile phone users) have smart phones, and of those, over 40% have bar code scanning apps, Margaret adds. Retailers are embracing technology to drive people into stores, including services like Groupon, Foursquare, and instant coupons, as well as leveraging entertainment to create interactive shopping experiences. Retailers like Nordstrom and JCPenney now have options to buy online and pick up merchandise in-store the same day. But if states begin to impose taxes on online sales, some of the incentives to shop online may go away, they say.
Prudential Douglas Elliman’s Faith Hope Consolo, J. Crew’s Holly Cohen, Target Corp’s Terri Simard, Luxor and Excalibur Hotel & Casino’s Renee West, and Wynn Resorts’ Elaine Wynn
ICSC had its own version of The View yesterday, featuring top women in retail and hospitality. Prudential Douglas Elliman queen of retail Faith Hope Consolo moderated for J. Crew SVP of real estate, planning and construction Holly Cohen; Target Corp VP of law Terri Simard; Luxor and Excalibur Hotel & Casino prez Renee West; and Wynn Resorts director Elaine Wynn. Their consensus: The market is getting better, but there’s still a lot of uncertainty, especially when you depend on disposable income. “It’s erratic,” Terri says. “When you think it’s going up, you hit a bump.” Consumers focusing on reducing their debt are no longer as impulsive as they used to be.
Prudential Douglas Elliman’s Faith Hope Consolo, J. Crew’s Holly Cohen, Target Corp’s Terri Simard, Luxor and Excalibur Hotel & Casino’s Renee West, and Wynn Resorts’ Elaine Wynn
In certain ways, the downturn benefited J. Crew. As more consumers cut down on luxury purchases, they began mixing designer duds with J. Crew pieces. “People are now going across the aisle and are more adventurous,” Terri says. And they're more value conscious, points out Elaine; they’re not as concerned with the fashion of jewelry but instead its value as a long-term investment. The panelists shared how the market has made them lean and mean in operations, from shutting down underperforming concepts to putting a major focus on customer service. But we’re also in an emerging market where women are making 80% of all consumer decisions—so it’s critical for the industry to be sensitive to this decisionmaking, especially by making women part of operations, they say.
Legaspi Co president José de Jesús Legaspi
Other trends: retail opportunities in Hispanic communities, whose rapid growth is a defining characteristic. LA is home to the second-largest Hispanic population outside Mexico, and unlike Houston, Latinos are totally politically incorporated. Some thoughts from the panel (moderated by the Legaspi Co president José de Jesús Legaspi, above, and featuring Loyola Marymount University’s Fernando J. Guerra and UCLA School of Medicine’s David Hayes-Bautista): Retailers are searching for a general Holy Grail approach to tap this burgeoning market, but at the end of the day, you’ve got to trust your instincts instead of trying to find some study or data. José's main takeaway: The Hispanic community has grown tremendously and “people are finally realizing that there is a really good consumer that the retail community can reach out to.”
nder Armour Retail’s Jeff Ruback, with PA Outlet Management’s David Ober, Phillips-Van Heusen Corp’s Lillian Thrasher, and EWB Development’s Lisa Wagner
It seems lots of folks are trying to plug into the outlet industry. Out of some 200 signed up for RECon’s first-ever special interest group on outlet centers, only 10 were already in the industry. The group was moderated by Under Armour Retail’s Jeff Ruback, with PA Outlet Management’s David Ober, Phillips-Van Heusen Corp’s Lillian Thrasher, and EWB Development’s Lisa Wagner. They say outlet centers are a niche industry involving a tight-knit community. They draw from a broad radius and require intensive and constant marketing. Tourism’s a big driver: The average international shopper at an outlet mall spends over $1,000 on his or her shopping trip. There’s a core group of outlet players that determine whether a center gets built. The partnership between the brands and the owners is key—it’s not a base rent business but a percentage rent business.
Johnson Capital president and facilitator Guy Johnson
We also sat in on a finance panel, packed with industry folks wanting to have a conversation with top industry leaders like Johnson Capital president and facilitator Guy Johnson, above, plus two finance gals from Texas—1st Service Solutions CEO (and CMBS vet) Ann Hambly and US Bank Special Asset Group West’s Celeste Gladych. Rounding out the cast were Torchlight Investors’ Joe Clarke and PCCP partner Bill Lindsey. Hot topic: the portfolio of Nevada properties and notes valued at $1B that was sold off last week in an Archetype and auction. (We told you it was coming). SVP Ken Rivkin told us this morning the 59-asset portfolio sold for over $340M, many of the assets trading for over $30M. Guy says they traded so high because people thought they were putting one over on the banks and the banks cleaned up.
1st Service Solutions president and CEO Ann Hambly
The conversation quickly turned to borrower workouts of distress CMBS (defaults broken down by vintage: 16.2% in ‘05, 23.3% in ’06, 43.6% in ’07, and 20% in ’08). Ann, above, whose firm is a borrower advocate in loan restructuring and assumptions, says if the borrower is willing to pay, it'll have to be in default or going into default before the lender will discuss restructuring. From a lender perspective, Bill says borrowers need to hand over financials and most of the time there’s no workout because there’s no agreement on value. Celeste says US Bank will work with borrowers if they can modify and make loans performing again. And guess what? Character and integrity matter.