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NEW FIRM BRINGS BROADBRAND TO 700 STRIP CENTERS

By Dave Bodamer

Less than eight months after its debut, MyShoppingCenter.com says it's ready to lead the way in bringing broadband access and Internet services to tenants of community shopping centers and, eventually, regional malls.

As of the end of December, more than 700 shopping centers with 12,000 merchants in more than 25 states had signed on to the service. North Miami Beach, Fla.-based MyShoppingCenter.com is installing high-speed broadband infrastructure at each shopping center and providing Web pages to centers and tenants, all for free. The company then sells a variety of services to the tenants on a subscription basis.

"The demand is clearly there," said MyShoppingCenter.com President and CEO Gary Mansfield. "We have multiyear contracts with many retailers months before we've even brought these services online."

The company sees strip center tenants as an untapped market, he explained. Strip center merchants tend to have loyal customer bases, presenting an opportunity for e-mailed coupons and other Internet marketing and services that might not be as successful as at a regional mall, which draws from a larger radius.

MyShoppingCenter.com builds individual sites for every retailer and every center it wires. Or, if a retailer is part of a national chain, MyShoppingCenter.com links to the chain's site through the shopping center's home page. The shopping center Web sites include local community content, such as calendars of events, bulletin boards or articles about the local area, meant to attract consumers to the shopping center sites.

The company, backed by a high-profile board of directors, was officially launched in June 2000, and has reached deals with Kramont Realty Trust, IRT Property Co., Federal Realty Investment Trust, Mid-Atlantic Realty Trust and Regency Realty.

The company was started by Chaim Katzman, chairman and CEO of Equity One, a Miami-based retail REIT, and Centrefund, a Canadian REIT. Both of those companies are also MyShoppingCenter.com clients.

Most of the centers controlled by those REITs are being wired now and slated to come online this year. The only centers operating at the end of 2000 were a group of about 30 near Miami.

"We signed on with them because we felt like they were the best suited to provide services to strip shopping centers. ...Unlike with [Simon Property Group-backed] MerchantWired, there was no financial contribution necessary on our part," said Norman Kranzdorf, chairman of Plymouth Meeting, Pa.-based Kramont. Also, MerchantWired, started last May, is working only with regional malls, not with strip centers.

"We believe that every shopping center owner has to deliver broadband to be competitive. It enhances the attractiveness of the landlord," Kranzdorf said. He added that MyShoppingCenter.com's services could help build relationships between customers and stores and drive traffic up at the centers in general. In particular, the service targets shoppers who are using the Internet to make purchases.

Once at the site, consumers can download electronic coupons from tenants or click on banner ads linking to individual retailer Web pages. Customers can also sign up for e-mails featuring special offers from stores they like, or learn about stores they have not visited.

Merchants can also display a list of their inventory online, giving customers the option to purchase goods through the Internet. They can even send messages to consumers' cell phones if that person is close to the center. Besides those services, the high-speed access also enables retailers to process credit-card transactions more quickly and through the Internet rather than with a machine hooked up to a dedicated phone line.

Through MyShoppingCenter.com, independent tenants can also reach other merchants with common needs and pool demand to get volume discounts on goods and services.

Tenants can also sell goods to each other. MyShoppingCenter.com will provide information on vendors to tenants in its network to aid them when making those purchasing decisions. The broadband network gives tenants full, high-speed Internet access with the potential for video conferencing, online applications and local and long distance telephone service. The company has deals with AT&T, Lucent Technologies, WorldCom, UUnet and MasTec to lay the cable.

Owners get their properties wired for free and for an undisclosed fee can take part in revenue sharing with MyShoppingCenter.com on the services that tenants pay for. It's also a tool by which shopping center owners can differentiate themselves from the competition.

"In the retail environment, unlike the office environment, there's really not a great ability for tenants to do this," said Ron D. Kaplan, CIO of Rockville, Md.-based Federal Realty Investment Trust, which recently signed a letter of intent with MyShoppingCenter.com. "It allows us to offer our tenants a number of great services."

Technologically, MyShoppingCenter.com's Web pages are the top of the line, using Flash programming to bring animation to nearly every page it designs. When new users access the main page, they can enter information that enables the site to generate a page individually catered to their choices, based on location and what types of products they prefer to buy.

"We are just another tenant of the center and like any other tenant we pay a percentage of our revenue back to the landlord," explained MyShopping Center.com's Mansfield.

Kramont had attempted to bring broadband to its tenants on its own before signing on with MyShoppingCenter.com. The company also gave each of its tenants one-page Web sites (as opposed to the three-page sites MyShoppingCenter.com offers).

"There was a tremendous response from our tenants to what we were able to do," Kranzdorf said. "We had pharmacy customers being able to do renewals online and customers making appointments with salons online." MyShoppingCenter.com's services should only enhance that, he added.

Thomas H. McAuley, chairman and CEO of Atlanta-based IRT Property Co., said his company chose MyShoppingCenter.com because he felt it had a good focus on the types of technology that strip center tenants would have a use for. "By offering our tenants the Web-enabling technology, we're enhancing their ability to do business while increasing our ability to attract and retain strong national and regional tenants," McAuley said.

Until recently, MyShoppingCenter.com had secured deals with shopping center owners on its own, but it recently reached a deal with Chainlinks Retail Advisors, the nation's largest retail brokerage, to help negotiate future deals. Mansfield attributes the company's success at signing REITs to MyShoppingCenter.com's board and to the concept itself.

After making its debut in June the company demonstrated its various services using shopping centers from Katzman's own portfolio. It has continued to upgrade its Web site and had a soft launch of what will be the final version in December.

The company also has contacted other REITs with properties similar to Katzman's to sell them on the idea. Mansfield declined to release any financial information about how much the venture has cost to start up. But with thousands of merchants already subscribing, he said he was confident in the company's viability.

"We had a great deal of success talking to REITs ourselves, but the shopping center industry is fragmented and [Chainlinks] has 50 offices and more than 400 staff members that can go and provide our solutions to landlords in markets that we don't have access to," Mansfield said. "It's our way of addressing the state of the shopping center market."

Troy Peple, CEO of Vienna, Va.-based Chainlinks said, "Technology changes in the retail shopping center sector are inevitable. We've investigated the real estate technology market and selected MyShoppingCenter.com because of their deep understanding of the basic needs of the national and independent retailers, as well as their retail-centric, value-added solutions."

Although many retailers in neighborhood and community centers are locally based and would not seem to need high-speed access, Mansfield said there is a huge appetite for the services his company provides.

According to the company's research, customers of neighborhood centers visit between two and two-and-a-half times a week and yet know only about 20% of the tenants in those centers. Web sites for these centers could introduce customers to the tenants they do not know, Mansfield said.

Katzman drafted Joseph Antonini, former chairman and CEO of Kmart Corp.; Jack Smith, former chairman and CEO of The Sports Authority; Odie C. Donald, president of DirectTV; and Arthur B. Laffer, a member of the Economic Policy Advisory Board during President Ronald Reagan's administration, as board members.

"Chaim understood the needs of retail tenants in his shopping centers," Mansfield said. "We worked together to build a board that could bring technology to retailers both large and small that are unavailable without broadband connectivity."

Mansfield would not rule out MyShoppingCenter.com moving into the regional mall sector at some point in the future and competing with MerchantWired head-to-head.

"The size and potential clients at regional malls make a tremendous amount of sense for MerchantWired to focus on," Mansfield said. "But we believe small merchants need these solutions, too. We also believe we can go to regional malls. Our focus on the technological needs of retailers is the reason we've been successful and will continue to be."

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