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Demographic research — it’s Greek to them

Could the wisdom of the ancient Greeks be the key to understanding shoppers? ReTeam, a retail consulting firm based in Copenhagen, Denmark, has developed a market research tool that segments consumers not by age, gender, income or education but by general psychological profiles borrowed from the ancients. The methodology is called Mind16, and it uses surveys to divide consumers into four groups: practical, sensual, intellectual and emotional, according to Kathrine Heiberg, a ReTeam partner.

ReTeam recently used Mind16 to help a landlord figure out why some consumers respond negatively to mall events. “Intellectual” shoppers, it seems, hate noisy concerts in the food court, while “emotional” shoppers tend to tap their feet. “What the landlord had to do was not stop doing events but to rearrange the master plan a little and place the stage in a corner,” Heiberg said. The idea, she says, is to use Mind16 either to appeal to specific consumer types or to craft messages and environments in a way that resonates equally well with all four groups. Intellectuals might be drawn to the nifty shoe technology in a Nike store, while the sensuals could prefer the softer atmosphere of The Body Shop. To appeal to the practicals, a landlord or retailer might do well to provide signage and marketing materials full of facts. But the Mind16 system recognizes that people have “major” and “minor” moods: An intellectual shopper may be in an emotional mood one day and in a practical one the next. As the ancient Greeks well knew, human behavior can be tricky.

 

Who wants to work above the store?

CB Richard Ellis is having no difficulty persuading Inland Empire businesses to relocate to Forest City Enterprises’ massive Victoria Gardens development in Rancho Cucamonga, Calif. The leasing team has already filled more than half the project’s 40,000 square feet of office space, most of which sits atop shops and restaurants. With the office vacancy rate hovering at 2.86 percent for the market, Vindar Batoosingh, a CB Richard Ellis senior vice president, says he expects the remaining space to fill quickly. “Having 1.3 million square feet of retail and restaurant space outside your office door is a highly compelling proposition for tenants,” he said. “The bustling atmosphere creates a true downtown feel that people are drawn to.”

 

Architect of luxury

Peter Marino is the go-to architect for retailers and developers wanting to create luxurious environments. Best known for designing residential and cultural projects, he is also building an opulent body of retail work, including flagship stores for Chanel, Christian Dior, Fendi, Giorgio Armani and Louis Vuitton, in such far-flung locales as Hong Kong, New York, Paris and Tokyo.

In February Taubman Asia and Gordon Group tapped Marino to design the retail component of their Marina Bay Integrated Resort bid in Singapore. In March the tony Americana Manhasset (N.Y.) shopping center celebrated its 50th anniversary with a design exhibit honoring Marino, who created the center’s sophisticated scheme in 1983 and continues to mastermind its renovations and new additions.

As reported in the New York Times, when Americana owner firm Castagna Realty first approached Marino to design the project, his response was, “I don’t do shopping centers.” Marino’s architectural practice has offices in East Hampton, N.Y.; New York City; Philadelphia and Santa Barbara, Calif.

 

Whole-Mart

Determined to make a name in the organic merchandise sector, Bentonville, Ark.-based Wal-Mart Stores bought an entire crop of organically grown cotton to launch a low-priced line of baby clothes. The line, called George Baby, will appear in stores in June. In addition, Wal-Mart will introduce about 400 organic food items in its U.S. stores this summer, said Stephen Quinn, senior vice president of marketing, at a conference for investors. “Our customers have clearly said this is what they want,” he said. Wal-Mart will make room for the new goodies, he said, by editing its assortment of other categories.

 

Raising the flag

Shoppers at over 500 U.S. retail centers will be seeing red, white and blue this summer as ICSC kicks off its first nationwide An Old Gloryous Celebration campaign, which promotes patriotism and the American flag. Starting Memorial Day weekend (May 26 — 29), 15 developers will hold special events at their properties, including flag-pledge drives in which shoppers who promise to fly a flag on Flag Day (June 14) receive a free stick flag.

On Flag Day itself, the centers will host flag-raising events honoring veterans and military heroes. The campaign is co-sponsored by Veterans of Foreign Wars (VFW) and American Veterans (AMVETS). For a listing of participating developers and centers or for more information, visit: www.oldgloryous.com

 

The living room revolution

The boom in flat-screen TV sales will translate into more traffic for U.S. home furnishings retailers such as The Bombay Company and Pier 1 Imports this year, observers say. When people put new flat-screen televisions in their living rooms, it tends to make the rest of their furniture seem outdated, prompting an updating of furnishings to match the TV, says Neely Tamminga, a retail analyst at Piper Jaffray. LCD (liquid crystal display) unit sales grew 160 percent last year, while dollar volume grew 127 percent over the year before, as the average price for an LCD TV fell below $1,000. Plasma TV sales also saw significant growth in 2005, up 128 percent in unit volume and 70 percent in dollar volume, despite a decline in average prices of over 25 percent, according to NPD Group. In a note to investors, Tamminga upgraded Pier 1 stock from “market perform” to “outperform,” despite the retailer’s yearlong same-store sales slump.

 

Follow Bollywood

When it comes to site selection in his native India, retailer Kishore Biyani prefers to let Bollywood blaze the trail. As managing director of Pantaloon India, Biyani owns and guides the expansion of India’s top two retailers, family apparel chain Pantaloons and hypermarket chain Big Bazaar. The two chains’ merchandise is targeted at sophisticated customers, those likely to enjoy Bollywood films that feature modern and more-urban ideas and situations, such as unmarried couples living together. So if such a film draws large audiences in a particular Indian city, he told the Hindustan Times, it is a sign the city can support a Pantaloons or Big Bazaar store.

 

Tenants’ sales rise faster than occupancy costs

Mall tenants saw sales rise faster than their occupancy costs — the portion of revenues that goes to rent, common-area maintenance and similar expenses — last year. This indicates that landlords will have room to raise rents as leases expire this year, observers say. Taubman Centers, for one, saw same-store sales per square foot at its 21 malls hit $508 last year, up 9 percent and a record for a mall REIT. Its tenants’ occupancy costs, meanwhile, dropped to 14.3 percent of total sales last year, from 15.2 percent in 2004. Similarly, Simon Property Group posted a same-store sales gain of 5.4 percent to $450 per square foot at its 78 regional malls, while occupancy costs were flat at about 12.9 percent, and this despite rent increases of 3 percent during the year. “Strong growth in tenant sales kept our occupancy costs from growing,” said Stephen E. Sterrett, Simon’s CFO, on an earnings call. CBL & Associates Properties saw sales climb 4.1 percent to $331 per square foot for the year, while tenant occupancy costs slipped to 11.8 percent from 12 percent the previous year.

 

Year of the shoe

Americans cosseted their feet in 2005, spending some $42 billion on shoes, up 9 percent from the year before, says a report from New York City-based research firm The NPD Group. U.S. consumers bought 1.4 billion pairs, up 5 percent from 2004. Shoe sales were three times greater than apparel sales, the firm reports. Men’s footwear sales grew the most, up 9 percent to $16 billion. The best sellers were slip-on loafers, which accounted for one out of every four dollars spent on footwear in department stores last year, NPD reports, and thongs, sales of which have increased fourfold since 2002.

 

Simon mixes it up

Efforts to find mixed-use partners for its high-profile retail properties have led Simon Property Group into new territory. In Phoenix’s Northwest Valley, for example, the firm has put up $50 million to join residential developers Meritage Homes and Toll Brothers in a land venture. The group has acquired 5,485 acres of land outside Phoenix with aims to create a mixed-use, master-planned community containing more than 4,000 acres of homes and 645 acres of commercial property. Simon will have first rights to develop the commercial space once entitlements on the land are completed, a process CEO David Simon says is likely to take two years. “It’s a business we want to learn more about, and this was a way to do it with a low equity investment,” he said on a year-end conference call. He also said Simon has six or seven joint ventures to develop self-storage space in the works for 2007.

 

Ford showroom

Known for turning the flagging Gucci label into one of the world’s most popular luxury brands during the 1990s, fashion designer Tom Ford plans to launch a new empire under his own name. The first Tom Ford boutique will open at the corner of Madison Avenue and 70th Street in New York City in November. The three-level, 9,600-square-foot unit will be the first of five stores the designer plans to open over the next three or four years. Rents on Madison Avenue retail space average about $700 per square foot, market sources say. The other Tom Ford stores will be in Los Angeles, London, Milan and Tokyo. Ford will sell made-to-order and off-the-rack mens’ suits at his stores, in addition to a line of women’s beauty and eyewear merchandise. Ford isn’t shy about competing with his former employer. His new store will be located right across the street from Gucci’s Madison Avenue flagship store.

 

America’s greenest

The U.S. Environmental Protection Agency’s Green Power Partnership named Whole Foods the “greenest” retailer in America for 2006. The advocacy group ranked U.S.-based retailers based on their annual voluntary “green power” purchases through Jan. 18. Green power purchases can include a range of sustainable-energy sources, such as solar, wind and hydro. Over that period Whole Foods used 463,128 megawatt hours of energy to power its 181 stores. All of that came from green power sources, including solar energy systems installed on the roofs of most stores.

 

Century City coddles cars

Shoppers who use valet parking services are getting the red-carpet treatment at Westfield’s Century City mall in Los Angeles. In March the company instituted a program called Valet Mate, which provides parkers with pagers they can squeeze when they are done shopping and want their cars back. Visitors even have the option of sending their vehicle through the mall’s Elite Auto Spa while they shop or wait in a renovated lounge with soft seating. The highfalutin car wash provides detailing, fluid checks, tire pressure testing and similar services.

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