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Shopping Centers Today -> December 2007
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TWO FOR ONE
LANDLORDS ARE PUSHING TO MARRY PROPERTY MANAGEMENT TO MARKETING
To merge, or not to merge? Lots of shopping center owners are soliloquizing over that one as they ponder combining their marketing and property-management functions to help advance national brand strategies.
At issue is whether a unified, across-the-board marketing approach will yield better results than the more traditional one that is customized to a given trade area. The sentiment at Atlanta-based Cousins Properties’ retail division is that it will. That division’s own marketing and property-management departments were merged in February.
“We saw opportunities to create efficiencies in property management and consumer marketing and combine them into one function for better brand management,” said Angie Leccese, the firm’s vice pres- ident of brand management. “We felt that bringing these two disciplines together would create a better platform to communicate our core values. After all, brand marketing is the way we market our assets, and our brand is what we’re passionate about.”
This approach also adds value for all Cousins centers, says Leccese, who headed the marketing for the firm’s Avenue portfolio of premier open-air lifestyle centers. Individual centers maintain the latitude to adjust to local demographics, says Leccese, but within a company brand framework. “Our center managers not only enforce lease language, they also care about retail productivity,” Leccese said. “We are working in teams instead of silos.”
Jane Lisy, vice president of marketing at Cleveland-based Forest City Enterprises, acknowledges that the industry is moving in this direction, though insisting that Forest City has no plans to follow suit. “Forest City believes in the uniqueness of each market, and those markets differ so drastically by region that you can make a big mistake if you address customers on a one-size-fits-all basis,” Lisy said. “There are so many cultural differences and different expectations from market to market.” Forest City invests significant resources to train on-site marketing professionals to address such unique issues, says Lisy. “It’s a big commitment. But the program has worked quite well, and we do get a loyalty in our marketplaces for our efforts.”
There is one exception, Lisy says: Lisa Krieger, the general manager of retail and senior director of marketing of the firm’s Tower City Center, Cleveland. Krieger does maintain a dual marketing and property manager role, Lisy says, “but that has more to do with the unique nature of the [urban] Tower City project and the fact that she has more marketing support staff than the typical center.”
Standardization does make more sense for shopping center owners with very large and geographically diverse portfolios, says Lisy. “They are managing more properties than we are,” she said. “But we are small and nimble enough to do it the hard way so we can make our marketing unique to each market.”
Mary Lou Fiala, president and COO of Regency Centers Corp., says her firm has operated its marketing and property-management functions jointly for years. “That has been very effective for us,” Fiala said. “The objective is to make sure image and brand are consistent.”
Regency’s marketing budget and staffing philosophies vary greatly according to center size. “For a smaller, grocery-anchored center, we’ve found that you are either going to like it or not like it and that you can’t change customer behavior there with twice-a-year brochures that cost $10,000 to produce,” she said. “But centers over 200,000 square feet are a regional draw, and we spend more marketing dollars there — an approach that we have found to be extremely successful.”
Other Regency customer-identification programs, such as its Premier Customer Initiative, help determine which retailers are best for a given market’s consumer tastes and allow Regency to tailor offerings without considerable investment in on-site marketing teams, she says. But if the company acquires a property in a community that counts on special events and traditions that generate traffic, such as an annual Christmas tree lighting ceremony, “we certainly won’t want to stop that,” she said.
Changes in the ways large retail tenants allocate their marketing budgets have in turn altered the ways centers invest promotional dollars. Since national tenants have started contributing less to the cooperative-marketing funds of the centers they occupy and spending more on their own promotions, local mall marketing has lost some of its luster, says a national marketing manager for a large mall-ownership group. Cooperative-marketing funds have been slashed by as much as 50 percent since the early 1990s.
Branding has come of age in the national retail-development community, says Robert Duboff, CEO of Boston-based HawkPartners, a marketing and brand-strategy consulting firm that has several retail and institutional clients. “We have already seen this in other industries,” Duboff said. “Donald Trump is a good example: People have expectations that are attached to properties that bear his name. His is now a widely accepted brand.”
The branding push leaves many retail developers with an interesting choice, Duboff says. “Are they going to build up local names and not worry about their own national name, or are they going to focus more on their brand? If so, can they assume they have created enough value in their national brand so they can use it everywhere? You had better be sure you find the answer to those questions.”
Some developers are bridging the gap between the two strategies by giving their new centers distinctive, locally identifiable names to help regionalize them while still focusing strongly on their brands, he says. “That way, you have both a national equity and a local buzz, and you can still have all the store brands that are associated with the national name.”
Leccese says more companies are seeking efficiencies in utilizing their branding power. “They are really beginning to evaluate the way they market and how they can leverage tenants from their marketing strategies,” she said. “It is crucial that we understand the importance of these relationships and understand the role they play.”
Lisy sees this differently. “For us, a more standardized approach would result in the loss of a lot of talented marketing directors é who are committed to the importance and value of the unique nature of each retail market our centers serve.” To that end, there is continued support to keep marketing and property management separate, she says, “and to maintain dedicated on-site marketing professionals [at centers] to adequately address those issues and opportunities.”
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