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Net Profit

Developers turn to computers and the Internet to improve their operations

By Debra Hazel

In 1943 IBM chairman Thomas Watson said, "I think there is a world market for five computers." Today, the market capitalization of Amazon.com is equal to that of JC Penney, Kmart, Borders Group and Barnes & Noble combined.

General Growth's specialty leasing Website <www.speclease.com> paid for itself after the first deal.

The computer seems to have taken over the world, threatening such long-cherished institutions as traditional retail. While accurate dollar figures are hard to come by, most observers say that Internet sales tripled last year. With so much attention focused these days on the perils the Internet poses to brick-and-mortar retail, some shopping center developers and retailers are using the World Wide Web and other high-tech systems to improve their business.

"You're going to have to change because the industry is changing so rapidly. The way to adapt quickly is by forming strategic alliances through technology businesses," said Mark Klockner, vice president of new business development for Chicago-based General Growth Properties, speaking at the "Specialty Leasing Using Technology" session at ICSC's Short-Term Specialty Retail Conference & Trade Exposition, held in Dallas in February.

The firm has created a Website <www.speclease.com> to provide information on its specialty leasing program to prospective tenants. The site may also be accessed through the main General Growth site, <www.generalgrowth.com>.

"We thought the corporate site was way too formal," Klockner recalled. The corporate site provides financial data on the firm, as well as information on General Growth's 100-plus regional malls.

The speclease site, on the other hand, is a tutorial on how to become a temporary tenant.

"The Website targets the person who has never been in the business, but who would like to enter it. It tells what they need to get started," Klockner said. The site walks prospective tenants through a business plan, teaching them step by step how to succeed.

So far, it seems to be working. The site was launched in February 1997.

"We're getting 125 responses a month, and it doesn't take long to convert that to a couple of deals a month. So the site is very profitable," Klockner said. Surfers logging in for more information also are fed into a database, so that promising candidates can be hooked up with franchise opportunities if necessary.

The initial creation of the site cost $15,000. Maintenance is tied to the corporate Website; thus, ongoing costs are minimal.

"It paid for itself with the first deal," Klockner said.

But the creation of a Website is more than slapping information or products on a page and hoping customers will click in. As with traditional retail, Internet sites must be easy to use, observed Brad Boa, president of Whereits@.com, Dallas.

"In the last week of January, 43 million Americans surfed the Web. Some $1.5 billion in consumer goods were sold over the Net last year," he said.

And sites might be even more successful if they were easier to use. The problem: All too often, visiting a Website is more work than the convenience is worth. The successful Website must offer community, availability, ease of use and customer support and service, he said.

"According to Forrester Research, two-thirds of electronic shopping carts do not make it to checkout. And 42% of top Websites take longer than five days to respond to e-mail, according to [New York-based consulting firm] Jupiter Communications."

Developers have a slightly different customer -- retailers looking to fill space. But the communications problems aren't all that different. Various new technologies can help with that, Boa said, including voiceover lines that allow businesses to talk with customers while they are online; and a two-line solution that will permit a customer-service representative to reconfigure a potential tenant's desktop while they are on the phone.

The Internet, or more accurately, an internal company Intranet, also can be used for employee training, Boa said.

"The advantages of online learning is that it is available 24/7, provides a consistent delivery of information, and that people retain information more with computer-based training," Boa said. "In addition, you can tell if someone has taken a course and passed it to an appropriate degree."

"Everyone getting into the real estate arena is struggling with whether to serve customers over the Internet," noted Stephen Pospisil, director of creative services for The Rouse Co., Columbia, Md.

However, he said, the degree to which retailers are using the Internet will eventually come to help or hurt their landlords.

"This will affect our access to capital as developers and retailers," he said.

Klockner noted, though, that companies looking to use new technology to help their business have serious decisions to make: how much time and money they're willing to spend, and for what return.

"The Internet can be your friend, or your enemy, depending on how much you're willing to invest in the process."