Chief innovation officers abound in Silicon Valley, and now the I-word is popping up on business cards in retail real estate as well.
For these executives charged with fostering innovation at their companies, the goals may include wooing clicks-to-bricks retailers by offering them better data on property performance; reinventing how traditional properties look, feel and operate; cultivating new types of nonretail tenants; and staying ahead of the curve on 21st-century marketing strategies.
“The pace of change, to put it bluntly, is ridiculous,” said Gregg Katz, director of innovation and technology for the Atlanta-based Shopping Center Group. “So for me, this role isn’t about having the answers to everything. It’s about strategy, vision and, to a certain extent, project management and implementation. Having charted a path for ourselves, we want to move to the end of that path in as straight a line as we can.”
Even companies that have not carved out innovation-related positions are seeking to find new ways to adapt to change, experts say. Of late this has been particularly evident at industry conferences put on by ICSC and others, said David Poline, president and CEO of Atlanta-based recruiting firm Poline Associates. “I saw this a lot at the 2018 OAC Summit back in February,” he said. “Much of the programming there was related to future-leaning topics.”
Gregg Katz, director of innovation and technology for the Atlanta-based Shopping Center Group
This past February Jim Ward assumed the role of vice president of innovation and new business ventures at CBL Properties. In his nearly 20-year career with that Chattanooga, Tenn.–based REIT, he has managed several malls and held top positions in marketing and branding, most recently as vice president of marketing and digital strategies. As Ward sees it, the new position has allowed him to spend more time focused on innovative approaches such as working with CBL’s retail partners and tech vendors on data-sharing pilot programs and cultivating relationships with digitally native retailers that could fit in the portfolio.
The point of creating a role like chief innovation officer is not necessarily to preclude executives in leasing, development, property management or brokerage from pursuing new ideas on their own, experts say. Rather, having a point person for innovation can help the company gain a big-picture view and better coordinate those collective efforts. “I work almost daily with our heads of IT and operations, our senior leasing executives and our data analytics team,” Ward said. “Just last week I had some overlap in meetings with marketing. So it’s a role where you pull everything together. You try to make sure that whatever you implement and pilot will be the right solution across the entire organization.” When Shopping Center Group created Katz’ position back in 2012, the company’s senior leadership team had a similar idea in mind, Katz says. “We felt it was important to align all of that under one umbrella,” he said. “It gives you the ability to then create that single message and single strategy.”
Other companies have tapped specialists to innovate in areas of particular strategic importance. In recent years, Trademark Property Co. has put a major emphasis on ramping up the look, feel and function of its properties, including the launch of its branded Conscious Place approach to sustainable, community-driven development, says Cassie King, who joined the Fort Worth–based firm as director of design and innovation in 2015. “We believe that we have to evolve to stay relevant,” she said. “It’s important to us to create places where people feel safe to make memories and let their kids run around like it was their own backyard. Our tagline is, ‘Places people love.’ ”
King is an artist and furniture-builder with a background in landscape architecture and urban planning. In scaling up the portfolio — 17 retail and mixed-use properties so far — Trademark tasked her with overseeing the design aspects of its new direction. “They realized that there was a void and that they needed somebody in-house who was truly over design and innovation, as opposed to relying solely on outside architecture firms,” King said. Waterside, a 63-acre mixed-use property whose first phase opened in Fort Worth in 2016, was King’s first project for the company. Retailers and restaurants there include REI, Sur La Table, Whole Foods Market and a raft of service tenants. When all three phases are completed, in 2020, the project will comprise some 200,000 square feet of retail space, 800 residential units and 200,000 square feet of offices.
Jim Ward, vice president of innovation and new business ventures at CBL Properties
The site happened to hold personal meaning for King. “I grew up playing soccer on the property, which used to be a large recreation area for employees of Lockheed Martin and their families,” she said. This history helped shape the public art that Trademark commissioned for Waterside by local artists, among them Bob (Daddy-O) Wade, who is famous for creating The World’s Largest Cowboy Boots, in San Antonio, and a 40-foot iguana sculpture at the Fort Worth Zoo. To create distinctive pieces for Waterside, the Texas artist reused old playground equipment, carousel horses and other pieces that had been on the property for decades, King says.
“He turned an old swing set into a cowboy and a lasso, with three donkeys in front of it called The Three Amigos,” King said. “There’s a totem-pole-like structure with an airplane on top and a tugboat at the base, and then he put 16 carousel horses up on poles for this piece called Horse Field.” According to King, the context-appropriate use of public art is in line with the goal of pursuing innovation, not least because that dovetails so well with shopper use of Instagram and other visually oriented social media. “People always have their cellphones in their hands and are always taking pictures,” she said. “At Waterside we’ve created a backdrop for that.”
The outsized role of social media today is also part of Ivanhoé Cambridge’s thinking as it pursues innovative tenant mixes at its malls in Canada and around the globe, says Tracy Smith, who became senior vice president of marketing and innovation for the Ivanhoé Cambridge retail group last year. This past June the Montréal-based development firm announced a leap forward on the entertainment front, in particular: a joint venture with global theatrical producer Cirque du Soleil. “That’s a great example of innovation at work at Ivanhoé Cambridge,” Smith said.
Naturally, the developer’s marketing teams will use social media to promote Cirque du Soleil’s family-entertainment concept, dubbed Creactive, which opens at Toronto’s Vaughan Mills in September 2019. But the 24,000-square-foot indoor space, which will feature dancing, juggling, mask-designing, bungee-jumping, obstacle courses, trampolines, trapezes and a circus track, will also offer visitors plenty of motivation to create their own posts on Instagram, Facebook or Twitter. “Our visitors are happy to help us generate content,” Smith said. “Our job is to capitalize on that by giving them an engaging experience that makes them eager to get out the good word.” Ivanhoé Cambridge is now in talks to bring Creactive to other properties in Canada and abroad, according to the announcement.
CBL, for its part, also seeks to bring innovation to its tenant lineups, according to Ward, who has been meeting with prospects not typically associated with retail properties. “Cultivating those new concepts is part of my role,” he said. “Right now, for example, we’re developing a partnership with a co-working [concept] owner who has three locations in downtown Chattanooga.” Many of the markets in which CBL operates are ripe for such a concept, Ward says, because they offer strong growth and high demand for co-working, and yet such national names as WeWork have yet to enter those markets. “This co-working initiative is also one that could dovetail well with our redevelopment projects,” he said.
“Increasingly, retailers are now looking for that transparency — that proof of value — from the property owner”
To meet the growing demand for data among retailers, meanwhile, landlords and brokers are relying on a wide range of tech vendors and tools for collecting, analyzing, synthesizing and packaging shopper and property data in new ways. Those methods, innovators say, can include gathering data when shoppers walk around the mall carrying their smartphones (the devices continuously broadcast anonymous signals that can be tracked) or when visitors use location-based mobile apps or otherwise opt in to various coupons, Wi-Fi networks or promo text messages. The ability to leverage this data can be a big plus for leasing teams, Smith says.
“Increasingly, retailers are now looking for that transparency — that proof of value — from the property owner,” Smith said. “One could argue that providing them simply with traffic numbers is not enough anymore. Now we’re able to give them a better understanding.” Some retailers are open to sharing their data with landlords as well by joining pilot programs and partnerships, he notes. “It’s an area where innovation is very much top of mind. Everybody is prototyping more, piloting more and trying to iterate more rapidly to see what works.”
Ward, for his part, is in discussions with about 25 online retailers interested in opening stores in CBL’s portfolio. Data-sharing tends to be a big part of those conversations. “With those digitally native retailers, we’re very focused on providing more data related to attribution where they want to know the effects of opening a physical store on their online presence and sales,” Ward said. Historically, most retailers lacked in-depth data about how shoppers moved around the mall or inside their stores, but now new technologies are closing this gap. “For the first time, they can see true sales conversions, from the common area to their stores,” said Ward. “It gives us the ability to work with them on the optimal set up. Where are the consumers spending the most time? Is the staffing correct based on what you’re seeing inside the store?”
In spearheading innovation for Shopping Center Group, Katz has focused heavily on supplying the company’s own brokers — along with such clients as retailers, landlords, developers, investors and financial institutions — with higher-resolution data, he says. While older approaches based on census data and the like offered broad outlines about trade areas, today’s approaches are more targeted, he says. “Let’s say you know what’s going on demographically or even psycho-graphically within a five-mile radius ring,” Katz said. “That’s great. But what’s actually happening in that ring? Are they actually visiting your location, or do they leave the suburbs to work downtown? With those older methods, you didn’t know.”
“We’re trying to get a sense of how to create truly unique experiences that can animate spaces differently.”
By contrast, Katz says, data drawn from GPS-enabled mobile devices is a game-changer because of its ability to pinpoint shopper locations and movements. “Now you’re not talking about ‘maybes’ — you’re talking about ‘definitelys,’ ” he said. In some cases, this has led to some frank conversations between Shopping Center Group brokers and their landlord clients, Katz says. “They might think the trade area for their center is 30 miles, but then you have to show them that, realistically — based on true travel and trip data — it is more like seven miles,” he said. “That can be difficult, but at the end of the day, having that data allows for better decisions.”
As these executives pursue innovative approaches to data, marketing, place-making and more, they also face the challenge of keeping up with fast-moving industry trends. Smith, for one, describes ramping up his participation in such forward-focused conferences as South by Southwest (known informally as SXSW), in Austin, Texas, where next year’s topics include cryptocurrencies, virtual reality, experiential storytelling, the “intelligent future” and more. “Typically in the past, people from the mall industry would not have gone to something like SXSW, but that’s the type of thing we’re looking at now,” Smith said. “We’re trying to get a sense of how to create truly unique experiences that can animate spaces differently.”
As Ward forges ties with tech startups and digitally native retailers, his efforts to understand larger trends are paying dividends, he says. “It’s important, in my experience, to sit back, think, do your homework and let information marinate a bit,” he said. “It makes you much more effective in those conversations and in developing those relationships.” Over the past few months, Ward has mingled with venture capitalists, startup founders, data gurus and the like at such events as Shoptalk and the RetailNext Executive Forum. At press time his plans included attending the Worldwide Business Research eTail East e-commerce conference, taking place this month in Boston, as well. Likewise, Katz soaks up news and information about technology, retail and data through his job at Shopping Center Group. “It without a doubt influences almost every decision that we make,” he said. “What’s new? Where are things headed? We’re always asking these questions.”
But for King, bringing innovation to the look and feel of Trademark’s properties is more about old-fashioned artistic inspiration than about content worthy of Wired magazine. Much like an art collector or gallery owner, she cultivates relationships with local artists and is constantly on the lookout for new talent or unusual design ideas. “I travel a lot, both for work and for fun, and I’m always paying attention and looking for ideas to bring back,” King said. “Even on a vacation to France, Italy or Vancouver, I feel like I’m gathering inspiration.”
“The emphasis on innovation is happening in an incremental way at every level across an organization and throughout the industry. ”
The challenge, executives say, is to invest time, money and energy only in ideas that stand a realistic chance of yielding actual benefits. Though tech startups with millions of dollars in venture capital can spend lavishly on potential innovations, they say, the budgetary realities in the shopping center industry require a more grounded approach. “You can’t just throw things up against the wall and see what sticks,” Smith said. “You can try things, yes, but what you want is a targeted, surgical and smart way of testing and innovating. You have to make sure that you stand a good chance of demonstrating real value for your retailers and consumers.”
Are innovation officers, then, soon to become the industry norm? Funding a C-suite position devoted solely to matters of innovation is no light matter, says Poline, and so most companies will probably encourage their executives in traditional roles such as development, leasing, operations and IT to track trends as part of their jobs. While a number of Poline’s developer clients do put a premium on forward-thinking candidates, relatively few so far have actually engaged his firm to hire the likes of a chief innovation officer.
“We are taking a wait-and-see approach as far as whether [creating such positions] will pay off,” Poline said. “But one thing’s for sure: The emphasis on innovation is happening in an incremental way at every level across an organization and throughout the industry. That has led to a greater focus on people whose skill sets demonstrate a capability of bringing new ideas to the forefront.”
By Joel Groover
Contributor, Shopping Centers Today