Hitting the Target How to Develop and Implement a Successful Retail Recruitment Strategy

Presented by: 1 About The Retail Coach Retail Analytics & Locational Intelligence

We develop and execute high-impact retail From start to finish: retail recruitment and development strategies: recruitment is The Retail Coach’s only focus. • Corporate site selection with national retailer • Retail real estate brokerage • Retail leasing The Retail Coach - experience, strategy, • Development/Redevelopment technology and creative expertise. • Land development with investment firm • Market analysis & land strategy

2 2011 Client States Updated 04/26/11

3 The New Economic Development

“…the application of public resources to stimulate private investment with emphasis on new technologies, sustainability and local communities.” Source: TIP Strategies - Austin, Texas

Retail must be a component of your community’s comprehensive economic development strategy.

The is quickly becoming a service economy: if you don’t understand this – and capitalize on it – your competing communities will.

4 The New Economic Development

Retail economic development is localized.

There is only one winner: The community who Regionalism is the trend in receives the sales tax economic development today. If a revenue. plant goes in next door to you, you’re going to benefit; and if the plant comes to you, your neighbors are going to benefit. You can’t do it yourself. You have to look around and get partners.

John Lewis Associate Director of Governmental Studies at Northern Illinois University 5 Retailer Recruitment

Look at your community through Be Prepared for Active Recruitment the eyes of a retailer, developer and/or Retailers go where the deals are the easiest. investor. Treat them like customers and make it easy for them to get the information they need.

Have one point of contact in your community who is responsible and accountable for retail recruitment.

You Must Have: • Current database of available properties • Current retail trade area and community demographics • Retail gap or opportunity information • Current traffic counts • Aerial photograph

Be prepared to send information INSTANTLY.

6 Retail Trends

Retailer demand for new High interest areas for retail expansion – locations is up across the primarily where unemployment is low board – growth plans up • Greater Washington D.C. Area 40% from 2010 levels • Eastern Seaboard (Boston to the Carolinas) • Chicago • Texas • Florida •

Big Boxes – Shrink & Re-Think The Online Shopping Effect – do we completely understand the full impact?

The trend is to shift to smaller “intimate” stores stocking only the best selling items – customers are directed online for other items.

7 Retail Trends

Retailer Repositioning

Home Depot Walmart Selling pad sites to QSR’s and other users Neighborhood Market is being re- branded to Walmart Market and will Office Depot focus on groceries and home goods. Opened its first 5,000 sq. ft. store in December Store sizes will range from 25,000 – 2010. Plans call for reinventing itself as a 70,000 sq. ft. convenience retailer – like Walgreen’s and CVS Staples Gap Opening 4,000 sq. ft. office supply Shrinking Gap Kids and Gap Body and placing inside convenience stores and will only carry Gap stores high-volume sales items. Plans are to saturate urban/suburban areas Walmart Accelerating the roll-out of its smaller “Walmart Best Buy Express” convenience store locations (15,000 sq. Focusing on smaller storefronts called ft.). First unit opened 2Q 2011 Best Buy Mobile

8 Retailer Expansion Plans

Retailers are Looking for Opportunities – NOT Just Sites

Auntie Anne’s 50 Dollar General 625 units Baskin-Robbins 60 Family Dollar 300 Buffalo Wild Wings 100 Dollar Tree 275 Charley’s Grilled Subs 100 Best Buy 8 Checker’s/Rally’s 125 Best Buy Mobile 150 Chick fil-A 80 Citi Trends 65 Chipotle 130 Chico’s 40 (18 months) 100 Burlington Coat Factory 20 Denny’s 111 AT&T 100 Dunkin Donuts 350 Apple 50 Burgers & Fries 200 Aldi 100 Genghis Grill 100 99 Cents Only 25 IHOP 70 7-11 350 Little Caesar’s 100 Target 21 Marco’s Pizza 75 Forever 21 50 100 Jo-Ann Stores 50 100 Pep Boys 55 Yogurt 100 Ross Dress For Less 60 Popeye’s Chicken 130 Save-A-Lot Grocery 100 Yogurt 100 Tractor Supply Company 75 100 Ulta 60 Sonic 85 Verizon Wireless 125 90 Hibbett Sports 50 Walmart SC 48 Walmart Express 40-100

9 Understand Retail Site Selection

The site selection process is 10 Steps … long and involved. 1. Complete an area market analysis 2. Identify and rank retail submarkets 3. Determine the trade area 4. Analyze the demographics and psychographics 5. Determine competitors 6. Identify traffic generators (hospitals, employers, car dealers, etc.) 7. Analyze traffic 8. Select the area 9. Select the site 10. Project retail sales

Go or No-Go Decision

10 Understand Retailers Preferred Customer Profiles

Know the preferred customer profile for the retailers you are targeting for recruitment.

Population: Minimum of 150,000 in the trade area Age: Median age of 46 Gender: 80 – 90% are female Household: 38% have children Income: Median income of $55,000 Education: 43% have completed college Employment: More than 50% are employed in professional or managerial positions Other: Understand difference between price and value

11 Understand Retailer’s Purchasing Cycles

A purchasing cycle is the frequency with which a retail item is ordered or purchased by a customer.

Pizza Hut: One trip every three weeks Wendy’s: Weekly or bi-weekly visits Kroger: Every week Walgreen’s: Refill prescriptions once per month Rack Room Shoes: New pair of shoes three times per year Wal-Mart: Weekly or bi-weekly visits

12 Understand Retailer’s Essential Location Factors

A location/site must have each factor in order for a retailer to be successful.

• Visibility • Accessibility • Regional Exposure • Population Density • Population Growth • Operational Convenience • Safety & Security • Adequate Parking • Adequate Signage

13 Understand that Community Development Precedes Economic Development

First Impressions are Important

• Community Appearance • Pride of Ownership (Residential & Commercial) • Functional Infrastructure • Evidence of Crime • Codes & Code Enforcement • Downtown Vitality

Retailers Look to Minimize Risk and Maximize Profit.

14 Understand the Importance of Alcohol Sales to

Moral Issue or Economic Development Issue?

• Extremely important to recruitment • Alcohol sales: 10-20% of a restaurant’s total sales • Potential economic impact is significant Understand the Retail Economic Impact of College Students

Conduct a student survey to identify:

• Primary source of income • Purchasing habits/frequency • % of purchases in/near campus • Retailer-type preferences • Specific retailer preferences • Monthly retail expenditures

15 Other Important Factors

• Understand your community's relationship to surrounding, competing communities. • Understand the road systems within your community. • Understand the traffic patterns of people who live, work, play and travel in your community. • Understand the factors that cause people to move in certain directions.

16 Understand Retailers Market Penetration Strategy

It is vital to understand the importance of store spacing and retailers’ macro-to-micro approach to site selection.

Narrowing from Area Analysis To Site Selection

17 Area Analysis

18 Community Analysis

19 Submarket Analysis

20 Location Analysis

21 Site Selection

22 Understand Your Community’s Traffic Patterns • Living Traffic • Work/Commuter Traffic • Long Distance Traffic Understand Retailers Want To Locate in Communities That Offer Residents Everything.

• Downtown District • Business Activity • Commerce • Social Life • Entertainment

Understand Retailers Look For Problem Indicators

• Topographical issues • Downward demographic trends Lack of code enforcement is • Excess vacancies • Emerging retail clustering in other areas • Lack of city planning & code enforcement #1 problem in most • Lack of investment • Evidence of crime communities. • Struggling Downtown District

23 Understand Your Community’s Retail Trade Area

A Retail Trade Area is the largest distance consumers are willing to travel to purchase retail goods and services.

The size depends on the variety of goods and services offered in your community and proximity to retail in nearby competing communities.

Understand Retail Trade Area Accuracy An accurate retail trade area is the foundational tool for a retail recruitment strategy.

Make certain it is accurate by:

• Meeting with or interviewing retailers • Intercepting survey customers • Confirming with license plate survey

24 Do Not Rely on Computer-Generated Retail Trade Areas

They do not consider many vital factors. In most instances, they are not accurate.

Radial: 30,072 population

25 Do Not Rely on Computer-Generated Retail Trade Areas

Drivetimes have application in densely populated urban areas.

Drivetime: 40,190 population

26 Retailer-Defined Retail Trade Areas Are More Accurate

Retailer- Defined 91,029 population

27 Sell Your Community as a Retail Trade Area Population

Market your community to retailers and real estate developers as a retail trade area population, not a community population.

A community population of 7,500 may not peak the interest of a site selector, but a retail trade area of 60,000 will.

Spend the time and resources to determine your community’s retail trade area. You want it to be as large as possible, but it must be accurate.

28 Understand Retail Trade Area Scale

In some instances, you need to determine your community’s primary and secondary trade areas.

• Primary Retail Trade Area Consumers who are likely to shop in your community more than once per week (where retailers derive approximately 80 – 85% of their business).

• Secondary Retail Trade Area Consumers who are likely to shop in your community once per week, or once every two weeks (where retailers derive approximately 15 - 20% of their business).

29 Benefit of Secondary Trade Area

San Saba, Texas Community Population: 2,536 Primary Retail Trade Area Population: 8,788 Secondary Retail Trade Area Population: 47,539

Alco Stores considered the secondary retail trade area population in affirming their decision to build/open a new 15,000 sq. ft. unit in San Saba.

30 Understand Data Sources

Utilize a retail industry-accepted national demographer for all of your community’s quantitative information.

Data derived locally may be more current and accurate; unfortunately national and regional retailers have been slow to embrace its worth – preferring to use unbiased third-party providers.

31 Understand Your Residents

Psychographics and lifestyle segmentation will become increasingly important to retailers as they seek to perfect the site selection process.

However, do not put primary focus on their importance. Although valuable, lifestyle segmentation today is used more for store merchandising than site identification and selection.

32 Take Advantage of Networking Opportunities

Attend International Council of Shopping Centers (ICSC) Trade Shows:

1. Have a professional presence 2. Have accurate data 3. Create a target list of those retailers you would like to meet and set up appointments 60 days in advance 4. Make new contacts with retailers expanding into Texas and nurture the relationships

Las Vegas ReCon Chicago Deal Making May 20-23, Las Vegas, NV 5 - 6 October, 2011

33 Consider Having a Booth at the Trade Shows

• Information and data must be concise, relevant and accurate Hire a graphic design firm; • Have a minimum of two people at the show; design first-class trade show one person to attend the booth and one to booth and marketing collateral: seek-out prospects • Have a strategic plan for making new contacts Bayley/Brooke • Set up appointments. [email protected] • Have attainable goals and realistic www.bayleybrooke.com expectations 877.854.1460 34 Role of Downtown in Retail Recruitment

Do not overlook your downtown area, its potential and its impact on national and regional retailer decision-making.

35 Work with Community Stakeholders

Understand your community’s retail recruitment potential and work to manage the expectations of your board and the community.

Confidentiality among staff and board members is important.

36 Get a Bird’s Eye Perspective

Have a current aerial photograph of your community and surrounding area highlighting:

- City limit and ETJ boundaries - Major thoroughfares - Major retailers/developments - Planned/platted residential developments - Schools/universities - Planned/proposed roads - Parks, hospitals - Major employers/business parks

Utilize white space on back: - Area map, community profile, demographic profile, new development renderings/site plans, zoning map and sites for sales or lease (seek cost-sharing from brokers and developers)

37 Practice Recruitment Priorities and Process

Sell your community first, then sell the sites.

Goal: Get the retailer to the community. Have knowledge of sites that may interest the retailer prior to making the call.

38 Create a Supportive Consensus

Articulate your community’s retail strategy to everyone, everywhere.

Make certain independent businesses understand the overall strategy and how they fit in. Make every attempt to get their buy-in.

Rule of Thumb: “If they are not in on it – and up on it – they will be down on it.”

39 Understand Incentives and Their Roles

Have an understanding of what incentives communities your size are offering retailers and developers.

Be careful about entering the incentives-game.

40 Maintain Developer Relationships

Don’t overlook the possible need for real estate developer identification and outreach as part of your economic development strategy.

Have marketing materials that educate developers on specific site opportunities in your community.

41 Maintain Broker Relationships

Know the real estate brokers who are active in your area: - Have in-house broker functions - Make it easy for brokers: they are transaction-oriented - Consider a bus tour to showcase properties; seek sponsorship assistance from brokers, developers, title companies, etc.

42 Tell the Same Story

Make certain that all real estate brokers, developers and investors who are active in your community use the same market information.

• Retail Trade Area • Retail Trade Area Population • Demographics • Psychographics • Retailer gap information • Traffic counts

This eliminates confusion and minimizes questions.

43 Be Proactive

Perform a SWOT Analysis of your community from a retailer’s perspective.

Know your advantages and understand your challenges.

Address challenges by coming up with an actionable “to do” plan based on priority.

Retailers, developers and/or investors want to know that something is being done.

Retailers, developers and/or investors look for stable or improving communities where their risk is minimized.

44 Know Your Competition

Know your competing communities’ advantages and disadvantages.

Know the location of their retail submarkets.

Be familiar with their retail recruitment programs.

Know how your community stacks up against competing communities in terms of socioeconomic factors.

45 Nurture Existing Retailer Relations

Have a retail retention program.

Network with retailer managers as often as possible. They can be your best ambassadors when prospective retailers are in your community.

• Drop-in Regularly • Schedule • Invite them to retreats and board meetings • Appoint them to committees/board positions

46 Develop a Community Resource Guide

Document intended for retailers and developers interested in your community. Includes staff resource listing, zoning classifications, codes, planned infrastructure, etc.

47 Know Your Community’s Daytime Employment

Have knowledge of your “area” daytime employment and recognize its importance to restaurants.

Restaurants must have healthy dinner and business in order to be successful.

48 Identify Retail Opportunities

Measure consumer demand and retail opportunity by performing a Retail Gap Analysis.

49 Understand the Downtown Development Model

50 Understand that a Community Must Have a Downtown Focus

• Smaller communities must work harder to get retailers’ attention • Do not abandon downtown • Maintain strong residential support around downtown • Have a downtown redevelopment strategy • Downtowns have become entrepreneur-driven • Entrepreneurism increases during economic downturns

51 Downtowns Must Mean Business

Most downtown businesses operate as a hobby and not a for-profit business.

If operating hours are 9 am to 4 pm, the market they are reaching is the unemployed.

Understand that most downtown businesses are undercapitalized and need assistance with customer service, merchandising and general business practices.

Go next door to find prospects

Travel to communities in your area and take a close look at their downtowns, specifically independent businesses that appear to be doing well. They may be interested in opening a new unit in your community.

52 Make It Personal

Understand that personal contacts are the most important thing in retail recruitment.

In this day of social networking (email, texting) we have forgotten how important it is to pick up the telephone and make a call or send a handwritten note.

It works!

53 Assume Retailers are Doing Their Research on Your Community

Upload all retail information on your website and make certain it is accurate, current and easy to find.

This is becoming more and more important.

Oftentimes, retailers and developers will visit your community without your knowledge.

54 Retail Recruitment is a Process And Retailers Must be Recruited

Be persistent – a “no” today might be a “possible maybe” in six months.

55 Moving Beyond Data www.theretailcoach.net [email protected]

662.844.2155

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