Hitting the Target How to Develop and Implement a Successful Retail Recruitment Strategy
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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 United States 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 • California 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) Cold Stone Creamery 100 Burlington Coat Factory 20 Denny’s 111 AT&T 100 Dunkin Donuts 350 Apple 50 Five Guys 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 Panda Express 100 Jo-Ann Stores 50 Panera Bread 100 Pep Boys 55 Pinkberry Yogurt 100 Ross Dress For Less 60 Popeye’s Chicken 130 Save-A-Lot Grocery 100 Red Mango Yogurt 100 Tractor Supply Company 75 Smashburger 100 Ulta 60 Sonic 85 Verizon Wireless 125 Wingstop 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 Restaurants Moral Issue or Economic Development Issue? • Extremely important to restaurant 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,