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New Foot Locker concept is powered by local culture

posted by: Admin in News

Foot Locker has long been a standby shoe store in shopping malls throughout the states. But the chain is ramping up efforts to send U.S. sneaker fans flocking to a standalone experiential store concept, a strategy that it’s already piloted abroad.

Foot Locker announced the opening of its new Power Store concept in the metro Detroit area (its first in the U.S.) last weekThe retailer envisions the store as a hub for local sneaker culture, art, music and sports. The store, decorated with art from a local artist, will host community-oriented events like panel discussions and Q&As with DJs and rappers about various cultural and artistic topics. It will also feature exclusive products created by local designers geared toward an urban audience. The Power Store in Detroit is the first of 12 slated to open globally throughout 2019, with U.S. locations announced for Los Angeles, New York and Philadelphia.  Currently there are Power Stores in London, Liverpool and Hong Kong.

Photo: Footlocker

Many of the big shoe brands have been working to attract the “sneakerhead” subculture of athletic shoe enthusiast and collectors. Nike, Adidas, Puma and others have all been debuting exclusive and customizable products and finding new high-tech ways to turn product releases into experiential events. Foot Locker is one retailer that has joined sneaker brands in courting sneakerheads. For instance, the chain hosted an Augmented Reality (AR) scavenger hunt last year in Los Angeles for the newly-released Nike LeBron James shoe.

Even inside the mall, Foot Locker has been taking steps to differentiate itself as a retailer with the interests of serious sneakerheads at heart. The chain has begun partnering with some of the biggest sneaker and sportswear brands to open single-brand store locations. For instance, under its Footaction banner, Foot Locker operates a concept called Flight 23 which sells only Jordan-branded products.

But it’s apparent that the chain is pivoting away from the shopping mall. Last year, it announced the closure of more than 100 locations, mostly in malls that it characterized as deteriorating, according to Forbes.

THE QUESTION IS: Will Foot Locker succeed with standalone experiential concepts in the U.S. rather than with a mall focus? What will Foot Locker have to do to keep the experience interesting for customers and are there regions where these stores might perform better or worse?

Source: Matthew Stern,

4 Things Retailers And Landlords Want You To Know About Consumer Shifts

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Malls are reeling with record levels of vacancies, and now Sears’ Sunday night bankruptcy. Retailers are scrambling to reshape and redesign the way they market and sell everything from food to cosmetics, all because of the profound changes in the way we choose to buy things.

Speakers at Bisnow’s National Retail: East Coast Series event this month said retail moving with the times and bracing for the changes ahead is now urgent. Here are four things they think you should know:

#1. Make Stores Instagrammable And Customers Become Spokespeople

If shoppers can ’Gram it, they will come.

While the retail experience is driving foot traffic to stores, the key to sustained success goes beyond luring people to brick-and-mortar locations. Making something worth posting means customers do the marketing themselves, and stores become locations worth visiting.

“When people photograph things, they become influences for a brand and that can really push digital sales, and really push people back into a shop,” Sugar Hill Real Estate Chief Creative Officer Jay Solomon said. “Old types of retail didn’t offer in-store experiences that were ‘Instagrammable.’ There’s nothing interesting about walking into a Home Depot and taking pictures of aisles with hammers.”

Starbucks Director of Store Development Dan Shallit said customers posting videos improves company and store standards. Starbucks closed thousands of stores across the country in May to run anti-bias training with employees after a video of two African-American men being arrested in a Philadelphia store location was seen by millions of people online.

“It holds us to a higher standard,” he said. “If something were to happen in one of our businesses, everyone would know about it in a couple of hours … it forces us to hold ourselves accountable.”

#2. Data Is Helpful, But Doesn’t Always Tell The Full Story

Across commercial real estate, companies are working out to use data to make their business more efficient.

In the world of retail, malls are starting to track their customers’ movements and habits to figure out where to place stores. At iPic, a high-end cinema chain with in-theater dining service, data is used to tailor guest experiences.

“We like to house the data we collect to create these guest touch points,” iPic Vice President of Real Estate Patrick Quinn said. “We know who you are from when you buy a ticket.”

Orangetheory Fitness Head of Global Brand Strategy Kevin Keith said the company tracks users digital behaviors, “as long as it is used for the good and people trust you, and it makes the customer experience better, people love that.”

Guesst CEO Jay Norris said his company — a digital platform that works like Airbnb for retailers and brands seeking short-term arrangements — provides data back to the brands that take part in its pop-up shares.

“We give it back to the brand, and that’s something a traditional wholesaler doesn’t do,” Norris said. But when it comes to selecting store locations, data shouldn’t always be the defining factor, some panelists said.

“When [we] first looked at [our location in Brookfield Place], we had incredible data that said ‘don’t do it’ … the traffic patterns in the space were not what we were looking for … but the landlord had a vision,” Starbucks’ Shallit said. “If you live by the data, we make a lot of bad mistakes … The data doesn’t necessarily work all the time.”

#3. Pops-Ups May Not Be The Answer

Landlords with vacant space on their hands have turned to pop-up stores and short-term leases to draw attention to store locations. Boutique gyms, experiential stores and less established brands have found their opening in stores previously reserved for long-term, nationally known brands.

Not everyone is convinced that experiences and pop-ups are the silver bullet.

“I think it’s a great marketing tool, [but] from a full-service retail perspective, I’m not a big fan of pop-ups if you are going into a new city and new brand,” Bialow Real Estate founder and CEO Corey Bialow said. “I think it only works with established brands.”

The prevailing belief is that buyers want a curated experience, something that feels authentic. Brookfield, for example, is running an initiative called Love, Bleecker that works to create experiences at its storefronts in that street.

“Curation sounds really sexy and nice … [but] all it means to me is these guys are taking less rent,” RKF Chairman and CEO Robert Futterman said. “Experiential, the jury is still out,” he added. “Experiential in New York is really having a reckoning,” pointing to the closure of the NFL Experience last month.

#4. Stores That Lose Touch With Their Consumers Are In Trouble

In the first half of 2018, more than 2,500 store locations closed in the United States, according to JLL’s retail outlook report from the second quarter, and nearly 600 more locations will close by the end of the year.

Retail stalwarts like Sears, Toys R Us, JC Penney and Macy’s are all shuttering stores. But some believe store closures say more about those brands and companies than retail overall.

“Brands that don’t listen to consumers get disrupted, and disruption is what is causing those brands to disappear,” The Howard Hughes Corp. Chief Marketing Officer Steven Cornwell said. “They get more focused on their shareholders and the financial markets and they stop thinking about what the consumer needs … Consumers tell you pretty quickly if you are doing the right thing or not.”

The Prusik Group co-founder and principal Rohan Mehra said there are examples of established brands that are adapting to retail’s new order.

“I think you are seeing [innovation] across all different types of brands, whether it is small and new, or more established brands,” Mehra said. “Look at what Target is doing … [It could] have followed the path of a lot of big-box retailers, but they have developed an urban concept and have opened a lot of stores. The customers are responding and the stores are doing incredibly well.”

Author: October 15, 2018. Miriam Hall, Bisnow New York

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McNellis: Amazon’s Clicking into Bricks

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In May 2017, The Real Deal ran a cover story entitled, “Retail is F*cked.” While snarkier than its mainstream competitors, it encapsulated the prevailing sentiment of the day, that all that remained for traditional bricks & mortar retail was for the doctor to call its time of death, no doubt by text.

Apparently unaware of the demise of old school retail, Amazon has just announced several new forays into bricks & mortar. Last week, it said it would open a general store in New York City that will sell toys, household goods and other top-selling items on its website. Two weeks ago, Amazon announced plans to open 3,000 Amazon Go stores by 2021. The hook is that these convenience food stores will have no cashiers. Rather, to record your every touch (if not your secret yearning for Cheetos), each store will have more sensors, cameras, computer vision and AI than a Navy drone over Aleppo. About the size of a typical 7-11, the few Go stores already in operation sell pre-packaged, prepared food and limited grocery items.

Upon seeing this announcement, the business press genuflected at the altar of Amazon, delighting in the idea of a clerk-free world, of shopping in the canteen of the starship Enterprise. They reported that Amazon’s eyes in the sky system—let’s call it “Total Shopper Surveillance”—will cost upwards of a million dollars a store to install, but failed to question whether this additional outlay would place Amazon at a competitive disadvantage in the saturated world of convenience stores. Is the typical wait for a cashier so long that you would pay that much more for milk and eggs (enough to amortize $1 million) to avoid it. Put another way, admit you occasionally run into a 7-11 and ask yourself if you’ve ever been in a line of more than a couple minutes.

If 7-11 and its myriad competitors already have the most convenient locations (they do) and Amazon rushes in but can only find locations a block or two off Main & Main, will you spend more time walking those two blocks than you would awaiting the cashier?

Or, assume that the free world will delight in undergoing a daily MRI for the sake of saving sixty seconds. How long would Amazon keep that competitive advantage? How soon would it be before 7-11, Circle K and every other major C-store player turned on the cameras and punted their clerks? To this point, a San Francisco based start-up, Zippin, announced last week that it is developing its own version of TSS for sale to supermarkets far and wide.

Given the company’s undoubted genius, Amazon must be aware of the challenges of building a 3,000 store chain from scratch, and its press release could be a sly way of announcing that it’s in the market to acquire and aggregate convenience store chains totaling a few thousand units.

But, whether built ground-up or acquired by merger, having 3,000 wickedly-expensive convenience stores for the sake of running convenience stores makes little sense for the company. On the other hand, having 3,000 convenient locations to which its e-commerce shoppers must drive to fetch their Prime packages makes a world of economic sense. In a stroke, requiring the Amazon faithful to pick up their own damn packages would solve the costliest problem bedeviling e-commerce, that of the last-mile of delivery. If Amazon could announce that it would continue delivering to your home, but at that delivery’s real cost (say, $12) or that you could save that money by hitting its Go store a couple miles away, the well-off or foolish might continue with home delivery, but everyone else would find a way to Go, and Amazon could at last make money in e-commerce.

Rather than concluding that clerk-less shopping will be the greatest thing to hit retail since the Sears & Roebuck catalogue, the media might have realized the announcement’s broader significance: Short of a full page announcement in the Wall Street Journal, Amazon just did everything it could to confirm that not only is traditional retailing alive and well today, but that, combined with on-line shopping, it is the future of retail tomorrow.

Despite this, it will be a cold day in Riyadh before The Real Deal and the rest of the media that gloried in retail’s death will admit, “We were f*cking wrong.”

Author: John E. McNellis is a Principal at McNellis Partners in Palo Alto, Calif.

Source: The Registry

Adapt Or Die: The Ways Landlords Are Bending Over Backward To Deal With A Shifting Retail World

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Retailers and landlords, grappling with a new retail paradigm, are being forced to find creative uses for spaces and experiment more and more with different concepts to fill stores and lure shoppers.

In the first half of 2018, more than 2,500 store locations closed in the United States, according to JLL’s retail outlook report from the second quarter, and nearly 600 more locations will close by the end of the year. Across the country, the closures of retailers like Sears and Toys R Us have dumped empty space on the market. Retail absorption declined nearly 60% in Q2 2018 from a year earlier as vacancy ticked up.

Much has been made of the e-commerce-driven destruction of brick-and-mortar retail. Many large-scale, big-name operators have closed or are shrinking in size. But savvy landlords should see this as a chance to make lemonade from lemons.

“In the past everyone was looking for a silver bullet,” said EY Executive Director Marcie Merriman, a cultural anthropologist and retail strategist who will deliver a keynote address at Bisnow’s National Retail: East Coast Series event in New York Oct. 4. “There are tons of tests that are going on that don’t work … [but] if you are afraid to fail, those are the brands and business that are really in the most trouble.”

In New York, landlords are increasingly willing to slice up large spaces for smaller tenants, many of whom don’t have established track records. Some are turning to boutique fitness concepts or innovative fast-casual restaurants — previously not considered to be highly desirable tenants — to fill space.

Brookfield Property Partners, which this year bought mall owner GGP for $15B, is experimenting with seven storefronts it recently bought on Bleecker Street, where it is running incubators for e-commerce operators to test out a brick-and-mortar space.

Shoe retailer Margaux has opened a store there and some art and cultural “activations” have launched, according to a Brookfield spokesperson.

“For a landlord that owns a mall in a global gateway market like New York, and they lose a department store, it’s an opportunity to get creative and to find new users. It’s a creative project that’s also got really good upside to it,” JLL Director of Retail Research James Cook said. “For those malls in the secondary and tertiary [markets], it’s a lot more work and it’s a lot more uncertain.”

He said space left open by department store closures is being filled by operators that offer either value or an experience. Former Macy’s stores, for example, are being filled by Whole Foods or Life Time Fitness, according to JLL’s report, while AMC Theatres and H&M have gone into space once occupied by Sears and JC Penney.

It’s all part of the trend toward service-driven, experiential real estate. Consumers are looking for experiences; something that cannot be recreated online, or that can be posted on Instagram. Or both.

Retailers and landlords need to be preparing now for the next wave of consumers, Merriman said: people born after 1997 who are typically referred to as Gen Z.

The oldest members of that generation are now 22 years old, and are distinctly different from their millennial predecessors. They are more skeptical and frugal than previous generations, with more interest in how and where their products are made.

“[Gen Z] have a more transparent understanding of implications of consumption,” she said, adding that Gen Z shoppers are seeking out innovative retailers that use less packaging and waste. “It’s the same generation that has been raised with boxes at their door. Now they are going to question [those] implications.”

TerraCRG Managing Director of Commercial Leasing Peter Schubert, who has represented tenants like Blue Apron and Juice Generation in Brooklyn, believes young people are not consuming less, but differently.

Landlords in Brooklyn are having success filling space with creative or entertainment tenants, he said, where there has always a vibrant nightlife and café culture.

He arranged the lease of Ample Hills Creamery’s factory and museum, a 15K SF space at 421 Van Brunt St. in Red Hook that opened this summer. It is the type of offering, Schubert said, where people can see their food being made, that suits today’s consumers.

“This is exactly what people want, they want to be able to see the manufacturing, right on-site [where there] is no shipping, and you get the whole understanding of the origin of the company,” he said.

Experiential, entertainment and food service offerings can drive the overall health of a retail area, sources said, because people tend to shop while they are there.

“There is a big value to our tenancy,” iPic Theaters Vice President of Real Estate Patrick Quinn said. “We are not drawing the same amount of attendants as, say, a supermarket, but we do draw about 1,000 people a day.”

A high-end movie chain, iPic offers in-theater dining service. Earlier this year it signed on to open a 348-seat theater, restaurant and bar at Heritage Village, a proposed mixed-use development in Hicksville, Long Island.

“I’ve seen a lot of landlords lately trying to attract tenants that are Amazon-proof,” he said. “[But] retail is probably evolving faster now than in the past couple decades … it’s hard to say, ‘You have to do leases with tenants that are XYZ.’”

Landlords are also trying to adapt and be flexible to change. The Rudin family, with its joint venture partner Eyal Ofer’s Global Holdings, is opening an immersive playground for dogs pop-up in an empty 3K SF retail space at their condominium project, the Greenwich Lane at 155 West 11th St.

“Experiential retail is not the silver bullet solution for the bad retail market … it’s another concept, some places it works and some places it doesn’t,” Michael Rudin said. “It’s more about adapting and going with the tides of our business, being flexible and not always doing things the ways they’ve been done in the past.”

Author: Miriam Hall, Bisnow New York

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Slowing Development in CA May Point to Nationwide Issue

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California is something of a bellwether for the U.S. economy and for commercial real estate. Thus Golden State trends are important. According to the recently released Summer/Fall 2017 Allen Matkins/UCLA Anderson report, broad segments of the market will be slowing down in the coming years.

Though unemployment has dropped and income and spending are increasing, there’s an ebbing of market optimism about the future from developers, which should lead to a slowing of development, the report said.


For instance, developer sentiment for all northern California markets has been declining since at least June 2016, and the latest survey provides continued evidence of a downturn in the office market. The outlook in Los Angeles is decidedly more optimistic, although less so than two years ago. The difference between LA and the other California cities is Hollywood and Silicon Beach.

Sentiment about the next three years in California industrial markets has abated somewhat, but only because this has been the hottest market throughout the state in recent memory. E-commerce will continue to drive a hot market for warehouse space, just not quite as hot as before.

In virtually every retail market in California, panelists see 2020 as being a worse year for development than today, when we’ve already seen an increase in vacancies. The few retail development projects planned will most likely be redeveloping existing space or be a component of mixed-use projects, Allen Matkins/UCLA Anderson Forecast said.

In multifamily, it looked as though development at the mid- to high-end had reached a peak only six months ago, and that land and building prices had edged out lower-end projects. This still seems to be the case, at least for more modestly priced apartments. California continues to be a leader in job and income gains, and multifamily developers now see opportunities in new projects for the coming three years.

By: D.C. Stribling

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Sportswear-maker Puma has signed a deal for a flagship store along Manhattan’s Fifth Avenue shopping corridor

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German sportswear-maker Puma SE has signed a lease deal to open a flagship store on Manhattan’s Fifth Avenue shopping corridor, creating a marquee location that will be the first of its kind for the company in North America.

Puma is taking a three-level, 24,000 square-foot space at 609 Fifth Ave. at 49th Street, according to SL Green Realty Corp. , the real-estate investment trust that owns the building. The real-estate investment trust has launched a redevelopment that will include double-height storefronts that wrap around the building.

Puma Chief Executive Björn Gulden described the location as iconic, situated on one of the most prestigious streets in the world. While Puma has stores in the U.S. and Canada, none has the breadth of the company’s product categories this location will showcase, said Russ Kahn, senior vice president of retail for Puma North America.

“For the past several years PUMA has been focused on becoming the fastest sports brand in the world and we feel now is the perfect time to show the world who we are,” Mr. Gulden said in a statement.

Puma joins other sportswear companies such as Nike Inc., Under Armour Inc. and Adidas AG , which have leased space along the Fifth Avenue shopping corridor. The district hasn’t been immune to the effects of online retail growth, which has caused turmoil among traditional bricks-and-mortar retailers in the past few years.

In the first quarter of the year, the average asking rent on the lower stretch of Fifth Avenue from 42nd to 49th streets, which encompasses 609 Fifth Ave., declined 5.4%, to $1,060 a square foot, compared with the same quarter last year, according to real estate services firm CBRE Group Inc. Asking rent on the stretch of Fifth Avenue from 49th to 59th streets dipped 0.5%, to $3,700 a square foot.

Author: Keiko Morris

Source: The Wall Street Journal

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Southern California home sales crash, a warning sign to the nation

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Southern California home sales hit the brakes in June, falling to the lowest reading for the month in four years. Sales of both new and existing houses and condominiums dropped 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic. The report covers Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties.

Sales fell 1.1 percent compared with May, but the average change from May to June, going back to 1988, is a 6 percent gain.

The weakness was especially apparent in sales of newly built homes, which were 47 percent below the June average. Part of that is that builders are putting up fewer homes, so there is simply less to sell.

“A portion of last month’s year-over-year sales decline reflects one less business day for deals to be recorded compared with June 2017,” noted Andrew LePage, a CoreLogic analyst. “But affordability and inventory constraints are likely the main culprits in last month’s sales slowdown, which applied to all six of the region’s counties and across most of the major price categories.”

Fewer affordable homes

The median price paid for all Southern California homes sold in June was a record $536,250, according to CoreLogic, a 7.3 percent increase compared with June 2017. While part of that is due to a mix shift, since there are fewer lower-priced homes for sale, it is becoming increasingly clear that fewer buyers are able to play in the higher price ranges.

“Sales below $500,000 dropped 21 percent on a year-over-year basis, while deals of $500,000 or more fell about 3 percent, marking the first annual decline for that price category in nearly two years,” said LePage. “Home sales of $1 million or more last month rose just a tad – less than 1 percent – from a year earlier following annual gains of between 5 percent and 21 percent over the prior year.”

LePage points to the rise in mortgage rates over the past six months, increasing significantly a borrower’s monthly payment. Rates haven’t moved much in the past month, but are suddenly going higher again this week, pointing to even further weakness in affordability.

In the past, California, one of the largest housing markets in the nation, has been a predictor for the rest of the country. Home prices have been rising everywhere, amid a critical housing shortage. Prices usually lag sales by several months, and sales are beginning to crumble, even as more inventory comes on the market. The supply of homes for sale increased annually in June for the first time in three years, according to the National Association of Realtors, but sales fell for the third straight month

Author: Diana Olick

Source: CNBC, July 2018

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Strong Retail Sales in June Boosted Growth

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Consumer spending is bustling and likely propelled strong overall economic growth in the recently completed second quarter.

Retail sales—a measure of spending at U.S. stores, websites and restaurants—rose 0.5% in June from the prior month, the Commerce Department said Monday. May’s already strong spending growth was revised up to a robust 1.3% from 0.8%.

Many economists estimate the nation’s gross domestic product—a measure of output—expanded robustly in the second quarter. Ahead of Monday’s report, forecasting firm Macroeconomic Advisers projected growth had hit a 4.9% rate. After the report was released, the firm upped its forecast to 5.1%.

The Commerce Department will release its first estimate for second-quarter GDP on July 27.

Consumer spending, including outlays on many services not tracked in Monday’s report, accounts for more than two-thirds of U.S. economic output.

Vehicle sales and higher gas prices helped drive sales up last month. Spending at health and personal-care stores also increased by the largest monthly margin in more than 14 years. Department-store sales, buffeted by online competition, fell 1.8%, the largest decline in more than two years.

Partly due to soft spending in the first quarter, GDP growth slowed to a seasonally and inflation-adjusted annual rate of 2% in January through March, according to the Commerce Department’s latest estimate. But spending picked up in recent months. Retail sales during the second quarter climbed 5.9% from the second quarter of 2017.

Gasoline prices rose swiftly earlier this year, but leveled off in June. The national average price for a gallon of regular gas in June was $2.89, down 1 cent from May but up 41 cents from December, according to the U.S. Energy Information Administration.

Gas-price fluctuations could have skewed the headline retail-sales number, which wasn’t adjusted for inflation. Gasoline-station sales rose 1% in June from the prior month.

Meantime, consumers are on track to spend $215 billion on new vehicles in the first half of the year, nearly $5 billion more than the first six months of 2017, according to J.D. Power. The retail sales report showed auto purchases rose 0.9% in June.

When excluding gasoline and autos, retail sales rose 0.3% from May. When excluding gas, cars, building supplies and food services—a gauge followed by economists because it feeds directly into quarterly GDP estimates—spending was flat in June, according to analysts. But spending growth was up 0.8% in May for this measure, again pointing to robust consumer demand.

Compared with a year earlier, overall sales were up 6.6% in June. Spending continued to outpace inflation, with the Labor Department’s consumer-price index rising 2.9% in June from a year earlier.

Tax cuts appear to be propelling robust consumer demand. Many households are experiencing less withholding from their paychecks thanks to the tax overhaul. David Berson, chief economist at Nationwide Mutual Insurance Co., an insurance company, said they are also reaping some benefits from a stronger business sector.

“Businesses are expanding as a result of tax cuts, hiring more workers, and solid job numbers are boosting consumer spending,” Mr. Berson said.

The low unemployment rate, which was 4% in June, and growing wages have buoyed consumer spending. Measures of consumer confidence have remained high in recent months, supported by continued job gains and broader economic growth.

Analysts think recent tariffs and trade actions by the U.S. and China could impact the economy in different ways, either by hitting consumers directly with higher prices or by draining profit margins if businesses choose to absorb price increases for the products they sell.

Author: Sharon Nunn at

Source: The Wall Street Journal, July 2018

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In Strong Retail Economy And Tight Labor Market, Retailers Tout Incentives

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The strong economy continues to set records. April marked the 91st straight month of job gains, the longest stretch in history. That’s good news for retailers, who added 1,800 jobs last month and continue to demonstrate their resilience and innovation as the economy improves.

The hiring spree has also created stiff competition for candidates. The unemployment rate stands at 3.9%, the lowest rate since 2000. Those numbers are expected to remain low through 2020. Even with all the investments in technology and automation, consumers still crave human interaction, and retailers still rely on experienced people at all levels to get the job done.  As retailers discover how difficult it can be to find and retain talent, they are using a variety of incentives to attract workers and keep them happy.

Walmart, the country’s biggest private employer, announced a slew of new employee benefits at the beginning of the year. The company expanded its family leave policy from six to 10 weeks of paid maternity leave, along with six weeks of paid parental leave. Walmart also added financial assistance for full-time and salaried workers who are adopting children, and increased its starting hourly wage to $11 per hour.

 Retailers have long used one-time payments to entice candidates, and the practice is going strong. In a survey by the National Association of Colleges and Employers, nearly 57% of respondents said they planned to offer signing bonuses to the Class of 2018. That figure has been on the rise for four straight years.

While bonuses get candidates in the door, some retailers are testing incentives to support workers over the long term. Lowe’s, the home improvement retailer, recently started a workforce development program called “Track to the Trades.” Eligible workers get financial assistance to learn carpentry, plumbing and other trades to address skills gaps in the company and the wider workforce.

Other retailers are investing in workers’ skills and development, too. Kroger recently announced new benefits for long-term employees, including up to $3,500 for continuing education, professional certifications and advanced degrees. A report by the Lumina Foundation found that education benefits can pay for themselves by reducing turnover and personnel costs.

Cash bonuses and tuition assistance are among the headline-grabbing incentives for retail workers, but they aren’t even the main appeal of retail jobs. In a survey of nearly 1,500 U.S. retail workers, respondents ranked scheduling flexibility and types of work as the biggest draws for working in retail. In fact, flexibility is so essential that twice as many candidates want part-time opportunities than in any other business.

There are other, broader changes in the job market for retailers to follow. Retail jobs historically have been popular among teens and young adults looking for part-time, flexible work. But increasingly, manufacturing firms, technology companies and other businesses are snapping up pools of younger workers. According to the Census Bureau, the share of teens working in health services has doubled in the past 20 years.

Still, the retail industry accounts for one out of every four American jobs. Ask around and you won’t be surprised to hear that for many people their first job was in retail, either at the mall, the local ice cream shop, or maybe even bagging groceries. This still holds true today, but the difference is the best people are getting harder to recruit and retain.

Retailers need to turn on the charm to stay ahead of these trends, but this isn’t new for an industry accustomed to constant evolution and change. They are used to creating great experiences for customers. A changing labor environment means they’ll also have to use creativity when building their teams. Hiring managers have to dig deep for talent, because fierce competition for workers is unlikely to ease up anytime soon.

Author: Tom McGee

Source: The Wall Street Journal, May 2018

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Retail’s Other Problem: Too Few Clerks in the Store

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Many of America’s biggest retailers, under assault from Inc., have been slashing staff even faster than they have been closing stores, a dynamic that has left fewer clerks and longer checkout lines at remaining locations.

Despite operating roughly the same number of stores as it did a decade ago, Macy’s Inc. -1.88% has shed 52,000 workers since 2008. At J.C. Penney Co. , workers have disappeared twice as fast as department stores. That has led to an average of 112 total Penney employees for every store today, down from 145 a decade ago, according to a Wall Street Journal analysis.

Similar per-store staff declines occurred over the past decade atKohl’sCorp.KSS -1.09% NordstromInc.,JWN -1.40% TargetCorp.TGT -1.34% and WalmartInc.,WMT -1.75% regardless of whether the retailer opened or closed stores, according to the Journal’s analysis. The employment figures are for all full- and part-time staff and don’t distinguish between store, warehouse and headquarters workers. Industry executives say store employees make up the vast majority of retailers’ workforce.

“Retailers are shooting themselves in the foot trying to save pennies by lowering labor costs, and that’s costing them dollars on the top line,” said Rogelio Oliva, a business school professor at Texas A&M University. He recently analyzed the relationship between sales and labor at a women’s clothing retailer and found that many of the stores were understaffed by as much as 15%, leading to potentially lower sales.

Some companies attribute the declining head count to staff cuts at headquartersand a switch to smaller stores that need fewer workers. Others have added technology such as self-checkout lanes or shelf-ready packaging that they say makes existing workers more productive. And still others have hired more full-time workers, eliminating the need for two or three part-timers.

Now, some retailers are discovering they may have gone too far and are beginning to replenish staff—just as the booming U.S. economy is creating historic labor shortagesand forcing companies to pay higher wages and offer perks such as better training and benefits.

KrogerCo.KR -2.60% said this month it will hire 11,000 workers to improve customer service and speed checkouts at its nearly 2,800 grocery stores.

Dick’s Sporting GoodsInc.DKS -0.94% wants to increase store labor by about 10%, said Chief Executive Edward Stack, reversing a decadelong trend. Over the holidays, Dick’s added more cashiers, “because if there’s one thing that drives me nuts, it’s waiting at the register,” Mr. Stack said in an interview.

Macy’s said it is adding staff this year at 50 stores, in areas where the extra bodies will have the most impact, including in fitting rooms and in its dress, women’s shoes and handbag departments.

Retail staffing hasn’t kept pace with growth in the broader economy or population gains in the past decade. The number of salespeople at retailers grew by 1.5% over the past decade, even though the population served by each store has increased 12.5%, according to government data. At clothing and accessories stores, the number of cashiers is down more than 50% from 2007.

“Many retailers are at the tipping point of cutting too much labor,” said Craig Rowley, a senior partner in the retail division of Korn Ferry International, an executive-search firm. “If you cut staff every year, pretty soon you’re at minimal staffing.”

Gilbert McGarvey has worked at the flagship Saks Fifth Avenue store in New York City for 24 years, most recently in the shoe department. “It used to be what we sold was service,” he said, “Now, they’ve cut that to the quick.”

Saks last year closed the service desk at its flagship store and reduced support staff who process returns, restock shelves and fulfill online orders. That has meant salespeople now have to handle some of those tasks, which takes them away from selling, Mr. McGarvey said.

A spokeswoman for Hudson’s Bay Co., which owns Saks, said the Manhattan store had trimmed support staff by 2%, but added 15 service advisers near the store’s entrances to help guide shoppers. The spokeswoman said the service desk was eliminated to make it easier for shoppers, as they can now return items at any cash register in the store.

Across the board, workers had been stretched so thin that the Retail, Wholesale and Department Store Union stipulated in its latest contract, signed last year, that its members have the right to drop all other responsibilities to help take care of customers first.

“If brick-and-mortar retailers can’t compete on price in an online environment, the only thing that allows them to survive is to provide a positive in-store experience,” said Stuart Appelbaum, the union’s president.

Jessica Tokarski recently stopped by a Target store in Orchard Park, N.Y., to buy a phone case. But the 23-year-old couldn’t find anyone to unlock it from the rack, so she left the store without making a purchase.

“I’ve turned to online shopping, because customer service in stores has gotten really bad,” Ms. Tokarski said.

A Target spokeswoman said the retailer has added workers to its stores over the past year and is providing them with more training. She said a large part of Target’s head-count reduction was the result of the 2015 sale of its pharmacy business to CVS HealthCorp. , which shifted 15,000 jobs.

Over the past 12 months, 86% of U.S. consumers say they have left a store due to long lines, according to a survey conducted by Adyen, a credit-card processor and payment system. That has resulted in $37.7 billion in lost sales for retailers, Adyen estimates.

Retailers typically set staffing as a percent of sales, but a growing body of research suggests it should be based on foot traffic. The problem is twofold: Many retailers don’t track traffic and even if they do, they are reluctant to add labor, which is already among their biggest costs.

“If you’ve got a lot of foot traffic, but a lull in sales, you need to put more staff in your stores,” said Mark Ryski, the chief executive of HeadCount Corp., a data-analytics firm that tracks footfall at stores around the country.

Some companies are listening. After installing cameras last year, Cycle Gear Inc., a 130-store chain that sells motorcycle apparel and accessories, noticed sales dipped during the afternoon at its Orlando, Fla., store even though it was packed with shoppers.

“That told us the salespeople were overwhelmed,” said Rodger O’Keefe, a vice president. “We added two more salespeople during those hours, and sales have been up since then.”

Source: The Wall Street Journal

Author: Suzanne Kapner

Read more here.