As growing numbers of shoppers move online, European mall owners are looking to pull in customers by including services that can’t be replicated on the Web like hospital care and government offices.
Malls must become more like full-service community centers to survive in the face of a growing list of failed retailers like HMV and Blockbuster, property experts at the annual MIPIM trade fair in Cannes, France, told Reuters.
On the flip side of that retail revolution, the experts see big gains in warehousing as more goods are sent and returned via post.
“The days of the stand-alone mall are numbered,” said David Roberts, the chief executive of architect Aedas, one of the five largest practices in the world. The company has been involved in city masterplan projects in Asia, Europe and the Middle East.
“In 20 years time you will find stores that sell books and DVDs replaced by sites that give people a reason to go the mall … art galleries, education centers and health and spa treatments.”
Florencio Beccar, fund manager of CBRE Global Investors European shopping centre fund, cited the recent purchase of a mall in Germany, saying the fact it included a large medical centre was “a big plus”.
“I once saw a clinic in a Brazilian mall where you checked in and are buzzed on a device when they are ready. In the meantime you go shopping,” he said. “With the ageing population in Europe you can see that happening more and more.”
economics
The mall of the future
The Bronzer
This was a lot of fun to watch. You can follow Stu Larkin on Twitter and find out more about the company here.
Home Depot is “listening” to us as we shop
An interesting way to track us as we shop, via our smartphones
A company called Euclid Analytics uses the Wi-Fi antennas inside stores to see how many people are coming into a store, how long they stay and even which aisles they walk. It does this by noting each smartphone that comes near the store, feeding on every signal ping the phone sends.
Using the information, retailers can tell whether someone walked by the store, whether a customer came in and how long the visit lasted. If it is a big store, with a couple of Wi-Fi antennas, the owner can start to see where in the store someone went.
Euclid is three years old and has about 100 customers, including Nordstrom and Home Depot. It has already tracked about 50 million devices in 4,000 locations.
The big initial use is the so-called bounce rate, or the percentage of people who come into the store who leave without making a purchase. But the technology also helps stores make sure that there is enough sales help or that enough registers are open. By seeing how people move in a store, retailers can also better determine where to place low-profit and high-profit items.
Mr. Smith says Euclid has more data than it gives to customers. It gives its customers only anonymous data in a collected form, so individuals won’t be targeted. Stores using the technology may also put stickers in their windows telling customers they are being monitored and allowing them to opt out
It’s likely, however, that over time Euclid and its partners could add an opt in feature, where people choose to be recognized, the way registered Amazon.com customers are greeted when they come to a site. Then people might be offered, say, free parking for staying 20 minutes in a store, or they could get a discount for visiting three times a month.
While the technology has changed, the practice hasn’t. Retailers have always been obsessed over this kind of information.
Banking industry rebounding?
17 of 18 banks pass the federal stress test. Which is good if all of the dire predictions of the budget cuts come true.
US banks have enough capital to withstand a severe economic downturn, the Federal Reserve has said, after announcing that 17 out of 18 major banks passed its annual stress tests.
Government-controlled Ally Financial, the rescued former finance arm of General Motors, was the only bank to fail the test of capital strength.
Wall Street banks Morgan Stanley, at 5.7%, and Goldman Sachs, at 5.8%, were the next two lowest.
The tests have happened since 2009.
“The nation’s largest bank holding companies have continued to improve their ability to withstand an extremely adverse hypothetical economic scenario and are collectively in a much stronger capital position than before the financial crisis,” the US central bank said in a statement.
Under the tests’ most severe scenario, unemployment peaks at 12.1%, share prices drop more than 50%, house prices fall more than 20%, and the largest trading firms suffer a sharp market shock.
“Under this scenario, projected losses at the 18 bank holding companies would total $462bn (£308bn) during the nine quarters of the hypothetical stress scenario,” the Federal Reserve said.
The Business Case for Complete Streets
The Australian Heart and Stroke Foundation makes the business case for complete streets and walkable neighbourhoods.
The importance of a high quality streetscape can be seen by comparing it to the impact where the streetscape is poor. Oxford Street offices command a lower rent than the surrounding areas due to the concentration of traffic15 and in other London shopping streets, tenants on the asphalted side of a road compare their situation unfavourably with the tenants on the other side of the road, which is paved with York stone. One of the interviewees stated that the company has ‘considered disinvesting’ from areas where the streetscape was felt to be very poor.
A London study found that improvements in the street design quality can add an average of 4.9 per cent to retail rents of all shops and premises located on the high street. The most
important street elements for users were: lighting, footpath quality and maintenance, vehicles not parked on the footpath, provision of crossings, local area maps, information boards and signed routes.
Purolater vs. UPS vs. Boston Pizza
On Valentines Day Wendy and I went to the Boston Pizza on 51st Street. It was a horrible experience in every way other than being with Wendy. The service was bad, the appetizer and food was cold, and when we sent it back, it came back overcooked and cold. Not easy to do. We complained about it online and we got a phone call back asking the details of the encounter. I am not one that complains to get free stuff and when they asked if we wanted a gift card, we declined. I have been going to that location since about 1988 and just want better service.
Last week I also joked online about a camera I ordered being late and stuck in Purolater’s warehouse. It wasn’t a complaint, things get delayed and I was sure it was going to escape Toronto as soon as it could. A couple of days later on Twitter a Purolater rep asked for the details which I sent. They opened a file on it, tracked it down and freed my camera from T.O. and sent the little guy west. This morning I got a phone call from Purolater telling me that is was on truck 4 and would be at my house soon. I assume Wendy and Mark are playing with it right now (that wasn’t part of the plan).
I appreciated both Boston Pizza and Purolater trying to make mistakes right. I am not that upset at either one of them although I am rather reluctant to head back to BP on 51st for a while.
UPS is an entirely different matter. When they lost a package right before Christmas that was Oliver’s Christmas gift (his pogo stick), I was told to email them. I did and got nothing back. I called and was treated rudely. They actually blamed Amazon which is weird as Amazon’s job was to make sure the address was right and the package was in one piece. They even blamed my neighbourhood. I was shocked and vowed never to use UPS again if I could help it. As it turned out, Amazon picked up the slack, refunded my money and shipped a replacement out overnight for me for free.
Meanwhile I walked away from Purolater and Boston Pizza thinking that at least they cared. We all make mistakes but they were the only ones that tried to fix them. UPS has something to learn.
Detroit is getting an “emergency manager”
This is startling news considering that much of the news out of Detroit has been good lately.
I spoke with several people deeply involved in counselling the governor on Detroit, and none doubted that his next move is an emergency manager. Managing the restructuring of the city’s $12 billion of debt and pension liabilities is too complex to be handled through the political process.
There’s also a rumor that more bad news is coming on the pension shortfall that will make erasing the deficit even more difficult.
Pieces are falling into place quickly. The Financial Advisory Board will get an update Monday on the work of the three consulting firms hired to handle the restructuring.
Teams from Conway MacKenzie of Birmingham are embedded in all city departments and are finding broken systems — and savings — in every single one. The advisory board and Ernst & Young are digging deep into the budgets of each department in an attempt to match spending to revenue.
The goal is to achieve positive cash flow for the first half of the year. By then, the restructuring blueprint being worked up by New York-based Miller-Buckfire & Co will be ready. It will either be used to take the city into bankruptcy or handed to the emergency manager.
Which one implements the turnaround depends on how cooperative Detroit’s creditors are in shaving the debt. If the manger can convince them to take a significant haircut, the city may avoid bankruptcy.
The Cost of Professional Sports
If you live in New York, this should infuriate you
You might have missed this in the pre-holiday news dump, which it was specifically timed for—it’s a good idea to downplay the implications of a story like this. An agreement was announced in a “hastily called news conference” to keep the Bills in Buffalo (actually Orchard Park) through at least 2020. But the real story is in the details: the Bills have been allowed to pick up just 16 percent of the costs to keep them in town. If you’ve ever had the slightest curiosity as to how sweetheart a deal an NFL team can possibly get, the full agreement can be read below.
It’s going to cost $271 million for upgrades to Ralph Wilson Stadium and 10 years of running the place on gameday. The Bills will pay just $44 million of that. Erie County will cover $103 million, while the state of New York is on the hook for $123 million. If that turns out to be not cushy enough, the Bills can buy their way out of the lease after year seven. We and others have railed against the outrage of public financing for stadiums for years, but it’s still shocking to see in 2012 a textbook case of a community held for ransom, forced to give in to every last demand of a franchise threatening to move.
The End of the Big Box Store?
CBC has a story on the changing landscape that Best Buy and Future Shop is facing today
Brick-and-mortar outlets “have become less relevant,” he said, and as a result “the handwriting’s on the wall” when it comes to selling electronics in a big-box format.
Another factor is that electronics are being “downsized” as technology advances, making it less necessary to maintain huge stores, and cheaper for retailers to sell goods online and ship them to customers, Williams said.
While a big box is good for things like television, there really isn’t an advantage when it comes to other items. The Source is every bit as compitive on a lot of items. Even today I went to Best Buy and then actually found what I was looking for at The Source for a lower price. That happens quite a bit. It’s especially a big deal with The Source having locations all over the city. I often find it really easy to wander in and find what I am looking for on a break or while I am out and about.
The other issue is especially with Apple products is that I can buy direct from Apple and if it is over $50, I get free shipping and I don’t have to pay tax. I am looking at replacing my iPod with a new iPod Nano and it’s cheaper to buy direct from Apple than it is from anywhere in the city. The same thing when I buy from MEC. Expect others like Microsoft and even brands like Dr. Dre to do the same thing. Even if they don’t, shopping from Amazon is so easy and with Amazon’s low margins, it’s almost the same thing for an established brand.
In the end the big box stores use the format to compete on price and if they can’t compete on price, they bring very little else to the table (unless they can create an in-store experience like Cabelas) As online retail continues to grow, look for smaller stores with better customer service, and easy access to make a comeback. It isn’t just electronics. Stores like Rona are asking the same questions about how easy is it to compete with Home Depot and Lowes on a large scale when they may have the supply chain efficiencies and infrastructure to do it.
The other part of the retail discussion is Sears laying off 700 people in Canada. I wasn’t surprised. Several times I have been the only customer I could see in a Sears store and when I walk through it I have to dodge rack after rack of discounted goods. While The Bay has rallied around the voice and leadership of Bonnie Brooks, Sears seems to just be drifting with empty stores, an aging demographic, and no real leadership. I can’t see them being around in five years time.
A 33rd Street BID?
A great idea for Mayfair and Caswell Hill. Story is by Charles Hamilton of The StarPhoenix.
When Nicola Tabb looks out the front door of her vintage clothing shop on 33rd Street, she sees a community ripe with potential.
This strip is home to one of Saskatoon’s most acclaimed bakeries, a handful of antique shops, a tattoo parlour, a hair salon and hardware stores.
While prostitution and drug use are still relatively common sights in the area, these few blocks on Saskatoon’s west side have all the makings, she said, of a place on its way to becoming this city’s up-and-coming neighbourhood.
“I get people coming in all the time saying, ‘Thank you for opening on 33rd. I love to support my local business.’ I’m not sure if I would have got that anywhere else in the city,” she said.
Tabb lives in Caswell Hill just a few blocks away from where she opened her store, Better Off Duds, eight months ago. Since then, she said, the community has embraced her and now she is just one of a number of local entrepreneurs keen on the idea of starting a business improvement district (BID) for 33rd Street.
Similar BIDs are already operating in the Broadway, downtown, Sutherland and Riversdale neighbourhoods. The idea of a BID, according to supporters, is to get community and business people actively engaged in development decisions affecting the neighbourhoods.
“You look at what 20th Street was 10 years ago even, and since the inception and development of the BID look at what happened to the neighbourhood. It’s a trendy, kitschy place now,” said Shannon Vinish, a former business owner who was instrumental in the area’s first attempt at forming a BID back in 2004.
BIDs operate in more than 1,400 business areas across North America. The organizations are funded primarily by a levy on business owner’s property taxes and work on lobbying different levels of government for things such as increased policing, street level improvements and zoning bylaws.
“It’s just a natural progression of an area turning in on itself and saying, ‘What happened, how did this happen and how do we fix it,’ ” said Randy Pshebylo, the executive director of the Riversdale BID, which has been active since 1990.
Pshebylo said BIDs can be an effective way of giving business members a voice in shaping the landscape of their community. His BID, for example, lobbied successfully for a limit on the number of pawn shops on 20th Street.
I am actually excited about this. The Hudson Bay Park/Mayfair/Kelsey Woodlawn Community Association is revitalized, the Local Area Plan starts Thursday, and now a BID for 33rd Street? These are all really good things happening in the area.
The real reason Gary Bettman hates Donald Fehr
When Bettman looks at Fehr, he sees himself
Ask anyone who has had to haggle out a deal with Bettman behind closed doors and they’ll paint a picture of a brilliant, calculating and ruthless negotiator, who seizes every advantage, who when presented with an opportunity goes straight for the kill. He understands his opposition’s weak points, he knows his side’s strengths, and with a cool head and cold eyes he calculates the path to victory. That’s one reason why his employers, the owners, love him, and pay him the big bucks.
Consider the last NHL labour negotiations in 2004 and 2005. Employing classic divide and conquer tactics, understanding that hockey players in their hearts still feel darned lucky to be playing a game for a living, seeing the cracks in the infrastructure around Bob Goodenow, Bettman soon enough had the union membership enthusiastically sticking knives in the back of their own leader.
And the tipping point of that process?
When the players offered up a 24 per cent salary roll back to avoid a salary cap, and Bettman and the owners gratefully accepted their generosity as a starting point, and then ground them into the dust.
The players hired Donald Fehr as their union head because he is Bettman’s equal. He is there to guard them against falling prey to their own sentimentality about the game, to protect their interests in a negotiation in which everyone understood that they would be giving back, would be surrendering rights and surrendering money guaranteed in the previous collective agreement.
Clearly a student of history, Fehr began by restructuring the union hierarchy so that there was no longer a ready-made group of potential Brutuses who might be turned against him. Bettman and the owners have attempted the same strategy this time around, contacting players directly, whispering about revolts in the rank and file, suggesting that Fehr isn’t telling the whole truth, that it’s his presence alone that is preventing a deal. But so far, it doesn’t seem to be working nearly as well as it did against Goodenow.
We have now also had “good cop” owners enter the picture, we have had Sidney Crosby ride in on his white horse, we have had numerous propaganda volleys from both sides. But what’s been going on away from all of that staged drama is a hard, grind-it-out negotiation, with Fehr playing the same kind of frustrate-the-opposition defence that the New Jersey Devils employed in the bad old days.
It is going to be tough getting to the finish, though surely that’s still in the cards. Fehr is going to negotiate against a deadline – a real hard deadline to salvage the season , wherever that actually lies – and try to hold back any impulsive moves by his membership. Along the way, he’s going to grab whatever he can.
Like when the owners offered to up their “make whole” offer to $300-million this week, thinking that number would turn heads and shift the emotional tide and lead to the players rushing past the other details in their hurry to get back on the ice.
That’s great, Fehr said. Thanks for the money.
Now let’s negotiate the other stuff.
Gee, where have we seen that before?
Fleeing downtown Calgary
This is an interesting trend. Is the rent too high in downtown Calgary?
Imperial Oil is on the move. Now Canadian Pacific Railway. The big question is who is next to make the jump from downtown Calgary as prices escalate and tenants look for better rents away from the core.
“You add them together and you get 1.2 million square feet and that’s a big chunk,” said Ross Moore , head of research with CB Richard Ellis Canada, in referring to the two companies. “There is a limit to how high you can push rents.”
Imperial announced in September it would move its downtown office to a 20-acre site away from the downtown with five low-rise buildings and 800,000 square feet. Then last week CP Rail said it would move its employees as part of a cost-cutting plan.
“Everybody is focused on costs and real estate is obviously part of your costs,” said Mr. Moore, who wonders whether the trend will curtail some of the planned development expected to go ahead shortly. “They all have to be having second thoughts.”
Third quarter statistics from CB Richard Ellis show rents overall in Calgary’s downtown core climbed 4.4% from just three months before to $26.79 per square foot per year, making it one of the most expensive places in North America. The vacancy rate for what is considered a AA building is a scant 0.5% which has pushed rates up.
Of course the answer is no as it is market driven. CPR is cutting costs and Imperial Oil has it’s own strategic reasons to move to a very large campus but it is extremely interesting to see how expensive rent is in downtown Calgary.
