The SMART

1
The SMART Approach to Commercial District
Management
2

• Your Instructors
• Larisa Ortiz, Principal
• Jennifer Furioli, Managing Partner
• Larisa Ortiz Associates, LLC is a full-service
  consulting firm providing a wide range of
  services and technical expertise to commercial
  district management entities.
• www.larisaortizassociates.com
• www.commercialdistrictadvisor.com
• A summary PDF of this presentation will be made
  available at www.commercialdistrictadvisor.com

3

• Course Objective
• Discuss strategies to help drive retail sales and
  attract tenants during difficult economic times
• Retail Fundamentals
• Shopper satisfaction ultimately determines the
  success of the district

4

• Retail Pop-Quiz
• Question 1 What district characteristics are
  most important to customer satisfaction?
• Store Appearance
• Parking
• Cleanliness
• All of the Above

3
2
1
Source Urban Neighborhood Shopper Satisfaction
Analysis Surveys from Five Low- to
Moderate-Income Urban Neighborhoods, Market
Knowledge, 2008
5

• Retail Pop-Quiz
• Question 2 What district characteristics impact
  retail sales the most?
• Store Density
• Store Mix
• Parking Density
• All of the Above

Source Commercial Corridor Study of 265
Philadelphia urban commercial districts,
EConsult, March 2009
6

• Retail Pop-Quiz
• Question 3 Do chain pharmacies help or hurt
  overall commercial district retail sales?

• Chain pharmacies are beneficial by all measures
  in a corridor, and are most beneficial when they
  are in, not near, a mixed corridor.

Source Commercial Corridor Study of 265
Philadelphia urban commercial districts,
EConsult, March 2009
7

• Retail Pop-Quiz
• What affects shopper satisfaction by age group?
• YOUNG ADULTS
• MIDDLE-AGE
• OLDER ADULTS

Hours, Pricing, Environment (store
appearance) Accessibility (hours), Environment
(store appearance) Quality, Variety, Shopping
Environment
8
Shopper Satisfaction by Gender, Income and Age
9

• What interventions does this information suggest
  are critical to improving shopper satisfaction?
• Primary District Efforts
• Retail Sales Product quality, store hours,
  cleanliness, lighting, and sidewalks
• Secondary District Efforts
• Tenant Mix Food and retail, prices, and store
  appearance

10

• And the study finds.
• interventions that work
• Significant positive impact
• Business Improvement Districts
• Vacant lot stabilization
• Positive impact
• Improved security measures
• Mural arts programs

Source 2007 LISC Study of 265 Philadelphia
Commercial Districts
11
The SMART Approach to Commercial District
Management
12
Part I Strategic Positioning, Market Analysis,
Administrative Management
13
S M A R T

• Strategic Positioning

14
Customer Income Segment
15
W. 181st Street, Washington Heights
16
Smith Street, Brooklyn
17
DUMBO, Brooklyn
18
Koreatown
19
S M A R T

• Market Analysis

20
S M A R T Trade Area Analysis

• TRADE AREA Origin of /- 70 of your customers
• Determine by consumer surveys, retailer
  interviews, observation
• Answers the question Who shops here and who
  doesnt

21
S M A R T Trade Area Analysis
Trade Area by Retail Tenant Type
Disneyworld
Destination/Regional 30 min
Department Store/Big Box Retail
Comparison/General 15-30 min
Specialty Food Store
Drugstore
Convenience/Neighborhood 5-10 min
22
S M A R T Trade Area Analysis

• What Information Should You Collect?
• (from stakeholders/existing merchants)
• Assess Trade Area
• Where do customers
• come from?
• Demographics
• Other Shopping
• Destinations
• Frequency of Visits
• Tenant Mix
• Existing Tenant Mix
• Retail Preference (Chain v.
• Independent)
• Where customers currently shop

• Identify Concerns
• Safety
• Cleanliness
• Availability of Goods/Services
• Access/Parking

22
23
S M A R T Market Analysis
Customer Intercept Survey
6. When you shop for the following products,
where do you most often go?
Please write the name and location
Groceries Name ______________
Location ________________ Clothes/shoes
Name ______________ Location ________________
Electronics Name ______________
Location ________________ Etc.
23
24
S M A R T Market Analysis
Merchant Survey
24
25
Additional Data AnalysisNew Rochelle, NY ESRI
Findings
S M A R T Market Analysis

• Retail Leakage
• -Capture Rate 15

26
S M A R T Market Analysis

• Tenant Mix
• Anchors (like suburban malls)
• Clustering Similar Stores (co-tenancy)
• Convenience and comparison district

26
27
S M A R T Market Analysis
Mapping Tenant Mix -125th Street, Harlem
Opportunities for Independent Retail
Major Development Opportunities
27
28
S M A R T

• Administrative Management
• The resources and administrative capacity to
  identify and tackle revitalization tasks

29
Part II Retail Sales
30
S M A R T Retail Sales Strategies

• Improving Retail Sales During Difficult Times
• Improve the shopper experience by focusing on the
  fundamentals
• Increase customer visits and spending
• Emphasize and promote value options
• Support ways to cuts costs
• Address deficiencies
• Diversify income

31
S M A R T Focus on the Fundamentals

• Clean it up!
• Cleanliness is one of the top indicators of
  shopper satisfaction.
• Organize a volunteer event to sweep sidewalks,
  clean windows, and paint storefronts
• Encourage storeowners to clean their windows
  regularly

32
S M A R T Focus on the Fundamentals
Cleanliness
33
S M A R T Focus on the Fundamentals
Cleanliness
34
S M A R T Focus on the Fundamentals
Vandalism
35
S M A R T Focus on the Fundamentals
36
S M A R T Focus on the Fundamentals

• A 2009 comprehensive commercial corridor study in
  Philadelphia conclusively demonstrated that the
  Mural Arts Program consistently demonstrated
  positive correlation to corridor success
• Incidence of graffiti dropped and required less
  maintenance over time

37
S M A R T Focus on the Fundamentals
38
S M A R T Focus on the Fundamentals
39
S M A R T Focus on the Fundamentals

• Case Study
• Summer 2008
• Artist Facilitator Tim Gibbon
• Non-Profit Latin American Youth Center Art
  Media House
• 14 Students help design and paint

40
(No Transcript)
41
S M A R T Focus on the Fundamentals
Appearance
42
Appearance
43
S M A R T Focus on the Fundamentals
Appearance
44
S M A R T Focus on the Fundamentals
45
S M A R T Focus on the Fundamentals

• Focus on Fundamentals
• Clean streets and sidewalks
• Address vandalism through graffiti removal
• Help improve individual store appearance
• Your Role
• Educate
• On-line/customer surveys
• Link between customer satisfaction and sales
• Take Action
• Volunteer manpower for street clean up
• Invest in resources for graffiti removal
• Start a district mural program with local
  schools/artists
• Coach businesses in strategies that address dual
  issues cleanliness AND appearance
• Adopt-a-Flower-Barrel/Adopt-a-Tree-Surround

46
S M A R T Increase Customer Visits
Upgrade, dont eliminate, your marketing efforts

• Convenience Retail/Services
• Direct mail
• Neighborhood list serves, blogs
• On-the-street marketing methods
• Specialty Retail/Services
• Regional Magazines
• Local cable networks
• Leap From Promotions
• Destination Retail/Services
• Leap Frog Promotions

47
S M A R T Increase Customer Visits
In-Store Activities
48
S M A R T Increase Customer Visits
In-Store Activities
49
S M A R T Increase Customer Visits
Street Musicians
50
S M A R T Increase Customer Visits
Live Music
51
S M A R T Increase Customer Visits
Media efforts vary by retail category, target
audience and location of customer

• Convenience Retail/Services
• Direct mail
• Neighborhood list serves, blogs
• On the street marketing methods
• Specialty Retail/Services
• Regional Magazines
• Local cable networks
• Leap From Promotions
• Destination Retail/Services
• Leap Frog Promotions

52
S M A R T Increase Customer Visits

• Retail Pop-Quiz
• Convenience, Specialty or Destination?

53
S M A R T Increase Customer Visits

• Retail Pop-Quiz
• Convenience, Specialty or Destination?

54
S M A R T Increase Customer Visits

• Retail Pop-Quiz
• Convenience, Specialty or Destination?

55
S M A R T Increase Customer Visits
Google Ad Words
56
S M A R T Increase Customer Visits

• Retail Pop-Quiz
• Convenience, Specialty or Destination?

57
S M A R T Increase Customer Visits

• Retail Pop-Quiz
• What is the difference between Street Fair A and
  Street Fair B?

A
B
58
S M A R T Increase Customer Visits
Social Networking
Afzal Hossain, Owner Espresso 77, Jackson
Heights, NY
59
S M A R T
S M A R T Increase Customer Visits
Customers
Event Listings
60
S M A R T
S M A R T Increase Customer Visits
Event Listings
Discussion Board
Ad-Hoc Wall Postings
61
S M A R T Increase Customer Visits

• Increase Customer Visits
• In-store events
• Targeted advertisement
• Social networking
• Your role as a district manager
• Brainstorm activities with your retailers
• Use the public realm to drive traffic into stores
• Promote in-store events

62
S M A R T Reduce Costs

• Reduce Costs
• Negotiate a deal on a retail cleaning service
• Cooperative purchasing of office supplies,
  printing, etc.

63
S M A R T
S M A R T Reduce Costs

• Revisit lease terms
• Dont keep quiet
• Know your local market
• Consider creative lease terms
• Think long term

Source Andrew R. Levinson is the Managing
Director of Riverside Strategic Advisors LLC
64
S M A R T Emphasize Value

• Emphasize Value
• Promote value offerings prominently

65
S M A R T Emphasize Value
Do or Dont?
66
S M A R T Emphasize Value
Do or Dont?
67
S M A R T Emphasize Value
68
S M A R T Emphasize Value

• Emphasize Value
• Promote Value Items Prominently
• Maintain Quality Image
• Your Role
• Take Action
• Coordinate Cooperative Sales Events
• Facilitate cooperative professional printing
• Encourage/provide sidewalk displays

69
S M A R T Address Deficiencies

• Address Deficiencies
• Focusing time on improving quality can have a
  major impact on customer satisfaction and hence
  the performance of the business and the
  commercial corridor.

70
Retailer Audit Program
CAPITAL/EXPERTISE SAMPLE INTERVENTION
S M A R T Address Deficiencies

• Service
• Standards of discipline for staff
• Too many part-time staff
• Signs restricting returns

• Visual Clues
• Outdated design
• Messy store
• Perpetual on-sale signs
• Poor aisle and traffic flow

• Merchandising Clues
• Out of stock, broken stock, poor stock
• Last years inventory
• No new merchandise

• Management/Finance
• High turnover
• Permanent help-wanted signs
• Slow rent payment
• Old technology at point of sale

Source Getting Retail Right, John C. Williams
71
Merchant Safety Audit Program
S M A R T Address Deficiencies

• Exterior
• Lighting
• Parking access/visibility
• Property clean? Trash free?
• Secure exterior openings

• Environment
• Community policing officer assigned?
• History of violence in area?
• Nearby crime hotspots?

• Interior
• ATMs working/visible
• Clear line of sigh throughout store
• Alarm system present?
• At least two means of egress?

• Business Practices
• Previous robbery response training?
• Established robbery policy?
• Money counting policy?
• Frequent cash deposits?
• Insurance?

72
S M A R T Diversify Income

• Diversify Income Stream
• On-Line Selling
• Oakland Unwrapped

73
S M A R T Diversify Income
74
S M A R T Diversify Income
75
S M A R T Diversify Income
76
S M A R T Diversify Income
77
S M A R T Tenant Mix

• Tenant Mix
• Retail Attraction should not occur until a
  district is retail ready
• After problems inside and outside the business
  are addressed, the commercial corridor
  revitalization organization can focus on
  diversifying the economy with new retailers and
  restaurants

78
Part III Tenant Mix
79
S M A R T Tenant Mix
Warm Up
79
80
S M A R T Tenant Mix
81
S M A R T Tenant Mix
Strategic Positioning

Follow Up
Making the Ask
Preparation
Prospecting
Market Analysis
Administrative Management
82
S M A R T Tenant Mix
Administrative Management
83
Retailer Concerns As Ranked by ICSC Survey
S M A R T Tenant Mix

• Crime/perceived crime
• Weak market demand (perceived or real)
• Theft or shrinkage
• High rents
• High build out/rehabilitation costs
• Difficulty identifying sites
• Inadequate parking
• Higher operating costs
• Higher construction and development costs
• Lack of amenities to attract out-of-neighborhood
  employees

Source ICSC, 2004. Developing Successful Retail
in Underserved Urban Markets
84
Preparation Programmatic Activity Around Retail
Readiness
Case Study
84
85
Retailer Concerns As Ranked by ICSC Survey

• Crime/perceived crime
• Weak market demand (perceived or real)
• Theft or shrinkage
• High rents
• High build out/rehabilitation costs
• Difficulty identifying sites
• Inadequate parking
• Higher operating costs
• Higher construction and development costs
• Lack of amenities to attract out-of-neighborhood
  employees

Source ICSC, 2004. Developing Successful Retail
in Underserved Urban Markets
86
What Retailers Need to Know

• Do you have the customers they need?
• Definition of trade area
• Population, households
• Average HH income
• Median HH income
• Growth trends
• What makes this a good location?
• Measurement of unmet retail demand. . . Within
  specific categories
• Competitive analysis. . . Knowing who else in in
  the trade area (or not)
• Can we help them reach the right decision?
• Understanding the retailers business needs and
  wants
• Sharing specific consumer preferences

87
Preparation Marketing Material Development
88
Prospecting - National and Regional
Do you have the right residents?
Do you have the right kind of space?
89
Prospecting - National and Regional

• Where do you find tenant specific information?
• Websites
• Tradeshows
• Brokers/Leasing Agents
• Regional Real Estate Reps
• Networking

Starbucks Booth at an ICSC Tradeshow
90
Prospecting - Local
91
Administrative Management
92

• Prospect Contact Checklist
• Know these things before you reach out!
• Location, lot size, building size
• Building mechanicals
• Sale / lease pricing
• Permitted uses, sign regulations
• Traffic counts
• Retailer space requirements
• Retailer demographic requirements
• Retailer co-tenant preferences
• Typical lease preferences
• Meeting at a trade show?
• Simple is better
• - business card
• - follow up with e-mail and marketing package

93
Administrative Management
94
2009-2010 Retail Attraction Landscape

• National Chains Halting/Retrenching Expansion
• Dont spin your wheels on them right now
• Commercial Rent Down
• Buyers Market (Tenants in a position to sign
  longer-term leases at favorable rates/Owners
  hoping to sign shorter term leases)
• Opportunity for local retail to return to
  corridors once dominated by chain
• National chains negotiating temporary rent
  reductions
• Filling Spaces
• Leave no stone unturned
• Short-term (2-5 years) leases for temporary
  tenants
• Value-based and local retailers (Dallas BBQ,
  Dunkin Donuts, Gem Story, Thrift shopsUnique
  Thrift Store at 408 Fulton Street, Downtown
  Brooklyn

95

• Larisa Ortiz Associates
• www.larisaortizassociates.com
• www.commercialdistrictadvisor.com
• info_at_larisaortizassociates.com
• 718-205-5116