2012 Strategies - Heritage Ohio · Boulevard Strategies 614.294.2072 © Boulevard Strategies, 2012 ... The Wheel of Retailing Turns Again ... Cupcake Backlash Cupcake

Boulevard Strategies 614.294.2072 www.blvd-strategies.com © Boulevard Strategies, 2012

Central OhioRetail Outlook

where strategy & opportunity intersectBoulevard Strategies

(2012

Please join us in exploring 10 key trends, insights, observations, and musingsregarding the retail industry in Central Ohio and beyond.

This is our 7th Annual Top 10 List. We start from scratch each year andwrite all new material. We do not try to cover every trend every year soif something is missing from this year’s list, it may have been covered ina recent prior Top 10.

Having said that, there are a few constants. We always start off by lookingat the economy, particularly, consumer confidence, then we review localretail real estate stats and major new projects in the pipeline. We alwaysdevote one page to all things Wal-Mart: love ‘em or hate ‘em, you’d be afool to ignore ‘em. And we’ll always serve up our ever-popular “What’sHot, What’s Not” zingers. Otherwise, we try to share with you what we’vebeen seeing, experiencing, reading about, and thinking about lately…soplease read and enjoy!


Fatigue Sets In:Consumers Spend Away Their Blues in Spite of Economic Uncertainty


(10Workers-Owners Unite!New Wave ofEmployee-OwnedCompanies Emerges.

YET, ConsumerConfidenceIndexRemains Stuck

10056

norm

al

The Conference Board

Believe the USA isSTILL in a Recession(it officially endedin June 2009)

Pent-Up DEMAND Leads toHoliday Decorating,“Self-Gifting” Splurges atEnd of 2011

55%USA Today Poll

Stocks/Corporate ProfitsRise Much Faster ThanWages/Govt. AssistanceSince 2009

Luxury RetailersReport an

Increase in 2011

Meanwhile,Wal-Mart BroughtBack itsLAYAWAY Program

Marcus & Millichap Self-Employed, 90,000 Strong& Growing in Central Ohio,Represent

Divide BetweenSaks & Wal-Mart ShoppersDeepens.

Retail Spending Forecastto Rebound in 2012 toPre-Recession Levels.

8%

10%

Large Companies Spend on

NOTLabor and Training

Technologyand Equipment,

of EmploymentBase


56 Million Square Feet of Shopping Center Space:Does Central Ohio Really Need This Much? Will We Ever Need This Much inthe Future?


(9What Else is Happeningin the Region?

Anybody Notice a Pattern?If We Reach 36 or 37 by 2020,We Will Add atLeast16 Million Sq. Ft.

Retail Vacancy RateContinues to Hoverin Double DigitsMarketwide

Meanwhile, E-Commerce2.o Effortlessly AddsAnother Year ofGrowth

10to11%

Grandview-Based DeveloperTackles

in Central Core of Region

Planning/DevelopmentUnderway at:

What’s Up withWaggenbrenner?

Shopping Center Sq. Ft. PerCapita Rose from 12 in 1980,to 18 in 1990 ,to 24 in 2000,to 31 in 2010.

15%

or 10 Polaris Fashion Places

ProblemProperties

Weinland ParkColumbus Coated Fabrics

TimkenJeffrey Place

Ibiza Condos (former)

Kaplin Sites

Will Fill Niche inUnderserved DowntownRetail Market

Re-InventsItself as ModernEntertainment District

LaneAve.

Not Much Initial Retail ImpactExpected When theOpens on West SideCasino

Differentiate ItselfRetail-Wise From Polaris?

36/37Interchange

How Does the


Left For Dead:The Regional Mall Revisited


(8Strong Specialty RetailersGrab Excess Mall Spacein Bid to BecomeMini-Anchors.

Early Mall Pioneers Started inOhio:

Overtaken by Easier-to-Shopand MoreVibrant

Experts Project

of Ohio’s RemainingMalls Will Close This Decade

9or10

STILL HAVE Critical Mass, BestFashion Selection, High TrafficLocations, Provide RelaxedSocial/Family Experience(vs. In-&-Out Mission-Driven Strips)

However, SurvivorsAre Stronger Than Ever.

Number of Enclosed Mallsin Ohio Declined from53 in 1981 to 38 in 2011.

15%

Has Taken OverSeveral Empty Dept.Store Locations

Victoria’s Secret IncreasesFootprint by 55%,

CafaroDeBartolo Glimcher

and others

Jacobs

Power Centersand Lifestyle Centers

Another

New Tenant Types:Category Killers

Discount Dept. StoresFine Dining Restaurants

Pop-UpShopsUpscale Warehouse Clubs

Mall Sales Up Nationally 4 to5%2 to3%

in 2011

for All Retailvs.

Still Achieves Overin Sales

7o0$

LITMUS TEST for Today’sRegional Mall:

per Sq. Ft.

Does It Have ?


Wal-Mart Shrugged:Weak Store Traffic Dampens U.S. Sales at Retail Giant


(7Westerville WelcomesWal-Mart! (Well, Sort Of).

Concerns About Prices for Gas,Energy and Food as Well asEmployment Issues HaveWal-Mart Shoppers on theDefensive

Beyond Traditional Rivals (Target,Kmart, Kroger, Meijer), Dollar Stores& Drug Stores Have BroadenedConsumables Selection with SmallerSize Packages & Lower Price Points

Wal-Mart Commits to HealthierFood Choices -

Wal-Mart Express, Test-Piloted inArkansas in 2011, is Wal-mart’sAnswer to the Dollar Store(13K SKUs vs. 125K at SuperCenter).Target Tests City Target

Can Wal-Mart Play SmallBall? Plans Call for 100 NewWal-Mart Markets orWal-Mart Expresses.

Many Shoppers Don’t ThinkWal-Mart Prices Are theLowest Anymore.

15%

Meanwhile, Wal-Mart(aka Wal-Mart Labs) isInvesting Heavily inOnline Digital Movies& Social Networking

Labor Problems Continue toPlague Wal-Mart’sAuthortarianCulture

WSL Strategic Retail Survey

Less SaltMore Local Products

Less Sugar Less Fat

Developer (Hadler) Sways WaryOfficials to Allow Wal-Mart toBreathe New Life into Old TiredStrip at State & Schrock

Potential Benefits IncludeMore Choices & Lower Prices forConsumers, Jobs & Taxesfor City & County

Potential Negatives Include TrafficCongestion & Cannibalization ofExpenditures at Existing Retailers

Nimble Independents CANThrive in the Shadow ofWal-Mart


Good Stuff Cheap:The Wheel of Retailing Turns Again


(6Low-Wage Earners StillComprise Core BargainShoppers, but Affluent AreFastest Growing Segment.

Ollie’s Bargain OutletRecently Entered Into OhioMarkets With Sound GrowthStrategy, Solid Financing.

In Each Era of Retailing, theOriginal Low-CostDiscounters GraduallyExpand/Upgrade Offer..

This Allows for Newer, No-FrillsFormats Such as Dollar Stores &Close-Out Houses toUndercut Them

(Amenity Creep)

Since 2000,35-40 Net Dollar/Close-Out StoresOpened/Year vs. 9-10 Net DiscountDept. Stores Closings/Year In Ohio

Ohio Has OverDollar Stores,3rd Most in U.S.Behind Texas & Florida

Dollar Stores Love to Locate Nextto Wal-Mart or Target, Often inOlder, Low Rent Strips

Merchandise Sources Include DistressedLines, Closeouts, Overstock, SalvageMerchandise, Dept. Store Returns,Liquidated Goods, Discontinued Lines,Clearance Items, Ex-Catalog Stock,Freight-Damaged Goods, Irregulars,Salvage Cosmetics, Test Market Items,& Bankruptcy Inventories

Serendipity Doo Dah:Constantly Changing ProductDisplays Provide Treasure HuntFeel During Avg.Shopping Visit

Cheap Labor &Small FootprintsAre Also Keys to Business Model

Those Earning $70K+Shopped DollarStores 2XAs Much in2011 vs. 2006

Reality TVBrings Hard LuckBargains Intothe MainstreamMindset

Goodwill OpensUpscale Thrift Shopsin AffluentCommunities

1ominute

($14,415 Avg. AnnualWage/Employee)

(<10K Sq. Ft.)

1,100


I Love the 10’s, Part 2:Lifestyle Trends Continue to Create Retail Opportunities


(5The Great Groupon Debate:In Its Infancy or RapidlyReaching Maturity?

Getting Personal WhileGoing Corporate: Facebookto Extend $10 Billion IPOin 2012.

Life of Riley: OngoingHumanization of Pets GivesWay to Boomer-StyleIndulgences.

$55billion

Elite Doggie Day Camps, “HumanGrade” Pet Foods, Home-CookedMeals, Designer Dog Doo BagsDrive Another Big Year inJuggernaut Line of Trade

Incidence of Pet OwnershipIncreases with HouseholdIncome

Vet Visits Climbas Pets Live Longer,Due To Better Nutrition& Modern Medicine

7%

Facebook Ads Allow for Precision Marketing & Measurement of Results at Affordable Rates

Facebook AdRevenueDoubled in 2011

(Harris Poll)Ratio of Both SocialMedia Usage &Online Purchases byFemales vs. Males

Google+ Gains Traction,Expected to Grow to 400Million “Users” in 2012

Merchants Take a Financial Hit to DrawNew Customers Who Hopefully BecomeLoyal Repeat Customers

Loyal CustomersLukewarm Occassional CustomersNew Customers

Daily Deals Bought Quadrupled in 2011,While Daily Deal Sites Dwindled From530 to 360

Groupon Mainly Small BusinessPhenomenon So Far As ChainsJust Start to Show Interest

Groupon Continues to Expand ReachInto Travel, Direct-From-Manufacturer& Supermarket Channels

$6.52012

2011 $4billion

billion

58%42%

(vs. 60 Million in 2011)

38%27%31%


Sector Spotlight:What’s Hot and What’s Not


(4Life of Riley: OngoingHumanization of Pets GivesWay to Boomer-StyleIndulgences.

Sea Salt French FriesBurger King, Wendy’s Respondto Better Burgers Trend withBetter Fries...

Layaway Angels Strangers Flock to Local Storesto Help Out the Needy...

Men Who EnjoyShoping

Men’s Apparel Sales Up 7% vs.1% for Women’s Apparel in 2011

Shopping OnlineWhile Drinking

Women’s Fashion Sites ReportSales Spike After 9 pm

Gourmet BurgerDelivery

Domino’s Founder TomMonaghan Starts New BusinessWith 2 Burger Minimum

(NPD Group)

Pepper Spray in YourEyes

New Thanksgiving TraditionInitiated at Wal-Mart DuringMidnight Madness Sales

Headless MannequinsGeneric White Skinny PrototypesPushed Aside for HighlyCustomized Realistic Models

Men Who EnjoyWorking

“Mancession” Results in MoreMr. Moms

Cupcake BacklashCupcake Consumption Down18% in 2011

Mail DeliveryU.S. Postal Service Slated to EndSaturday Delivery, Plans to Close12% of Retail Locations

(NPD Group)

Hot Not


The New Local Foods Movement:Local Liquids


(3Middle WestSpirits, WatershedDistilleryColumbus

“Milk, the Way It Used to Be”:Dairy Sells Milk & CreamPasteurized at Low Temperature,Non-Homogenized, On Retail ShelfWithin 48 Hours

Zauber ,Hoof Hearted,and Born BrewingColumbus

SnowvilleCreamery

15%

Available at...

...and Other High-EndOhio Grocers

Key Ingredient inJeni’s Ice Creams,Another LocalFavorite

The Latest Additions to CentralOhio’s BurgeoningMicro-Brewery Menu(10 Locations, All Independents)

Mainstream GrocersAdd Craft BeerSelections As SalesIncrease

Local Micro-DistillersUse Locally-GrownProduce & MeticulousProcesses to ProduceAward-Winning SmallBatch SpecialtyVodkas, Gins & Whiskeys

Ohio Missing Out on GlobalBourbon Boom Centered inKentucky &TennesseeDue to ArchaicProhibition-EraLaws

Yuengling,Positioned BetweenMainstream & CraftBeers, Captures 12% of OhioBeer Market Overnight

Meigs County


Cross-Channel Shopping:Mobile Technology Bridges Gap Between E-Commerce & In-Store Retail


(2Cross-Channel CommerceWill Accelerate As TabletDevices Proliferate.

35% of American AdultsNow Own a Smartphone.

The Same Shopper Will Often Usea Combination ofWeb/Mobile Apps/StoreVisits toCollect Info, Comparison-Shop,Get Discounts/Coupons, & MakePurchases.

Does This Count AsE-Commerceor an In-Store Sale

(Pew Research)

Web-InfluencedStore Sales Are Growing by

(Group M)

This Adds Fuel toOnline SalesTax Controversy

Jobs Creation:Apple Store isGlimpse IntoFuture of Retailing

This Includes ...

Retail Apps Compare Prices, OfferCoupons/Discounts, Compile ShoppingLists, Suggest Recipes/Meal Plans, TrackReceipts, Loyalty/Reward Points, Scan BarCodes, Find Parking Spaces (at least in SF)+ Many Others

QR Code Scanning,Imported FromJapan, Aims atYoung InquisitiveMothers at Supermarkets

We’re All Thumbs: Only1 in 10, E-CommerceTransactionsCompleted ViaMobile Device

Store Employees Begin Toting i-PadsThat Serve as Mobile Catalogs, DigitalInventory Locators, Portable CashRegisters, Customer Files, VirtualMirrors, Facebook/Twitter Stations

Only of American Adults Own a Tablet Device,But It Was Near Top of 2011 XmasLists for 6 to 12 Year-Olds

(IBM)

9%peryear

?? 62%of Millenials(20-Somethings)

11%


Reservoir of Retail Know-How:Central Ohio Continues Tradition of Innovation


(1Looking Forward,Millenials Are MostEntrepreneurial GenerationYet.

HQ Impressive Retail/RestaurantRoster Ranging From Victoria’sSecret, EXPRESS, andAbercrombie & Fitch to Big Lots,Wendy’s, and White Castle

Retail Pioneers PutColumbus on the Map.

Outsiders Surprised That SearsUsed Central Ohio to BlackmailIllinois Legislators,But IndustryInsiders Know Better.

15%

American Crossroads:Distribution & Logistics Hub Dueto Geography, OSU Expertise,Rickenbacker & Intermodal Hubs

Columbus Consultants Such as Fitch,Big Red Rooster, Chute-Gerdeman,WD Partners, BIG Research Keep PortColumbus Busy as They Service Retail& Restaurant Clients Throughout U.S.and Worldwide

In Les We Trust:Mr. Wexner Re-InventsMall Retailing (TheLimited, Victoria’sSecret) Then Re-Inventsthe Mall Itself (Easton)

Casto Family Opens One of the U.S.’sFirst Shopping Centers, Town &Country in 1948, Soon Followed byGraceland, Northern Lights, GreatWestern, Other Early Efforts & Later,Lennox Town Center

Store Design Genius Alton DoodyBlazes Trails in Starting 2 of theGreatest Retail “Think Tanks” EverManagement Horizons &Retail Planning Associates

of 20-SomethingsAspire to Be TheirOwn Bosses(Employers Holdings, Inc)

OSU Fisher College of Business & CCADIntroduce 100’s of Grads Into LaborPool Each Year, Many With StrongInterest in Retail Careers, asProfession Gains Credibility

Local Governments Focus on“Economic Gardening” (NurturingGrowth at Existing Small Start-Ups)as Opposed to “Hunting for Big Game”(Using Tax Give-Aways asAmmunition) From Outside the Area

50%


Central OhioRetail Outlook


(2012

About Boulevard Strategies:Boulevard Strategies provides economic and retail research and analysis,economic development planning, strategic planning, market plandevelopment and program development services to government, non-profit and private sector clients.Our services support the development of:

• Economic Development Plans• Economic Impact Analysis• Real Estate Strategy and Analysis• Trend Tracking• Industry Cluster and Baseline Studies• Business and Marketing Plans• Competitive Assessments• Benchmarking• Business and Retail Audit Reporting

.

Our clients include:• Commercial Property Developers• Commercial Property Investors• Municipalities• Government Agencies• Downtown Business Associations• Community Development Organizations• Development Corporations• Special Improvement Districts• Retailers• Manufacturers• Service Organizations• Non-Profits

If you enjoyed our Top 10 list, follow us on Facebook where we postand comment on articles about the latest retailing, real estate, landuse planning, and marketing trends several times a week all-year long!

Documents

2012 Strategies - Heritage Ohio · Boulevard Strategies 614.294.2072 © Boulevard Strategies, 2012 ... The Wheel of Retailing Turns Again ... Cupcake Backlash Cupcake