Down is the New Up. Up is the New Up. How Innovative Retail Models are Making Consumers Spend Again

Down is the New Up.Down is the New Up. Up is the New Up: How Innovative Retail Models are Making Consumers

Spend Again

Thursday,

October 14

9:30 a.m. – 10:45 a.m.

Alan McKeonAlan McKeonPresident & CEO

Alexander Babbage, Inc.

While the “Great Recession” lasted 4 quarters and reduced Real GDP by nearly 7%, it ended in June 2009 ‐ 16 months ago

ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 3

Is Down, the new Up?

ALEXANDER BABBAGE

Job growth continues to trail previous recoveries


Vertical axis shows the ratio of that month’s nonfarm payrolls to the nonfarm payrolls at the start of recession.

http://economix.blogs.nytimes.com/2010/07/02/comparing-this-recession-to-previous-ones-job-changes--/?scp=5&sq=recession%20comparison&st=Search

Within all the doom and gloom, some retail models and retail sectors are still growing

40,000

U.S. Retail Sales (Seasonally Adjusted) Recession

30,000

35,000

15,000

20,000

25,000

In M

illions $

5,000

10,000

0

Jan‐93

Jul‐9

3

Jan‐94

Jul‐9

4

Jan‐95

Jul‐9

5

Jan‐96

Jul‐9

6

Jan‐97

Jul‐9

7

Jan‐98

Jul‐9

8

Jan‐99

Jul‐9

9

Jan‐00

Jul‐0

0

Jan‐01

Jul‐0

1

Jan‐02

Jul‐0

2

Jan‐03

Jul‐0

3

Jan‐04

Jul‐0

4

Jan‐05

Jul‐0

5

Jan‐06

Jul‐0

6

Jan‐07

Jul‐0

7

Jan‐08

Jul‐0

8

Jan‐09

Jul‐0

9

Jan‐10

Jul‐1

0

Health and personal care stores Clothing and clothing access. stores

1993 20101993 2010


Department stores (excl. L.D.) Warehouse clubs and superstores

Food services and drinking places

Services as a proportion of consumers personal consumption expenditures continues to grow

100%

U.S. Share of Personal Consumption Expenditures

80%

90%

50%

60%

70%

Total PCE

30%

40%% of T

0%

10%

20%


1929 1939 1949 1959 1969 1979 1989 1999 2009

Share of Goods in PCE Share of Services in PCEServicesGoods

Experience matters


Experience overload…1001+ Books about 1001 things you must do …… before you die


Value matters100.0%

Designer26.6% 20.1%

80.0%

es g e“I buy designer merchandise and am willing to pay for the style and workmanship”

50.4% 52.2%

60.0% Brand“I buy well-known brands because they provide the best quality for my money”

40.0%

23.0% 27.7%

20.0%

Value“I prefer to pay the lowest price, so I shop primarily for values”


0.0%

2005 2006 2007 2008 2009 2010

Value doesn't just mean low price

EXPERIENCEEXPERIENCEPRICEPRICE

EXPERIENCEEXPERIENCEVALUE = VALUE =

PRICEPRICE


*Definition of value inspired by AlixPartners

Consumers can check prices quickly and easily online:NexTag, 201st most popular website in US

Rank Website1 Google2 Facebook3 Yahoo4 YouTube5 Amazon.com6 Wikipedia7 Twitter8 eBay9 C i li9 Craigslist.org10 Blogger.com11 Windows Live12 MSN13 Go14 Bing15 LinkedIn15 LinkedIn16 AOL17 ESPN18 Myspace19 CNN Interactive20 WordPress.com21 Netflix22 PayPal23 The Internet Movie Database24 Flikr25 The New York Times26 Microsoft Corporation27 The Weather Channel28 About

ALEXANDER BABBAGE

http://www.alexa.com/siteinfo/nextag.com

© Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 12

28 About29 Bank of America30 Apple Inc.

……201 Nextag.com

Consumers can check prices quickly and easily in‐store:Red Laser, mobile price and stock checking application

iPhone Application

Scans and reads bar‐code on products, books, clothing

Uses GPS from phone to determine where local retailers are

Displays comparison of prices at different retailers online and offline

Displays in‐stock situation

ImplicationsImplications

Can drive in store purchase decision online

Can convert in store purchase to another local retailer

ALEXANDER BABBAGE

local retailer


Marketers are using price and value to drive sales back to retail outlets

Groupon (Group‐Coupon) launched November 2008launched November 2008

A coupon “tips” when a set number of customers buy the “deal”

Gap was the first nation‐wide Groupon deal, tipped at 600 customers

Results:

445,000 shoppers purchased the $25 Gap Groupon dealthe $25 Gap Groupon deal

$11 million in revenue in one day

An average of 10 Groupons

ALEXANDER BABBAGE

http://mashable.com/2010/08/19/gap‐groupon/

An average of 10 Groupons sold per second


Consumers are smarter in determining how and where to part with their hard‐won dollars…and voting with their feet

Experience exceeds price paid = high value

Result: gain market share

Price exceeds value of the experiencePrice exceeds value of the experience

Result: lose market share


Anselm FuscoAnselm FuscoSenior Vice President of Investments

Madison Marquette

Asbury Park History

18

Asbury Park History

19

Recent Past

20

Recent Past

21

Stone Pony Summerstage

23

Boardwalk Overview

24

Restaurants

25

Retail

26

Southwest Waterfront

28

Southwest Waterfront

29

Blake L CordishBlake L. CordishVice President

The Cordish Company

The Cordish Company 601 East Pratt St., 6th Floor Baltimore, MD 21202 Phone: 410.752.5444 Toll Free: 1.800.733.5444

Power Plant- Baltimore, MD

Power Plant- Baltimore, MD

Bayou Place- Houston, TX

Atlantic City Outlets- The Walk- Atlantic City, NJ

Atlantic City Outlets-The Walk- Atlantic City, NJ

Atlantic City Outlets-The Walk- Atlantic City, NJ

Seminole Hard Rock Hotel & Casino- Hollywood, FL

Power Plant Live- Baltimore, MD

Fourth Street Live!- Louisville, KY

Power & Light District – Kansas City, MO

Ballpark Village- St. Louis, MO



Woodbine Live!-Toronto, Canada

Philly Live!- Philadelphia, PA

Mission Rock- San Francisco, CA

Seminole Hard Rock Hotel & Casino- Hollywood, FL

Seminole Hard Rock Hotel & Casino- Tampa, FL

Charleston Place- Charleston, SC

NASCAR Sports Grille

NASCAR Sports Grille- Orlando, FL

Maker’s Mark Bourbon House and Lounge- Louisville, KY

MEX

Vinino

Mosaic Lounge

Mosaic Lounge

Hotel Night Club

Rams Head Live!

Hard Rock Live!

Portfolio Profile M i t F Mainstream Focus

Play to the Deep End of the Pool Dominate Mid-Size Markets with Category

Killer Destinations T h B d D hi C i Touch Broad Demographic Categories

Regional Drive-To Destinations Unique Entertainment Experiences for

Guests

Portfolio Trends in Sales & Per Capita Spending

Vertical IntegrationD f Fi t W Will P t t Thi H Defense First: We Will Protect This House

Challenge of High Energy Concepts Shadow GovernmentsShadow Governments Inevitable Meltdown With Broad Negatives Brain Damage of Complexity & Investment Offense: Create Unique Venues Database Building Multiple Consumer Touch Points Multiple Consumer Touch Points Improve Experiences for Patrons Additional Sponsorship Opportunities

Kansas City Power & Light District- Kansas City, MO

Kansas City Power & Light District- Kansas City, MO

Power & Light District- Kansas City, MO

Sprint Center- Kansas City, MO

Midland Theater- Kansas City Power & Light District- Kansas City, MO

AMC Mainstreet Theater











The Jones

Activation of Public Spaces

Treat Public Spaces as Active Businesses Commitment to Operational Expertise and Depth ofCommitment to Operational Expertise and Depth of

Human Resources: Production, Marketing, Sponsorship Discipline of Distinct P&L Statements: Balancing $4.0

Million in Revenues and ExpensesMillion in Revenues and Expenses Limited Sources of Revenues: Landlord, Tenant,

Common Area Sales and Sponsorships Value For Free & Unique Experiences Regional Destination: Drive Times & Repeat Visitation

Making MarketsBi t Ch ll Ch i P ti d P tt f Biggest Challenge: Changing Perceptions and Patterns of Behavior

Recognition that Consumers are More Judicious With Higher E pectationsExpectations

Quality of the Experience is Critical Exceed Expectations: Mainstreet, Midland, Cosentinos Focus on Immersive and Departure Based Entertainment

Experiences: Bright Lights, Big City Events and Anchors that are Purchasing Enablers Such as g

Sports and Concerts in Terms of Mindset and Drive-Time

Strategy Adjustments Increased Calendar of Events and Budget by approximately Increased Calendar of Events and Budget by approximately

15% to 210 Event Per Annum Increased Diversity of Event Calendar to Reach a Broader

DemographicDemographic Debated But Kept With 100% Free Events Opened up Additional Sponsorship Assets in Sought After

Activation Experiencesp Limitations on Sponsorship Dollars: 3 for 2 Increased Trade Emphasized Media Partners Including Social Media Outlets p as ed ed a a t e s c ud g Soc a ed a Out ets

Brand Alliances

Execution is The Key

Ambiance is the Anchor Not Concepts Experience Over Brands Large Scale Mixed-Use Districts Versus

Projects Delivering Enhanced Value

The Cordish Company 601 East Pratt St., 6th Floor Baltimore, MD 21202 Phone: 410.752.5444 Toll Free: 1.800.733.5444

Julie Brinkerhoff‐JacobsJulie Brinkerhoff JacobsPresident & CFO

Lifescapes International, Inc.

NormaLynn CutlerNormaLynn CutlerLead Drum Majorette

Cutler Enterprises

The EmThe Em--urgenturgentThe EmThe Em--urgent urgent Theater of RetailTheater of Retail

Playing for Dramatic ResultsPlaying for Dramatic ResultsWhat’s NewWhat’s New

NormaLynn CutlerNormaLynn CutlerCutler EnterprisesCutler Enterprises

WHAT’S WRONG WITH WHAT’S WRONG WITH S C ???S C ???

WHAT’S WRONG WITH WHAT’S WRONG WITH S C ???S C ???THIS PICTURE???THIS PICTURE???THIS PICTURE???THIS PICTURE???

OPEN SPACEOPEN SPACEOPEN SPACEOPEN SPACEOPEN SPACE OPEN SPACE ANIMATION FORANIMATION FOR

OPEN SPACE OPEN SPACE ANIMATION FORANIMATION FORANIMATION FOR ANIMATION FOR OPEN WALLETOPEN WALLET

ANIMATION FOR ANIMATION FOR OPEN WALLETOPEN WALLETOPEN WALLET OPEN WALLET DOMINATIONDOMINATIONOPEN WALLET OPEN WALLET DOMINATIONDOMINATIONDOMINATION.DOMINATION.DOMINATION.DOMINATION.

C S OC S OC S OC S OTRICKS TO HELP TRICKS TO HELP YOUR PROPERTYYOUR PROPERTYTRICKS TO HELP TRICKS TO HELP YOUR PROPERTYYOUR PROPERTYYOUR PROPERTY YOUR PROPERTY

ROCKROCKYOUR PROPERTY YOUR PROPERTY

ROCKROCKROCK.ROCK.ROCK.ROCK.

1. DON’T BE AFRAID 1. DON’T BE AFRAID TO BE INSPIRED BYTO BE INSPIRED BY1. DON’T BE AFRAID 1. DON’T BE AFRAID TO BE INSPIRED BYTO BE INSPIRED BYTO BE INSPIRED BY TO BE INSPIRED BY

OTHERSOTHERSTO BE INSPIRED BY TO BE INSPIRED BY

OTHERSOTHERSOTHERS.OTHERS.OTHERS.OTHERS.

2. DO COLLABORATE 2. DO COLLABORATE 2. DO COLLABORATE 2. DO COLLABORATE WITH ARTISTS, LOCAL WITH ARTISTS, LOCAL

IF POSSIBLEIF POSSIBLEWITH ARTISTS, LOCAL WITH ARTISTS, LOCAL

IF POSSIBLEIF POSSIBLEIF POSSIBLE.IF POSSIBLE.IF POSSIBLE.IF POSSIBLE.

3. DON’T BE3. DON’T BE3. DON’T BE3. DON’T BE3. DON T BE 3. DON T BE PREDICTABLE.PREDICTABLE.

3. DON T BE 3. DON T BE PREDICTABLE.PREDICTABLE.

4. DO MIX LOW &4. DO MIX LOW &4. DO MIX LOW &4. DO MIX LOW &4. DO MIX LOW & 4. DO MIX LOW & HIGH CULTURE.HIGH CULTURE.

4. DO MIX LOW & 4. DO MIX LOW & HIGH CULTURE.HIGH CULTURE.

5. DO SUBSCRIBE TO 5. DO SUBSCRIBE TO EDGY MAGS OF ALLEDGY MAGS OF ALL

5. DO SUBSCRIBE TO 5. DO SUBSCRIBE TO EDGY MAGS OF ALLEDGY MAGS OF ALLEDGY MAGS OF ALL EDGY MAGS OF ALL

KINDSKINDSEDGY MAGS OF ALL EDGY MAGS OF ALL

KINDSKINDSKINDS.KINDS.KINDS.KINDS.

6. DO LAMPOON &6. DO LAMPOON &6. DO LAMPOON &6. DO LAMPOON &6. DO LAMPOON & 6. DO LAMPOON & SATIRIZE.SATIRIZE.

6. DO LAMPOON & 6. DO LAMPOON & SATIRIZE.SATIRIZE.

7. DON’T AVOID TEXT.7. DON’T AVOID TEXT.7. DON’T AVOID TEXT.7. DON’T AVOID TEXT.7. DON T AVOID TEXT. 7. DON T AVOID TEXT. EMBRACE IT!EMBRACE IT!

7. DON T AVOID TEXT. 7. DON T AVOID TEXT. EMBRACE IT!EMBRACE IT!

8 DON’T BE AFRAID8 DON’T BE AFRAID8 DON’T BE AFRAID8 DON’T BE AFRAID8. DON’T BE AFRAID 8. DON’T BE AFRAID OF THEMES DON’TOF THEMES DON’T8. DON’T BE AFRAID 8. DON’T BE AFRAID OF THEMES DON’TOF THEMES DON’TOF THEMES. DON T OF THEMES. DON T

OVERDO THEMOVERDO THEMOF THEMES. DON T OF THEMES. DON T

OVERDO THEMOVERDO THEMOVERDO THEM, OVERDO THEM, EITHER.EITHER.

OVERDO THEM, OVERDO THEM, EITHER.EITHER.EITHER.EITHER.EITHER.EITHER.

9 DON’T SPEND A9 DON’T SPEND A9 DON’T SPEND A9 DON’T SPEND A9. DON’T SPEND A 9. DON’T SPEND A FORTUNE ONFORTUNE ON

9. DON’T SPEND A 9. DON’T SPEND A FORTUNE ONFORTUNE ONFORTUNE ON FORTUNE ON

HOLIDAYS (UNLESSHOLIDAYS (UNLESSFORTUNE ON FORTUNE ON

HOLIDAYS (UNLESSHOLIDAYS (UNLESSHOLIDAYS (UNLESS HOLIDAYS (UNLESS YOU HAVE ONE).YOU HAVE ONE).

HOLIDAYS (UNLESS HOLIDAYS (UNLESS YOU HAVE ONE).YOU HAVE ONE).YOU HAVE ONE).YOU HAVE ONE).YOU HAVE ONE).YOU HAVE ONE).

NEW PARADIGMSNEW PARADIGMSNEW PARADIGMSNEW PARADIGMSNEW PARADIGMS NEW PARADIGMS IN RETAILIN RETAIL

NEW PARADIGMS NEW PARADIGMS IN RETAILIN RETAIL

Down is the New Up. Up is the New Up: HowUp is the New Up: How Innovative Retail Models are Making Consumers

Spend Again

Q&A

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Down is the New Up. Up is the New Up. How Innovative Retail Models are Making Consumers Spend Again