There is no such thing as a free lunch. Tea and scones, however, can be another matter at the Somerset Collection, a luxury mall in Troy, Mich.
Eileen Fisher partnered with tea shop Teavana for a “tea and treats” private trunk show March 19, previewing the spring collection for 65 guests from a mailing list of about 250. The tea and scones were served on china and Eileen Fisher had a big day, between $50,000 and $60,000 in sales. For every $200 spent, customers received a $25 Teavana gift card.
Somerset set a much different tone when it hosted a mass pep rally for the Michigan State basketball team, which lost in the final game of the NCAA tournament. The mall was never so packed.
“In tough times, you have to do things to drive traffic. You’ve got to be creative,” said Nathan Forbes, managing partner, The Forbes Company, based in Southfield, Mich., and developer of Somerset. “We’ve been reassuring tenants that we are doing things to help them drive sales.”
Forbes is just one of many developers demonstrating a cooperative spirit toward retail tenants in these times of retail and real estate bankruptcies, refinancings and consolidations, and that new mood will be evident at the International Council of Shopping Centers’ convention, called ReCon, in Las Vegas from May 17 to 20. Forbes said he’s been partnering more with retailers on marketing and special events geared to draw more traffic, though other developers are also exhibiting flexibility over lease rates, kick-out clauses and construction costs. It’s all an outgrowth of concerns over thinning consumer traffic in the malls and store closings over the past year. The convention, usually a teeming, back-slapping, festive affair is expected to be decidedly low-key, less attended and more brass tacks this year.
“Last year, I got 30 invitations to cocktail receptions. This year, I have gotten five,” said Forbes.
Simon Property Group Inc. and Westfield Group have decided to save money by abandoning the leasing floor of the Las Vegas Convention Center. Instead, they plan to hold meetings with retailers in hotels on the Strip, adding an element of inconvenience to retailers. The booths were among the largest and most impressive, though ICSC said they represented just 1 percent of the leasing space on the convention floor, or 20,000 square feet, and that the space has been reassigned to CB Richard Ellis Group Inc., Jones Lang LaSalle, Inland Real Estate Corp., Centro Properties Group and some other firms seeking greater visibility and more prominent space.
Several developers and retailers are sending reduced contingents, with many saying the teams are 20 to 25 percent smaller. And those who are coming in many cases have decided to leave early, with a two- or three-day stay instead of three or four days. Anticipating things will wind down sooner than past years, ICSC has decided to conclude the convention at 1 p.m. on May 20, instead of 5 p.m.
Paid registration is tracking about 15 to 20 percent below 2008, according to Michael P. Kercheval, ICSC president and chief executive officer. “I think it’s safe to say we will have around 30,000 attending, making it comparable with 2005 and 2006 turnouts. The last two years were extraordinarily large” with around 50,000 showing up. It’s a group that includes retailers, developers, brokers, consultants, bankers, architects and interior designers.
“The good news is the reduction in attendance seems to be from leasing mall staff, banks and other financial companies” and not so much “decision-makers,” Kercheval contended. “Developers have determined they don’t need to bring out entire leasing departments. With senior management from retail and development, we haven’t seen the fall-off and the reduction in registration for retailers is not down from where it was last year.”
There will be a noticeable shift in the character of meetings from 15-minute “meet and greets to half-hour meaningful discussions,” said Kercheval.
While acknowledging the inconvenience of certain developers situating off-site, Kercheval noted ICSC has responded with a free “retail connection” area at the convention center, to encourage developers and retailers to get together. Some other attractions are the U.S. Conference of Mayors, being hosted by ICSC, meaning retailers will be able to meet with mayors and economic development officials from cities such as Miami, Boston, Newark, Chicago and St. Louis, which are receiving U.S. government stimulus funds.
The industry mood is multilayered and tainted by “a little bit of misconception that the shopping center industry is directly tied to consumer spending,” Kercheval said. “As sales go down, retail margins are being squeezed, but not so retailers can’t pay the rent. Even at General Growth [which went bankrupt last month after failing to refinance its heavy debt], the net operating income and the cash flow are fairly strong. That’s because rents are continuing to be paid.
“Fundamentally, shopping center companies are pretty sound, even with consumer spending going down. A prolonged depression [if it occurs] will filter back into the shopping center industry, but right now their cash flow looks pretty good. They have plenty of cash to pay interest and a little bit of principle. On the consumer and retailing levels, I really can’t see any meaningful impact from the General Growth bankruptcy. General Growth has great locations and great management teams,” though it underscores a serious issue. “Refinancing and restructuring loans is the primary problem, not servicing the loans.”
Kercheval said occupancy rates industrywide are generally north of 90 percent, down roughly 3 percent from a year ago and likely to drop further this year. Malls hit with some major retail liquidations will be challenged to find new tenants. “If you lost both Linens ‘N’ Things and Circuit City, that is going to be hard to replace.”
Regarding the convention agenda, he said, “The tone this year is about the people and the professionals in our industry, more than the companies in this industry. We’ve added a lot of programs about personal and professional development, about how to find jobs and improve your job. We will have an employment opportunity center, called the ‘reconnect pavilion’ with sessions on job coaching, résumé writing and starting a business.”
For the pavilion, which is open to anyone — even those not registered for the convention — ICSC is teaming up with the International Franchising Association and the Community Bankers Association, as well as representatives from the federal government and search firms. Wal-Mart; various dollar stores; fast-food chains; middle-market specialty chains such as The Dress Barn Inc., Forever 21 Inc., Hennes & Mauritz and Mango, as well as upscale brands such as Tory Burch and Wilford seeking to open outlets, are expected to be among the most aggressive in hunting for new real estate. Others seen taking a high profile in the quest for space are Jimmy Choo; Christian Louboutin; Judith Leiber; Tous fashion jewelry from Barcelona; Bebe, and the South Korean chain called Who.A.U.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
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The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion