The Art and Science of Situating Your Store

May 31, 2007  by in UnCategorized   

By Home Furnishings Business in on June 2007 Rather than being reactive to changes in the marketplace, today’s retailers are becoming more proactive when it comes to researching, acquiring and managing their store locations.

Ultimately, it all comes down to watching the signs, staying on top of retail trends, and gearing new store setups to the places customers are most likely to shop in—now and in the future.

In a seminar held at National Retail Federation’s 2007 Show in New York on Jan. 14, James “Jamie” Bersani, executive vice president, real estate, Limited Brands (parent company of Victoria’s Secret, Bath & Body Works, Express, Henri Bendel, The Limited and The White Barn Candle Co., among others) and John Mulleady, vice president, real estate and construction, Circuit City, discussed the ins and outs of managing a store’s real estate lifecycle.
Here are some of their thoughts.

Do a Tour

“We don’t really pursue free-standing stores,” Bersani said, adding that his company typically seeks store space in malls, strip shopping centers and lifestyle center developments. He called the search for ideal space an “art and a science.”

How does Limited Brands go about finding new store properties? “We send out a rep out to tour the market and find appropriate venues in that area,” he said. “It’s not just about finding a good location. Our stores have strong identities, both in terms of design and the types of products they sell. We need to find a compelling shopping venue that compliments each brand’s identity.

“Ultimately, we want a location that drives a lot of traffic,” he added, “as well as a compelling store design.” One such option he said his company is utilizing more these days is converting spaces that were previously department stores, which he sometimes finds preferable due to their generous size, adaptability to his brands and traffic-drawing designs.

Just the Facts ... and the Gut

“There’s a balance between art and science,” Mulleady said, echoing Bersani’s statements as he spoke of the steps Circuit City undertakes when choosing new locations. “We base a lot of our decisions on research and data. Ultimately, these decisions are up to our real estate director, who typically does an analysis to see if a property is viable. If he determines, based on research of the market, previous stores in that location, and the performance of similar stores in the area, that we’re going to lose $3 million in the life of the store, we can’t do it.”

But there’s some “art” involved in the director’s decisions as well, even if the facts don’t predict success. “If he feels (a location) is right in his gut, we’ll go back and gather more data.” And Circuit City doesn’t rely solely on one director’s opinion, as it welcomes input on a site’s pros and cons from its entire real estate team.

“If anyone feels attached to (a) site,” he added, “they have to bring in more data to make their case.”

To Mall or Not to Mall?

“We are in a lot of lifestyle centers,” Bersani said, referring to the relatively new type of retail development containing only home-oriented stores such as hardware and home furnishings. “There are a not a lot of new malls built today, so a lot of our new U.S. stores are going into these centers. We’re watching those to see how they perform.”

Despite this trend, Limited Brands is still standing by its mall locations. “Eighty percent of our mall-based stores are successful in driving foot traffic,” he said, adding that malls continue to offer advantages lifestyle centers can’t match, such as food, entertainment and store variety. To draw traffic away from malls, he felt lifestyle centers must appeal to consumers as true town centers—hot spots of community activity in addition to shopping.

Read the Customers

Of course, retail isn’t just about a plot of land—it’s about people. Bersani offered his thoughts on gearing store location and construction to customer preferences, especially in the face of competition from online sellers. “We have to know the customer like a best friend,” Bersani said. “You have to be interactive with them. You have to find out how they like purchasing their goods. Do they like the experience of coming to a store? You have to gear your store—where it is, and how people access it in terms of things like traffic patterns and parking—to their preferences.

“Being a great brand means you’ve created an emotional connection to the customer,” he added. “We can’t reinvent customer taste. What we can do, in terms of store location and design, is work to create an exciting shopping experience.”