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Retail Law Advisor

Food For Thought: How Delivery-Only Food Service Is Impacting Retail Real Estate

Posted in Real Estate, Restaurants, Retail, Retail Sales, Technology

forks_86449_imageToday’s consumer is a tricky one – she is impatient and demanding.  She requires excellent service in the blink of an eye (or perhaps, more appropriately, in the swipe of a finger), and likes to eat meals made with high quality ingredients. Celebrity chefs have taken note. Chefs like David Chang, the man behind the Momofuku restaurant group, have used their name and business savvy to meld technology and food to promote delivery-only food service, a new twist on the traditional “fast food” concept.

Delivery-only food services, made possible by skillfully designed smart phone apps and masterful algorithms, have sprung up in cities like New York and San Francisco to cater primarily to busy Millennials who may not have time to leave their office for lunch or cook dinner at night. These consumers also tend to be at least semi-health conscious and do not want to break the bank to enjoy a quality meal.

Both Maple and Ando are delivery-only food services in New York City that enable consumers to order from daily offerings through an app on their smartphone. Ando is a delivery service co-founded by David Chang and Expa, a startup lab created by Uber cofounder Garrett Camp. Chang oversees the food (which consists of versions of the meals he would serve in his restaurants), Expa develops the technology and UberRush delivers the food.  Currently, Ando delivers only to Midtown East. The priciest item on the menu is $12. Chang is also an investor in Maple, another delivery-service app that delivers food below 42nd Street in Manhattan. Customers place their order through the Maple app or website, and software keeps tabs on its progress so they can track their order. Maple preps its food in an old factory in Brooklyn and performs final assembly at several distribution centers throughout the city. Each distribution center delivers only to customers located within a five-minute bike ride from the distribution center.  This system ensures that food arrives hot and in 30 minutes or less. Lunch is $12 and dinner is $15, inclusive of tip, tax and delivery.

The delivery-only food service industry is still in its early stages. However, to couch potatoes’ delight, as technology evolves to make food delivery even faster and more cost effective, more entrepreneurs are likely to enter the marketplace for their share of the pie, which could in turn impact the retail real estate industry. With no foot traffic, delivery-only food service companies require neither storefront space nor a prime location to attract their customers. Moreover, with no in-house dining, these companies can spend less on design and décor and instead focus on their technology and marketing strategy. Although a Maple kitchen is roughly the same size as a typical Chipotle (about 2,000 – 3,000 square feet), Maple avoids the premium that Chipotle must pay for prime retail locations. Maple hopes that its technology and business model will enable it to serve more customers than your typical fast-food chain but with far fewer physical locations.

Another newcomer, Umi Kitchen, eliminates the need for real estate altogether. Celebrity chef Danny Meyer’s oldest daughter has teamed up with Khalil Tawil and Derek Goffrid to create an app that allows users to choose a home-cooked meal from a selection of ever-changing daily options. The meal is then cooked in the chef’s own home and delivered to the customer by Postmates, a third-party delivery service.

As delivery-only food service becomes more popular, the food industry will once again need to adjust to a technology-driven world. Grocery stores have already been impacted by companies like Amazon, Peapod and Fresh Direct, which enable customers to do their food shopping online, and are now competing with companies like Blue Apron, Munchery and Hello Fresh, which allow customers to order semi-prepared meals that the customer is able to whip up at home, requiring minimal skill but providing the feel of cooking. Even traditional fast-food industry stakeholders are incorporating technology into their delivery operations. For example, Dominos now allows its customers to order a pizza simply by tweeting #EasyOrder or a pizza emoji to @Dominos and to confirm the order by sending a thumbs-up emoji via a smartphone, Samsung SmartTV, Pebble and Android Wear smartwatches or Ford Sync car. The Domino’s Anyware program has brought new meaning to the phrase “Get the door, its Dominos.” A common link between these companies is their use of technology to enable their customers to be more sedentary. And if the customer does not need to leave his or her office or home to shop, cook or pickup meals, then the location of the grocery store or restaurant becomes much less important.

Delivery-only food services are changing the types of space restaurateurs search for, since in this delivery-only niche, technology, quality and efficiency may be more important than where the kitchen is located or what the kitchen looks like. Perhaps soon, the old mantra “location, location, location” may no longer hold as much weight as before.

FACTA Check: Credit and Debit Receipts Can Show Injury-in-Fact

Posted in Compliance, Litigation, Retail, Retail Sales

credit_card_transaction_paul_burnsIn a series of recent decisions that have important implications for retailers, large and small, federal courts have allowed consumer class actions to proceed against businesses for violation of the Fair and Accurate Credit Transactions Act (“FACTA”), even where the consumers did not allege actual damages resulting from the violation.

FACTA requires businesses that accept credit or debit cards to truncate all but the last five digits of a consumers’ card numbers and prohibits printing of credit or debit card expiration dates on all electronically-printed receipts. Although the statute was enacted in 2003, its truncation provisions were phased into effect based on the date that businesses put cash registers or other receipt-printing machines into use. FACTA’s truncation requirements became fully effective for all businesses on December 4, 2006. Since then, numerous lawsuits have been filed against businesses based on alleged failures to properly censor data printed on customers’ receipts. Court rulings in recent FACTA cases underscore the importance of routine monitoring of retailers’ point-of-sale systems to ensure ongoing compliance with FACTA’s truncation requirements.

Last month, a federal judge in Florida rejected luxury shoe, handbag and accessory retailer Jimmy Choo’s motion to dismiss a proposed class action filed by a customer who alleges that Jimmy Choo willfully violated FACTA by issuing her a receipt containing her credit card’s expiration date. (Wood v. J Choo USA, Inc., Case No. 15-cv-81487 (S.D. Fla. Aug. 10, 2016). Jimmy Choo argued that the customer did not have standing to bring a claim under FACTA because she did not allege that she suffered any actual injury (such as identity theft) as a result of Jimmy Choo’s inclusion of her credit card expiration date on her receipt. In its motion, Jimmy Choo relied, in part, on Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016), a recent Supreme Court decision in which the Court held that a plaintiff must show that he or she suffered a “concrete and particularized” injury to have standing. The court in Florida ultimately rejected Jimmy Choo’s argument, finding that the customer’s allegation that Jimmy Choo violated her procedural right under FACTA to receive a receipt that protected her personal financial information constituted sufficient injury to confer standing. According to the court’s ruling, that injury occurred as soon as the improperly truncated receipt was printed.

Similar decisions have been reached by federal courts in California and Florida in FACTA class actions brought by consumers who alleged no harm other than an increased risk of credit and debit card fraud or identity theft.  (Flaum v. Doctor’s Associates, Inc., Case No. 16-61198-CIV (S.D. Fla. Aug. 29, 2016); Cesare v. Lab. Corp. of Am. Holdings, Case No. SACV160006DOCKESX (C.D. Cal. May 31, 2016). Additionally, the United States Court of Appeals for the Second Circuit recently vacated a New York federal court’s ruling dismissing a FACTA lawsuit against retailer The Donna Karan Company, and allowed the plaintiffs to re-plead their claims based on the standards set forth in the Spokeo ruling. (Cruper-Weinmann v. Peris Baguette Am., Inc., Case Nos. 14-3709 and 15-464 (2d Cir. June 30, 2016).

Businesses that fail to bring their registers and other point-of-sale systems into compliance with FACTA’s truncation requirements can be liable to consumers for damages, including statutory damages ranging from $100 to $1,000 per violation and punitive damages. In addition to actual, statutory and punitive damages, FACTA provides for an award of attorneys’ fees and costs to plaintiffs who prevail in enforcement actions brought under the statute. Considering the staggering number of potential plaintiffs in any given FACTA class action and the scope of damages that could result, retailers should take heed of courts’ recent decisions, and should implement routine measures by which point-of-sale systems are monitored for compliance with truncation requirements. Retailers should also be sure that their employees are educated on FACTA’s requirements for protection of consumers’ personal information.

The Future of Retail: Brick and Mortar!

Posted in Retail, Retail Sales

omnichannelIf you believe the hype, it is only a matter of time before brick and mortar retail succumbs to its online competitors.  Recent decisions made by several stalwart retailers appear to support this theory: Macy’s recently announced that it would close 15% of its stores, The Sports Authority and Radio Shack each conducted full chain liquidations as part of their respective chapter 11 bankruptcy cases, the Gap has announced the imminent closure of 175 stores and even Walmart is slated to close 269 stores by the end of 2016.

Yet, despite all of this seeming doom and gloom, of all sales in the first quarter of 2016, physical stores accounted for a whopping 92.3% of such sales. As further (and, perhaps, more meaningful) evidence of the staying power of brick and mortar shops, several originally online-only retailers have either already opened physical locations or plan to do so within the coming years. Last November, e-commerce giant Amazon opened its first brick and mortar bookstore in Seattle and will open more (maybe many more in the next few years. Other online retailers, including Bonobos, Warby Parker and Blue Nile, have opened physical store locations with great success. Notably, brick and mortar order sizes at Bonobos, a men’s apparel retailer, tend to be twice the size of online orders. For many online retailers, the expansion from online-only to brick and mortar operations is the logical next step required for existence in the coveted omni-channel space– also known as “bricks and clicks” (or “clicks and mortar”) retail operations – in order to optimize the consumer shopping experience.

While the expansion from online to brick and mortar may sound like a return to tradition, some of these retailers are opening physical stores that are anything but traditional. Bonobos is among the retailers who are treating their brick and mortar stores more like showrooms, “Guideshops” in Bonobos parlance, where customers can go to actually feel and inspect the merchandise up close, try on the various styles and make a purchase, but walk out empty-handed as their purchases will be fulfilled at on offsite warehouse and then delivered to whichever address the customer provided (probably the next day). Customers of Bonobos and the like appreciate the convenience of being free to enjoy the rest of the day without being laden down with cumbersome shopping bags. However, these showroom-like operations may prove to be less convenient for one party in interest – a landlord entitled to percentage rent under its lease.

Retail leases that provide for the payment of percentage rent require a determination of how to define “gross sales” for purposes of calculating such rent. Historically, sales of merchandise, food or services made in, at, on or from a particular retail store constitute gross sales, with certain exceptions negotiated by tenants, such as employee discounts, bad debts and charges imposed by credit card companies that may be passed off to consumers. In the simplest example, a customer buys a shirt from a retailer, the shirt is stocked at the premises and the consumer completes the sale transaction by paying the purchase price and walking out with the shirt in a bag. This sale would be included in gross sales from the store for purposes of determining percentage rent owed to the landlord. In a showroom-type operation, however, the salesperson essentially is completing an online order for the customer, the merchandise is not stocked onsite and the consumer will likely walk out without the purchase in hand. It would seem rather disingenuous for a retailer that is obligated to pay percentage rent in its lease and is operating a showroom location at which sales are routinely made online and fulfilled by inventory offsite to then argue that its typical sales should not constitute gross sales for purposes of percentage rent (as well as any kick-out right that such retailer may have negotiated for itself). The reverse situation can occur when a retailer provides its online shoppers with the ability to have orders delivered to (but not fulfilled at) a brick and mortar location to save on shipping costs. Landlords would certainly like such sales to be included in the store’s gross sales amounts. Tracking the genesis of online orders for purposes of determining gross sales presents another challenge related to showroom stores, one which was discussed on this blog a few weeks ago.

Ultimately, what does and does not constitute “gross sales” remains a negotiation between landlords and tenants, one that will evolve as retailers get more creative with the use of their physical space and rely more heavily on online transactions, both offsite and within their brick and mortar locations. The silver lining for all parties involved – landlords, retailers and consumers – is that such discussions signal that while the in-store experience may change with the times, as long as consumers still value experiences (and they do), brick and mortar retail is not in danger of extinction.

“In-Season Relevancy” Is in Season this September

Posted in Pop-up Retail, Retail, Retail Sales

runwayThe fashion industry is at a crossroads. Designers must decide whether to continue the age-old tradition of previewing their collections during Fashion Week four to six months before they are available in stores (with fall looks shown in February and spring looks shown in September), or buck tradition in favor of providing instant retail gratification to consumers. In a previous post, we wrote about how the shifts in technology and consumer demand were prompting designers to rethink the traditional Fashion Week format.  At the time of our last post, the Council of Fashion Designers of America (“CFDA”) had recently released a report examining the challenges of the Fashion Week format, citing as a potential solution “in-season relevancy” – the concept that a designer would time fashion events to when collections hit stores to maximize sales. In the ensuing months, it appeared that every day brought a new headline on how designers were deciding to change their Fashion Week format to achieve “in-season relevancy.” With all of this experimentation, have designers finally found the right Fashion Week formula?

For some brands, the answer is yes.  Designers that showcased immediately shoppable looks during the February New York Fashion Week (NYFW) have already reaped the rewards of “in-season relevancy.”  This past February, designer Rebecca Minkoff re-showed her spring collection, which she previously debuted the prior September, to consumers who were able to purchase the pieces immediately.  This strategy resulted in a 211 percent increase in year-over-year sales for Minkoff. This September, Rebecca Minkoff will be trading in the traditional Fashion Week stage for the streets of New York City, where she has invited fashion bloggers to model her collection outside of her retail boutique at which looks will be immediately available for purchase. Minkoff joins designers Tom Ford, Misha Nonoo and Tommy Hilfiger (with a carnival-themed runway at the South Street Seaport that will double as a pop up shop), who will make the revolutionary move of showing fall fashions during their Fall NYFW shows. Consumers are expected to make up half of the audiences for the shows of both Minkoff and Hilfiger.

Other industry stakeholders are capitalizing on the trend with more consumer-facing events. IMG, the producer of NYFW, is following the lead of designers who have chosen to show immediately shoppable looks by setting up two pop up shops for the duration of NYFW aimed at making a trade industry event open the public.  Shoppers will be able to purchase items that designers have made specifically for the pop up shops, some of which may appear on the runway. Even non-social media is seizing on the idea of immediacy in fashion. Google will be launching an initiative during Fashion Week that will allow designers to control what appears at the top of search results for a particular designer or brand with content from their NYFW shows, messages from the designer about inspirations and behind the scenes videos of show preparations. One can imagine that a curated medium like this could easily lend itself to “shop now” links in the future.

When NYFW kicks off tomorrow, what can retailers expect? In light of the growing trend toward showing in season collections during NYFW, retailers and shoppers alike can expect in season collections to translate into higher full price sales. Disrupting the traditional runway-to-retail calendar that delivers parkas in August reduces the likelihood that retailers will have to mark down those shipments during what should be peak selling periods in the winter months. However, despite the trend, some of the industry’s largest stakeholders, like Diane Von Furstenberg and J. Mendel, have not committed to showing immediately shoppable looks and are opting instead for more intimate, one-on-one appointment showings, while fashion conglomerate Kering is remaining a stalwart of the existing regime. Due to the varying sizes and budgets of brands that show at NYFW, it is not clear whether a singular approach will ever emerge as the new Fashion Week format. However, the fashion industry can count on “in-season relevancy” being in season for at least the coming week.

Arriving Now: An Uber Alternative to Parking Validation

Posted in Retail, Retail Sales, Transportation

ct-uber-oakbrook-1125-biz-20141125We previously wrote about how on-demand delivery services, such as Uber and its competitors Lyft and Postmates, have the potential to provide brick and mortar retailers with an answer to Amazon’s delivery service. Services such as UberRush now allow retailers to serve customers who are looking to skip the shopping trip entirely by providing on-demand delivery. But on-demand mobility companies such as Uber can also be relevant to customers who want to shop in-person, and for landlords who subsidize parking there may ultimately be cost savings or other advantages in partnering with such companies.

It’s no secret that car-ownership and usage patterns are changing, and it’s not surprising that retailers generally have much more parking than needed (even on Black Friday). And often, municipal parking regulations may cause more parking than is actually needed. For retailers and landlords in urban areas, it may be more cost-effective to subsidize the cost of rideshare as part of a shopping experience than to subsidize on-site parking. And Uber may be a willing partner.

Recently Uber announced a relationship with a multifamily residential development in San Francisco. As part of the deal, the developer of the 8,900-unit residential project provides a $100 per month stipend to residents for Uber and public transit use, and Uber, for its part, caps fares between the project and the public transit station at $5 per ride. The developer hopes to save money by not requiring as much parking on-site, although at this point the project is still under development (as many as 5,600 of the total 8,900 units are not yet built).

Shopping center owners and retailers currently provide a significant subsidy to customers in the form of abundant customer parking.  In urban shopping centers, the cost of this subsidy may be shared between the landlord and the tenant in the form of a parking validation system where the nominal charge to a customer for parking is waived or reduced. In suburban locations, parking is usually entirely “free” for the customer, and the cost of owning and maintaining the parking field is either incorporated into rent and CAM or borne entirely by the landlord.

Shopping center owners may be able to unlock development potential in their parking fields, or lower their capital and operating expenses, by subsidizing customer trips rather than customer parking, and on-demand mobility services provide the technology to make that possible. To make this arrangement attractive to the customer, the landlord and its tenants could provide a subsidy for the cost of the customer’s ride home (ideally with a car full of purchases) just as they currently provide a subsidy for the cost of parking validation.

The use of Uber to generate retail traffic has already proven successful at a shopping center north of San Diego, California, where a landlord used Uber vouchers of up to $25 each way to combat a parking shortage at its shopping center. In fact, the program was so popular the Landlord shut it down after just over a month because of demand. However, when planned in advance (e.g., when the concept is addressed in leases and/or on-site parking is reduced or redeveloped), on-demand mobility services present not only an opportunity to reduce parking capital and operating costs, but also to attract new, car-less customers who may otherwise be satisfied to shop on-line from home and not make the effort to travel to a brick-and-mortar store.

Significant parking subsidies are currently baked into the retail format, but with the advent of on-demand mobility, there is an opportunity to change that and potentially realize cost savings and other advantages. A key component to making this concept work will involve planning for it in leases with retailers, financing documents, and entitlements.

Selfies: Changing the “Face” of Retail

Posted in Retail, Technology

long-selfie-stickSelfies are everywhere. From selfie sticks to photo editing applications, people are looking for new and better ways to take photos of themselves. At the same time, retailers are creatively taking advantage of our selfie obsession.

Companies such as Crest and Freshii have been gathering market research from consumer selfies through apps like Pay Your Selfie. Pay Your Selfie allows users to earn cash rewards by posting selfies of themselves accomplishing various “tasks.” The selfies aren’t published (although they can be made public), instead they are sold to retailers for a set fee per image, with a portion of those funds being used to pay the consumer. We personally downloaded the app, just to see how intrusive this market research was. Not surprisingly, some tasks were specific and some were more general. For instance, on the day that we downloaded the app, we could get paid $1.00 to take a selfie with food we had ordered from Freshii, or we could get paid $0.25 to take a selfie with a coffee maker (and give any major retailer an insight into my coffee preferences).

A similar app, Mobilizr, pays consumers for posting selfies, but the compensation is based on the amount of traction the selfie gets. Retail companies purchase plans with Mobilizr to run campaigns for their brand based on how many brand ambassadors they would like to hire. The consumer posts a selfie showing the brand logo and gets paid $0.03 for every “like,” “share,” or comment received. Stylinity allows fashion bloggers to share selfies of their outfits, and earn money doing so. Once a blogger posts an outfit, he or she earns points for every person who reacts positively to the outfit and earns a commission for any item in the outfit that is sold from the link that he or she posted. The commission amounts vary, but there are currently over 180 retailers who have linked their products to Stylinity.

Soon, however, selfies won’t just be for the fashionistas. Several companies like Mastercard and Amazon have been investing heavily in facial recognition software. The goal is to use a selfie as a form of identification to prevent credit and debit card fraud. Mastercard has already rolled out the project in Silicon Valley- a consumer first takes a selfie to establish his identity. When that customer uses Mastercard’s Identity Check App to make a purchase online, another selfie is taken and compared to the original. Amazon has taken this idea to a further level, requiring that the selfie be interactive, so as to deter criminals from using a static photo of a person. If the facial recognition software is not satisfied with a customer’s identity, it can require the person to blink, wink or frown.

So far, Mastercard and Amazon have only been able to employ these security measures online. Google is working to change that via its “Hands Free” system. The consumer sets up a Google account containing their picture. At the store, they tell the cashier that they want to “pay with Google.” Then, one of two things will happen: (i) the retailer’s cash register will connect with the consumer’s phone, display the photo, and the cashier confirms the identity of the consumer, or (ii) the retailer has installed a facial recognition camera that will scan the consumer’s face and verify their identity based on their account photo. This costly system has been implemented in select McDonalds and Papa John’s locations in San Francisco, but may migrate to the rest of the country if retailers are willing (or pressured) to purchase the necessary software.

Whether you love them or hate them, selfies are shaping the current landscape of retail. As consumers look to make money from their selfies, retailers use them as a direct method of conducting market research, and financial institutions hope to use them to prevent fraud (and potentially avoid fraud liability). While it is still unclear what new role selfies might play in retail in the future, selfies are likely here to stay.

No Cash? No Problem: The Emergence of Cashless Retailers

Posted in Retail, Retail Sales, Technology

credit_card_transaction_paul_burnsFrom the time we were little, putting birthday money into our piggy banks, cash has always been an important part of our lives. Now, imagine a world where cash is no longer king. Like so many other things that we thought were futuristic, a cashless society is becoming more of a reality and less of a fictitious idea.

The use of cash has been steadily declining, with cash payments expected to continue to fall by 30% over the next 10 years. Countries such as Denmark, Sweden and Thailand have recognized this and have been trending toward becoming cashless societies. These countries have enacted laws that permit businesses to ban cash payments, and in some instances, require payments by mobile applications or credit cards. In Thailand, commercial and state run banks have introduced a payment system which is linked to a mobile phone number and allows the consumer to pay for goods and services without the need for cash.

Businesses in the United Kingdom are also jumping on board. Citing increased efficiency and speed during the lunch time rush, the salad chain Tossed has recently introduced cashless restaurants in the UK. Another example, Waitrose, a UK based supermarket chain, has recently unveiled the first cashless supermarket in the head office of Sky. While this store contains only 1,700 square feet, it will serve over 3,500 customers who will use self-service kiosks to pay with credit cards and mobile applications. Both retailers are expected to introduce cashless platforms in more locations.

Similarly, many benefits of the cashless world are being seen here in the United States. The ban on cash saves employee time and payroll costs by eliminating cash registers and trips to the bank, gas for armored cars, streamlined accounting and the ability to track customer habits to increase retail sales. The salad chain SweetGreen and the sandwich shop, Amsterdam Falafelshop, each headquartered in Washington D.C., are among the growing number of businesses that have started testing the cashless market.

Don’t turn in all of your green just yet, however.  Despite the increase in mobile applications, cash is still used to complete over 80% of transactions worldwide. Security risks are still at the forefront of electronic transactions.  Although the banks, credit card companies and inventors of mobile applications are working tirelessly to find ways to create mediums that consumers can trust and feel safe using, the risks still exist. In addition, many people still depend on cash – people who survive largely on cash tips (i.e. valets, doormen), smaller stores that cannot afford the high fees that credit card companies charge, and individuals who cannot afford the latest smart phones or who have credit issues. It is also worth considering the dilemmas that we will face when networks are down and consumers can’t purchase groceries, gas or oil because cash options are not available.

There is currently no Federal statute mandating that businesses must accept cash as payment for goods and/or services. Absent a State law to the contrary, private businesses are therefore free to develop their own policies on whether or not to accept cash. Massachusetts is one state that does have a law that prohibits retail establishments from requiring the use of credit to purchase goods or services. But this law does not appear to be well known or actively enforced, and the statute does not impose a specific penalty on businesses that fail to comply. Retailers should familiarize themselves with the laws in states where they operate before they refuse to accept cash payments.

While the cashless world is certainly on the horizon, many kinks still need to be ironed out. We do need to start preparing for this new age though. The convenience of paying by mobile applications, credit cards and ApplePay could eventually eliminate the need to carry cash.  Will our grandchildren will be as excited to fill their virtual piggy banks with virtual currency as we were to fill ours with coins and paper?

Digitizing Brick and Mortar: Geofencing and Geolocation Can Help Retailers Win at Omnichannel

Posted in Retail, Technology

omnichannelWe have blogged previously about the steady rise of e-commerce, the benefits and challenges of creating a cohesive omnichannel experience, and some of the special issues omnichannel creates for the landlord-tenant relationship. Customers may appreciate the convenience of omnichannel, but they do not spend much time thinking about where a sale technically takes place. Retailers and their landlords, by contrast, need to understand the relative return of various channels and the location of sales to keep customers happy with their brand or experience. Both retailers and landlord need to keep their businesses running efficiently and profitably, even as a shrinking proportion of actual sales are run through the cash register. The key to that game may be “geolocation, geolocation, geolocation.”

Basics of Geolocation

In the retail context, mobile “geolocation” takes advantage of GPS and Bluetooth capabilities on customers’ smartphones, together with retailer and shopping center Wi-Fi networks and hardware known as “beacons”, to pinpoint exactly where customers are within a space. Retailers can establish a virtual perimeter or “geofence” in or around their store (or a competitor’s) and automatically send a text message or email with a special offer, or set up beacons to guide a shopper to exactly the right shelf. When a customer browses in-store and then purchases later through an app from home, the retailer will have the data it needs to make the connection between the store visit and the online sale.

A Range of Technologies

The technologies that enable geolocation are still developing, and each has its own benefits and drawbacks. Systems that require a user to opt-in may offer a less than complete picture of a customer’s movements, while GPS-based systems that rely on the customer’s cell network to connect may function poorly in some indoor spaces. Beacons are more precise, and use less battery power from customers’ phones, but have a shorter range.  As a result, a geofencing program requires careful and considered implementation so that a retailer understands not only the capabilities but also the limitations of the chosen technology, as well as the impact it may have on customers (shoppers who have not knowingly opted in may be dismayed to find a retailer has been tracking their movements, and even a customer who loves the coupons would be angry to find out the location-based app is draining their battery).

Benefits for Retailers and Landlords Alike

Not only can such data help retailers plan their store layouts and inventory levels and build brand loyalty, but landlords can use the data to establish appropriate percentage rent provisions for their retail leases, enabling them to preserve the traditional alignment of incentives between landlord and tenant and helping ensure they receive proper credit for “show rooming”— when shoppers visit a brick and mortar store to investigate options, but make their purchases later online.

In short, in addition to improving the customer’s experience and sense of convenience, the ubiquity of smartphones and the ever-better, ever-cheaper options for geolocation offer revolutionary opportunities for retailers and their landlords to gain insight into what is actually going on, and where.

ICSC’s New England Idea Exchange Draws a Crowd to Talk Shop

Posted in Retail

ICSCThe Hynes Convention Center hosted the ICSC New England Deal Making Conference in Boston last week from July 19 through July 21. ICSC announced that attendance was at an all-time high of about 1,200 people. The conference kicked-off with several social activities, including the golf tournament, the new sporting clays event and the retailer fun run. Feedback on all events was very positive.

The show’s first day sessions were interesting and diverse – ranging from public/private projects, current issues facing capital markets and the retailer runway. The Next Gen Committee held a real estate version of the classic gameshow – Jeopardy – with host Josh “Alex Trebek” Levy of Waterstone quizzing the contestants on all things retail. After lively interactions from the contestants, Lori McWeeney of Blackline Retail Group was crowned the Jeopardy champion. The keynote speaker at the lunch was Stephen Karp, Chairman of New England Development. In his remarks, Steve highlighted the vast changes in our industry – as his company has moved from enclosed mall development to mixed use urban projects to outlet development. His broad experience brought an interesting perspective to the conference, especially for the younger participants in the audience.

The deal making session was crowded and busy – particularly in the morning. The energy was positive and the meetings were reported to be productive. As is generally the case in the summer, attendance started to dwindle as the day progressed. Attendance at The Wilder Companies after-conference party that wraps up the show was strong and, overall, feedback on the two day show as positive. Attendees were happy to see the show moved back to the typical Tuesday through Thursday schedule, after the experiment last year with the Wednesday through Friday schedule. ICSC seemed to be signaling their commitment to maintaining the New England show as a major attraction for all sections of the retail industry.