Header graphic for print

Retail Law Advisor

Uber Drivers: Employees or Independent Contractors?

Posted in Employment, Retail, Tax

uberdriverSince its founding in 2009, Uber has gained both praise and notoriety for shaking up the taxi industry by allowing individuals who meet minimum requirements to provide an on-demand car service via the Uber mobile app.  In December 2014, there were 162,037 active Uber drivers in the United States alone.  In San Francisco, where the taxi industry reportedly grosses $140 million a year, Uber now generates approximately $500 million a year.  Investors have flocked to Uber, too, pouring $2.7 billion into the company, bringing Uber’s estimated value to a whopping $41 billion as of December 2014.  But this meteoric rise has been accompanied by legal challenges in many jurisdictions around the world.  In particular, Uber is having to defend itself against claims that it has misclassified its U.S. drivers as independent contractors rather than as employees.

Why companies favor independent contractors

A company with employees must pay a variety of federal employment taxes and similar state taxes.  A company pays none of these taxes for an independent contractor, and the contractor pays its own expenses of doing business.  Thus, Uber’s independent contractors pay expenses such as gas and vehicle maintenance as well as self-employment taxes, all of which reduce Uber’s costs of doing business.

The risk of misclassification

It is difficult to calculate the monetary exposure Uber would face if all of its drivers were deemed employees, but the recent $228 million settlement between FedEx and 2,300 of its drivers provides an apt comparison.  In that case, the federal appeals court determined that FedEx had misclassified its California drivers as independent contractors.  Notably, the decision said: “Labeling the drivers ‘independent contractors’ in FedEx’s Operating Agreement does not conclusively make them so.”

Uber’s recent experience in California and New York

On June 16, 2015, the California Labor Commission awarded one Uber driver $4,000 in back wages and interest to which she was entitled as an Uber employee.  In the words of the hearing officer:

“Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to engage drivers and passengers to transact the business of transportation. The reality, however, is that defendants are involved in every aspect of the operation. Defendants vet prospective drivers, who must provide to defendants their personal banking and residence information, as well as their Social Security Number. Drivers cannot use defendants’ application unless they pass defendants’ background and DMV checks.”

The decision further notes that Uber controls the prices and cancellation fees charged to riders, the payments to drivers, and the app that enables the drivers to work, all of which describe an employment relationship.  In addition to this regulatory proceeding, Uber is defending a pending class action lawsuit in California in which the judge, on March 11, 2015, denied Uber’s Motion for Summary Judgment.  The plaintiffs there are trying to extend the class action to include all drivers nationwide.

Uber’s followers did not have to wait long to see how similar cases would fare in other states.  On July 14, 2015, in an interview with Bloomberg TV, the chairwoman of the New York City Taxi and Limousine Commission gave the opposite opinion of the California Labor Commission: “We have wholeheartedly supported driver flexibility as independent contractors when we allow them, much to the consternation of the industry, to drive for several bases…so a driver is not an Uber driver.”

Takeaways from the Uber experience

Uber will likely face additional regulatory enforcement proceedings, lawsuits brought by individual drivers, and class actions representing many drivers in a variety of jurisdictions, each with its own laws governing the distinction between employees and independent contractors.  Thus, the results will likely be mixed.

Retailers should follow Uber’s experience and learn from it.  Know the relevant law in the state(s) in which you operate.  Also know that numerous federal lawsincluding those enforced by the IRS – are implicated by improper classification of independent contractors.  The IRS allows a company to submit Form SS-8 for a ruling as to the proper characterization of a contractor/employee, which a company may find particularly worthwhile if it has many of one type of contractor/employee.  As always, seek guidance from your lawyer regarding compliance with state and federal employment laws.

ICSC’s New England Idea Exchange Talks Trends and Technology

Posted in Retail

ICSCAs ICSC’s New England Idea Exchange closes on yet another successful conference, the message is clear:  the retail industry is reinventing itself once again.  Attendance was on the increase again this year as real estate professionals gathered at the Boston Convention and Exhibition Center, appropriately located within the quickly expanding Seaport District, to hear about the latest trends in the industry and how those trends are here to stay.

Attendees heard from the experts on everything from big picture issues in the finance sector, to more nuanced discussions on how the single tenant net lease may be changing the real estate investment landscape.  The trend of high-end retailers expanding discount affiliates was also of great focus.  For example, while Nordstrom intends to open just a handful of new flagship stores in the coming year, it plans to open dozens of locations for its bargain brand, Nordstrom Rack.  In like fashion, the industry will see the rollout of Macy’s “Backstage” and an increasing number of Saks “Off Fifth” locations. On the owner/developer side, while enclosed mall expansion has ground to a halt, outlet centers continue to spread rapidly into new areas of the country.

This was the first year that the conference was scheduled on a Wednesday through a Friday.  Concern was expressed by attendees, however, that a Friday in July may be a challenge to assure solid attendance through the end of the show.  It will be interesting to see if ICSC returns to the more typical Tuesday through Thursday schedule to ensure that the New England show continues to be a major attraction for all sectors of the retail industry.

Cyber Liability Insurance – Does Your Retail Business Need It?

Posted in Insurance, Intellectual Property, Liability, Risk Management

cyberliabilityThe news is full these days of hackers stealing credit card and other customer information from United States retailers such as Home Depot, Target, and Neiman Marcus (and the federal government) among others. These mega-breaches make great headlines, but what about smaller retailers? Are smaller retailers and restaurants targets for cyber criminals? The answer is yes. Although hackers rarely attempt to directly breach the firewall protections of specific small businesses, identity thieves will frequently send out tricky mass emails to hundreds of small businesses claiming to be from PayPal, QuickBooks, Xerox, etc., and once the email is opened or the link accessed by an unwitting employee, the hackers have access to the system.

According to the Chairman of the House Committee on Small Business, “nearly 71% of cyber-attacks occur at businesses with fewer than 100 employees,” because they have less sophisticated security defenses and cyber policies and consequently are more vulnerable to hackers and human error. According to Benetrends Financial, responding to an average cyber-attack typically costs small businesses around $21,000 (approximately $215 per lost record). Response costs can include notifying customers of the breach, hiring forensic investigators to review how the hacker gained access to the system, providing complimentary identity protection services to affected customers, reimbursing banks for the reissuance of breached credit cards, and paying public relations consultants to rebuild the company’s reputation. These costs don’t include expenses associated with lost business or litigation arising from the breach.

Although some insurers may have provided limited coverage for cyber liability claims on older commercial general liability forms, the frequency and severity of cyber liability claims have forced insurers to create exclusions on existing forms clarifying that cyber liability claims are excluded from general liability policies. Furthermore, use of an outside vendor to manage data (in the cloud or otherwise) does not necessarily relieve a business owner of his or her obligations. Under state and federal privacy laws, a business owner who accepts personal information, such as credit card data, from a customer remains responsible for the security of the customer’s information even though the business owner hires a third party to process and store the information. Therefore, business owners now need to consider obtaining standalone, dedicated cyber liability insurance policies to cover their cyber liability risk. Depending on the coverage obtained, all of the costs mentioned above can be covered by cyber liability insurance. A summary of the different elements of cyber liability insurance can be reviewed here.

When applying for cyber liability insurance, a business owner should select an insurance broker who has an experienced, cyber liability knowledgeable team. The broker should be in a position to help the business owner use an application that is thorough and appropriate for the owner’s line of business. The application form will require detailed information from the IT and network security team (regarding cloud providers and monitoring mechanisms), the finance department (regarding premium limits, deductibles, and scope of insurance), and the legal department (regarding indemnities and other contractual protections from outside vendors). The best rates are given to those businesses that have cyber breach detection and response plans in place, and have internal policies designed to avoid a data breach and to protect personal identity information. Some helpful suggestions can be found in this list of Top Five Ways to Avoid a Data Breach prepared by the Beazley Group.

Cyber liability insurance is obtained as a separate policy, and can be obtained from an owner’s regular insurance broker or through an insurance broker specializing in cyber liability coverage. Because cyber liability insurance is a relatively new insurance product, the cost, coverage terms, and limit of coverage can vary widely from insurer to insurer making it worthwhile to shop around.

Are You Ready for the Attack? Online Brand and Reputation Protection

Posted in Intellectual Property, Retail, Risk Management

Laptop Magnifying glassIt starts with an inaccurate, possibly fake, online review. Then a post appears on a consumer complaint forum. Suddenly, there is a surge of false postings about your company on social media sites. Invariably, these anonymous postings appear prominently in search engine results, including Google. If you haven’t implemented proactive monitoring for attacks and are not prepared to counter them, otherwise controllable threats could balloon rapidly into full-scale crises.

The internet and related technological developments provide valuable platforms for the open exchange of information and ideas. However, the internet is equally available to unscrupulous individuals and bad actors disguised as bona fide consumers. Although the internet is full of false and misleading information, consumers still rely on internet reviews before making purchasing decisions. A recent survey found that 88% of consumers trust online reviews as much as personal recommendations. This underscores the importance of identifying and tackling online risks to a company’s brand and reputation.

There are certain steps that should be considered when an online attack occurs:

  • Assess the damage and establish a strategy. It is critical to assess the damage from an attack first and not just respond reflexively. There is no effective one-size-fits-all approach. A thoughtful and comprehensive strategy must be crafted to address the specific issues and challenges.
  • Protect intellectual property. Online attacks may implicate copyright, trademark, trade secrets, counterfeiting, false advertising, and other intellectual property. When an attack does involve intellectual property, federal and state laws may provide expedited and efficient remedies.
  • Identify defamatory and other unlawful content. Online attacks usually include defamatory and other unlawful content. Before initiating litigation or seeking other remedies, the unlawful content must be identified. This will allow a company to consider its available claims and the different venues where it could assert those claims.
  • Identify the sources. Typical sources of online attacks are disgruntled employees, dissatisfied customers, unscrupulous competitors, and other bad actors. While the First Amendment protects certain types of anonymous speech, it does not protect individuals, groups, or organizations from making threatening, defamatory, or other unlawful comments. It is often appropriate to deploy various legal tools to reveal the sources of online attacks. This is an important step to stop an attack.
  • Seek removal of unlawful content. State and federal laws dealing with intellectual property rights, unfair competition, and defamation provide for the removal of such materials.  Many websites and social media platforms also will remove unlawful content under certain conditions. Seeking the removal of this content may require a cease-and-desist letter, subpoena, initiation of a lawsuit and request for a court order, or other dispute resolution procedures.
  • Implement curative and preventative measures.  Even if an attack is stopped and content is removed, remnants of this content will remain online. Additional steps must be taken to identify and address these sources. In addition, preventative measures must be implemented to prevent reoccurrences and future attacks. Such measures may include gaining control over certain internet domains, increasing social media presence, and generating fresh marketing and advertising content.

The nature and prominence of the internet requires companies to monitor their online presence, manage their brands and reputations, and remain vigilant for potential attacks. When these attacks occur—which they do with increasing frequency—the response must be informed, proactive and strategic.

Let Freedom Ring!

Posted in Holiday, Retail

RainbowAmericanFlagGoulston & Storrs has a long and proud tradition of supporting diversity. It’s not just a theoretical goal; we believe diversity helps us recognize and appreciate alternate viewpoints which ultimately improves our firm and our ability to serve our clients.

Two years ago we spoke in support of the Supreme Court’s decision declaring Section Three of the Defense of Marriage Act (DOMA) unconstitutional. As longtime supporters and pro bono counsel for MassEquality we were gratified by this result. A few days ago, the Supreme Court legalized same-sex marriage nationwide, marking the end of a long chapter of activism. And just last week, Marc Solomon visited our offices to share insights from his book, Winning Marriage.

We celebrate our clients and colleagues who have labored tirelessly for many years in the fight for marriage equality, and share in their pride with the Supreme Court’s historic decision.

As we look to Independence Day, we are reminded what those brave patriots in 1776 achieved for us: limitless possibilities for individuals, families, governments, academic institutions and businesses. Since our founding, we have strengthened the links across a broad continent and an increasingly diverse population.  We have built a cross-country railroad linking our coasts; united fifty states; accomplished air travel, put humans on the moon and countless other achievements. All of those initiatives were possible because of the people behind them– including waves of immigrants from all continents– and the businesses they created to support the endeavor. In fact, many retail establishments are likely in business today due to the advent of rail travel and they will continue to adapt as mobile commerce evolves.

Two centuries later, we still enjoy limitless possibility: from the local small business owner looking to expand his business to the big box retailers who grew their brands from humble beginnings, we are all reminded that Friday’s Supreme Court decision is just one more milestone on the long path to progress. The wedding-planning business, and retailers in general will likely see a boost as a result of Friday’s decision, as we have already seen with companies like Target and insurance provider Esurance beginning to market specifically to gay couples.

Happy Fourth of July and let freedom ring!

Does Your Website or Mobile App Discriminate?

Posted in Compliance, Retail, Technology

Keyboard - access key Contact usAre you confident that your business complies with federal anti-discrimination laws?  If you offer goods or services to the public through the Internet, the answer may not be as simple as you think.  Increasingly, lawsuits are targeting retailers and other service providers that have an online presence, claiming that if their websites and/or mobile apps cannot be used equally by consumers who are blind, deaf, physically impaired or otherwise disabled, they violate the Americans with Disabilities Act of 1990 (the “ADA”). This area of law is still evolving, but taking some measures now may reduce the risk that your business will be the target of a discrimination lawsuit.

Title III of the ADA prohibits discrimination against disabled persons in places of “public accommodation.” This generally requires most businesses that provide goods or services to the public to be as accessible for persons with disabilities as they are for those without.  Traditionally, Title III has been applied to require businesses to provide equal access to stores, restaurants, and other physical spaces.  As our society has increasingly moved beyond the physical world and into the virtual, however, there has been a growing debate about whether the ADA also applies to our virtual stores, supermarkets, libraries, movie theaters, and other businesses.

The law on the ADA as it applies to the Internet remains unsettled.  Enacted in 1990, the ADA was not drafted with the Internet in mind, and Congress has not amended the ADA to modernize it in that respect. Courts across the country have disagreed on whether the ADA applies to Internet-only businesses, or only to those that also have a physical space.  For example, a federal court in Massachusetts ruled the ADA does apply to Netflix’ streaming service, while federal courts in California disagreed and ruled it does not.  Unfortunately, the United States Department of Justice (the “DOJ”), which is tasked with enforcing the ADA, continues to delay the release of its long-anticipated rulemaking on the topic – most recently pushing back the expected release from June 2015 to April 2016.

The lack of settled law and clear regulations has not stopped the DOJ and other complaining parties from aggressively pursuing claims against businesses that host websites or apps thought to be violating the ADA.  Even if not won outright, these claims can force large settlements, generate hefty legal expenses, and cause significant damage to a business’s reputation.  Until the law is clarified, how are businesses to protect themselves?

Though we do not yet know what the DOJ’s rules will look like, the DOJ has given some clues along the way that should help businesses to avoid being targeted in these suits.  In settlements with businesses alleged to have violated the ADA on the Internet, the DOJ consistently has required that the business comply with the World Wide Web Consortium’s Web Content Accessibility Guidelines 2.0 (“WCAG”).  These guidelines focus on making the Internet more accessible for persons with disabilities, suggesting accommodations such as having text alternatives for non-text content to help hearing-impaired users, being fully navigable by keyboard for physically impaired users who may be unable to use a mouse, and being compatible with ‘screen readers’ for vision-impaired users.  The WCAG sets three levels of conformity – from the lowest at level A to the highest at AAA – and the DOJ has generally required compliance with levels A and AA.

The WCAG are only guidelines, and are not mandatory for private businesses.  Still, they signal what the DOJ views as appropriate and what the DOJ’s rules may ultimately look like. In addition to aiming for WCAG Level AA conformity, the DOJ has also suggested through settlements that it would be reasonable to require businesses to have an executive or employee charged with ensuring WCAG compliance, and to hire independent auditors to conduct periodic evaluations of such WCAG compliance.  Finally, it may also be advisable to train your customer service staff to escalate complaints about website or mobile app inaccessibility so that problems can be remedied quickly.  Whether the ultimate rules look like the WCAG or are different, it is clear that rules are coming.  Taking the above steps may help to protect your business by keeping you ahead of the curve.

From the Suburbs to the City: How Grocery Retailers are Filling the Urban Grocery Gap

Posted in Retail

Shopping carts in a rowAs residential high-rises pop up all over the city of Boston, big-name grocery retailers are sprouting nearby to meet the increased demand.  The most recent example is the opening of a Roche Bros. supermarket in Downtown Crossing in late April of this year.  Occupying part of the old Filene’s Basement, Roche Bros. stands to benefit from the hundreds of new residents that Millennium Place has attracted, and the Millennium Tower will soon attract, to Downtown Boston.  Earlier this year, Whole Foods Market opened yet another location at the former Boston Herald site in the South End.  More supermarkets seem to be on the way, including a Star Market near North Station and a Wegmans Food Markets in Fenway.

With more people choosing to live in the city, it is no surprise that grocery retailers have spotted the market opportunity.  Worth noting, however, are the ways in which these retailers have adapted their traditional suburban supermarkets to fit city living.  Grocery retailers face a variety of challenges, and opportunities, when operating in the city.  These include higher development and operating costs, constraints on physical space that affect parking and store layouts, and a consumer base that is more on-the-go, desirous of fresher foods, and dependent on public transportation.

Below are some of the ways grocery retailers have responded to these unique challenges and opportunities:

  • Prepared / grab-and-go foods.  Capitalizing on not just the residents, but also the thousands of office workers in the Financial District, Roche Bros.’s street level floor in Downtown Boston is devoted primarily to ready-to-eat food prepared on-site covering breakfast, lunch and dinner, such as breakfast pastries, sandwiches, soups, salads and sushi.
  • Smaller portions.  City grocery retailers are less likely to see minivans in parking lots being loaded up with a week or two’s worth of groceries for the whole family.  Recognizing that urban consumers are often walking, biking or taking public transportation to the store and purchasing for a household of only one or two people, city grocery retailers are offering smaller portion sizes for a variety of food items with the expectation that these consumers will shop more frequently.
  • Delivery services.  Many of the large grocery retailers offer delivery services with a minimum order amount, which helps those needing to buy a heavier load and/or trying to fit a home-cooked meal into their busy schedules.
  • Limited assortment stores.  Trader Joe’s has achieved tremendous success in this category.  Its limited and carefully picked offering of products enables it to have a smaller physical footprint in the city, keep its prices low and still provide consumers what they want.  Its small but very popular location on Boylston Street in the Back Bay occupies only 7,118 square feet.

As Boston continues to experience growth in jobs and population, the development of new grocery stores will likely follow suit, providing fresher, healthier and more affordable food options to those living and working in the city and its neighborhoods.

Summer Retail: Sales Tax Holidays, Pit Stops, and Where the Deals Are

Posted in Retail

flip-flops-1-537x402Memorial Day has passed and while offices still hum with productivity, we can feel summer around the corner. With that in mind, we’ve explored what might be in store for the retail industry this summer.

Although the usual break of seasons has extended somewhat — we see back-to-school shopping starting in July and holiday shopping starting in October — there are still some recognized times of the year for good deals. According to consumer trend-spotters, in early summer, shoppers will be looking for fitness-oriented items and tools, perhaps for expected out-of-office time or in preparation for home improvement with warm weather ahead. During the dog days of summer, although one’s mind turns to vacation, for some consumers it will be time to feather the nest. Analysts predict sales of home goods and furniture to be strong in July until consumers turn their attention to school shopping and smaller goods in August.

For many states, this summer will bring a sales tax holiday. Retailers selling big-ticket items such as furniture, appliances, electronics, in addition to major purchases like cars, will need to be prepared with sufficient inventory and also understand what the rules governing sales tax  holidays. Check here for a full list of expected 2015 tax holidays if you think your business might need to gear up for the event.

Retailers will need to staff appropriately for the summer, which can be unpredictable with weather and vacations. A perennial favorite of college students, retail jobs this summer are predicted to be scarce but still available for motivated individuals who don’t mind being persistent and pounding the pavement a bit. Non-mall retailers such as those located in strip malls, shopping plazas, airport stores, hotel retail shops and locally-owned businesses may have their pick of talented applicants once mall retailers fill open positions.

Consumers will hit the road this summer, whether for the once-in-a-lifetime cross country drive or the every-weekend trek to the local beach. Regardless of distance, increased traffic on the roads means increased traffic at gas stations and convenience stores. Earlier in the year, analysts were predicting a few trends in the grocery industry, including an increased focus on technology and health and wellness. These customer-driven enhancements extend to convenience stores such as 7-11, Kroger and Wawa. Families on road trips are demanding many things from their rest stops: clean facilities, healthy snacks and meals, and easy access to fuel and places to relax. Additional menu items, greater attention to healthy options and more green space and dining space around the property will continue to drive the construction, development and upgrades of convenience stores and gas stations.

We are just about ready for summer 2015. As the old Exxon marketing campaign proclaimed: “Happy motoring!”

Coalition Loyalty Programs Spread to Retail Shopping In the U.S.

Posted in Retail, Retail Sales

loyalty shoppingSeven major brands, including Macy’s, Rite Aid and ExxonMobil, recently joined forces to launch “Plenti,” a loyalty program that encompasses an entire team of retailers. American Express, which operates the program, previously established successful coalition loyalty programs in Poland, Germany, India, Mexico and Italy, and similar programs have been in place in Canada, the European Union and Australia for many years, but Plenti is the first of its kind in the United States.  To ensure that the member retailers remain competitive in their respective markets, each Plenti participant will be the sole company of its kind within the program, but there are already plans to add a national restaurant chain, a grocer and a do-it-yourself retailer to the group. Creating a coalition of brands allows a customer to use points accumulated during their weekly trip to the grocery store to splurge on discretionary purchases, such as buying that expensive pair of jeans they wanted from the department store.  However, Plenti is entering a market in which loyalty programs currently lag far behind the expectations of customers.

U.S. consumers hold 3.3 billion memberships in customer loyalty programs. Each household is a member of an average of 29 loyalty programs spread among the retail, financial services, travel and various other economic sectors, but the average household is active in just 12 of those 29 programs. Since the introduction of paper punch cards that enticed first-time customers with an instant reward of several pre-loaded punches, the focus of retailers’ loyalty programs always has been capturing those customers who are less likely to engage in repeat business. Retailers are learning that in order to keep customers actively involved in their loyalty programs, they will need to expand beyond the standard model of accumulating points for monetary rewards.  For example, customers who are members of Walgreens’ “Live Well” program can receive points for exercising, for stepping on their scale, or even for making lifestyle changes such as quitting smoking. Capriotti’s, a sandwich chain, is testing a loyalty program that would sporadically surprise customers with a free dessert or drink or other rewards during future visits. In addition, certain programs now provide incentives that appeal to a customer’s social or emotional goals, with rewards such as activities on social media and charitable donations. Retailers hope that by establishing a social or emotional connection with customers, they will create a sense of community and loyalty to the brand.

Despite these changes, customers remain dissatisfied with most retailers’ loyalty programs.  One research firm determined that over 90% of discussions on social media regarding loyalty programs were negative. Over 50% of complaints were that loyalty programs were not “relevant, flexible or valuable enough” to customers.  Retailers have ready access to a customer’s purchase history, but very few loyalty programs choose to make personalized offers to customers. Customers also have expressed dissatisfaction with “points purgatory,” in which loyalty program points either expire or go unused.  Although retailers have acknowledged the need to individualize loyalty programs to retain customers, most programs have not yet achieved the requisite level of personalization, with one recent study finding that 78% of customers believe that the average brand does not recognize their individual needs.

In addition to personalization, the demands of millenials for advanced technology have forced retailers to acknowledge that loyalty cards likely will be replaced with mobile device apps that perform multiple functions in addition to rewards redemption, from mobile coupons to product information scans. However, retailers for the most part have not embraced the full range of mobile app functionality.  Although 79% of loyalty programs target shoppers through mobile device apps, less than 25% allow them to redeem rewards through the same technology. The technology necessary to tether social media activities to retailers’ accounts clearly exists because Walgreens’ customers must connect their fitness bands or smart scales to their Walgreens account to obtain points for exercising or weight loss.  Regardless, this technology remains vastly underused by most retailers.  One recent study determined that only 11% of loyalty programs personalize offers based on a customer’s location, information which could easily be determined through social media activity.

Retailers that have created mobile apps to meet millenials’ initial demands for technology may gain an even greater advantage by tying their apps to a mobile wallet provider.  Kohl’s loyalty program features a wallet built into its mobile app that allows members to open rewards certificates for scanning and redemption in the store, and Kohl’s considers the program to be a significant competitive advantage based on the number of returning customers. For most retailers this type of technology remains largely inaccessible since third party mobile wallet providers thus far have not had much success assimilating store loyalty programs. However, technology companies are interested in mobile rewards programs because of the potential for an incremental revenue stream, so it seems likely that the technology will continue to advance.  Customers have indicated a strong preference for having access to loyalty programs within a mobile wallet. Thus, retailers would be wise to incorporate both loyalty programs and mobile wallet technology into their mobile apps.  In addition, with industry leaders like Starbucks expressing interest in partnering with other retailers to integrate mobile payments and loyalty programs, the current rudimentary mobile wallet technology seems primed for adaptation and incorporation into coalition loyalty programs.

Given the success of coalition loyalty programs in similar markets, U.S. retailers would be well-advised to research coalitions that will be most beneficial to them.  Consumers will no doubt seek programs with retailers with whom they do repeat business and those with whom they can get the most bang for their buck in redemptions.

RECon 2015: a Decidedly Global Outlook

Posted in Real Estate, Retail

d36faa060a1fe99d9fc4ec28b1eb7d31We are back from the ICSC’s RECon Global Retail conference, and needed the full long weekend to recover!  More than 34,000 real estate professionals attended the event (substantially exceeding last year’s attendance), and the mood among was decidedly upbeat.

While the conference has always been the single most important event on the calendar of U.S. developers, property owners and retailers, this year the international appeal of retail and retail development was clearly on display.  Non-U.S. development companies, such as the Wanda Group, SCPG and McArthurGlen, were visibly present.  Similarly, many European were meeting with various property owners to discuss possible locations for entry into and/or expansion in the U.S.

Construction of urban, mixed use projects in gateway cities remains front and center for many developers whether domestic or foreign.  Also, repositioning of second tier malls through de-malling (or partial de-malling), and/or conversion to a discount/outlet format is a trend that shows no signs of abating. Fashion wings, which are build-outs in existing malls designed to host premium brands such as Sur la Table, Lucky Brand and Nordstrom are also continuing to flourish.

While the specter of Lehman Brothers still lingers in the air, interest rates and cap rates remain low, and there seems to be no shortage of opportunities for new projects and new deals.  Which of course leads us to Peyton Manning (himself the owner of several Papa John’s restaurants), who, in his opening speech to convention-goers, likened the real estate business to football, in “success is dependent on spotting opportunities that are not apparent to other players”.  For those of you that attended RECon this year, we hope that you spotted such an opportunity.