Directory of Major Malls
Directory of Major Malls

Strolling the Agora: Growth In Internet Sales May Impact On Leasing And Development, But Others See It As Another Challenge To Be Overcome

Strolling the Agora column for the November 24th 2010 edition of SHOPPING CENTER DIGEST

By Murray Shor

At first glance, the fact that internet sales are booming should have a
crushing impact on future deal-making, already staggered by
record-setting vacancies and lackluster leasing and development. This is
despite the fact that many soothsayers are seeing signs on the horizon
of improvement across-the-board– and they expect positive holidays
sales due in part to the early start of door-busters and deep
discounting right after Thanksgiving Day celebrations.

First the hard facts. E-commerce spending is expected to jump 13.7% this
quarter up to $51.4 billion. Certainly for many consumers and for many
types of merchandise, there are distinct advantages over buying at the

The shift from brick-and-mortar to the internet by shoppers, according
to some analysts, is to avoid the hassles of crowded malls, long waits,
lines at the checkouts, and battling others for very popular hot
items, the early AM or late-night hours for special deals, and the
increased stress of limited deep discount merchandise in high-demand.

And, they point out, many of these deals are available only on the
internet, top retailers are offering free shipping to home or convenient
store locations, and free shipping for returned merchandise.

Though many retailers are predicting record sales at the stores
beginning late Thanksgiving Day, as many consumers are opting out of
battling Black Friday frenzy in favor of hitting their keypads and
picking up the deals without stirring out of their homes.

And then, others point to the latest technology being used to drive
customers to the stores. Top retailers like Target, Toys ‘R Us, for
example, are using new apps on Iphones that enable savvy shoppers to
download coupons and sales flyers that are redeemed in the stores, said
one consultant. It’s all about using every vehicle available to sell

To some dealmakers in the industry, the opposing effort to enable
customers to shop from home and avoid the stores, could hamper future
leasing efforts by reducing the need for brick-and-mortar outlets.

Different Approach

However, one seasoned veteran takes a different approach. We are so
deep into the fecal quagmire which is our current and ongoing economy
that it’s impossible to isolate any one factor as an impacting reason
for a hit on sales.

He pointed out that he is currently leasing a well-located strip center
adjoining a new Walmart Supercenter and a forecast of growing
e-commerce will not change my leasing efforts. 

Another leasing executive stressed that we are constantly improving our
language in the lease terms. We had a problem involving overages, for
example, she explained, where some retailers were deducting from store
sales merchandise bought over the internet that were returned to a
local store. So we’re defining and refining this area. 

One leading broker in the Mid-Atlantic region said he’s already seen an
increase in retail deals over the last month or so. Granted, he said,  “we’re talking of a small number, but when there had been almost zero
deals before, even a little uptick in the last quarter and compared with
last year is a sign for joy. 

One landlord expanded on the problems of definition in a lease clause
when it comes to defining and apportioning online sales. If we grant
any tenant the right to terminate a lease because of tenant’s inability
to exceed a particular sales threshold, we require that the definition
of sales includes online revenue derived from zipcodes.

Optimistic Future

Yep, we’ve been going through the toughest period I’ve ever seen in
some 40 years, said one West Coast leasing rep. But I’ve also been
hitting a few dealmaking events around the country and there is a
growing optimism for the future of this industry.

You can’t deny there is an impact from online retailing. But even the
strongest proponents of e-commerce admit that there’s no replacement for
getting the customer into a store, having the opportunity to take
advantage of impulse buying, of the advantages of touching the
merchandise, trying it on, instant gratification. You’re never going to
get this same impact from a computer and 2-dimensional pictures.

A New York-based owner with close to 100 neighborhood centers around the
country, who has recently acquired several properties, was extremely
upbeat on mainstream shopping. We’re constantly in a state of flux. One
period we were all rushing to the suburbs, now there’s a trend to
in-fill closer to main population centers, and even into the CBDs of
cities. I look at the demographics and the projections showing steep
growth, and I can’t see but a strong demand for more stores and
centers once we get out of the economic slump and the high unemployment.
Internet sales, just another challenge that we can and will cope with.

Strolling the Agora was a twice-monthly column discussing trends, issues of importance, and commentary on the leasing/development aspects of the shopping center/retail chain industry in the US and Canada. Called Strolling the Agora, it was a part of Shopping Center Digest, a newsletter founded in 1973 published until September 2010. The column provided expert insight into various retail focused topics. It was primarily authored by Murray Shor, Editor & Publisher as well as industry and veteran retail experts.  A smattering of archived columns are presented here for your reading “pleasure”. It's an interesting “look back” at what were current hot topics at the time with regard to shopping center/retail industry focus, development and leasing expansions and processes, retail mix, opinions and more.
About Murray Shor:
Reporting and writing on the shopping center/retail industry since the late ’60s. Began as editor at Chain Store Age, founded Shopping Center World (now Retail Traffic), Shopping Center Digest “The Locations Newsletter” in 1973, and the Directory of Major Malls in 1979. Each issue of Shopping Center Digest contained a column called Strolling the Agora which provides commentary on trends, activity, issues of concern to development and leasing in the shopping center/retail industry.
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