RETAIL AMERICA: What s Ahead for Your Community ICSC 2014 Wisconsin Alliance Program August 7, 2014

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1 RETAIL AMERICA: What s Ahead for Your Community ICSC 2014 Wisconsin Alliance Program August 7, 2014

2 We have provided the research, the relationships and the strategies to achieve retail recruitment and development results that have helped over 250 communities throughout the U.S. become better, stronger places to live and work. ABOUT THE RETAIL COACH

3 We develop and execute high-impact Retail Economic Development Plans: Corporate site selection with national retailers Retail real estate brokerage Retail leasing Development/Redevelopment Downtown retail revitalization Land development with investment firms Market analysis & land strategy ABOUT THE RETAIL COACH

4 NATIONAL FOCUS CLIENT STATES 2014

5 AGENDA RETAIL & THE ECONOMY 2014 RETAIL OUTLOOK RETAIL STRATEGIES FOR YOUR COMMUNITY

6 RETAIL & THE ECONOMY

7 Wisconsin s Economic Growth Ranked 3rd in the Nation - Federal Reserve Bank of Philadelphia, 2013 Ranked 5 th for Top US States for New Manufacturing Jobs - CNBC

8 Wisconsin employment increased at a moderate pace in 2013 and the forecast anticipates stronger growth. Employment: % % Personal Income: % % % Source: Wisconsin Department of Revenue

9 JOB GROWTH Wisconsin's Unemployment Rate Declines to 5.7%... Lowest since ,100 Jobs Since June 2013 Source: U.S. Bureau of Labor Statistics

10 WISCONSIN HOME PRICES INCREASING; SALES INCREASE IN JUNE Median Sales Prices June 2014 $145, % June 2013 $140,000 Source: Wisconsin Realtors Association

11 Return of THE WEALTH EFFECT was single most important trend for Retail and will continue to impact consumer behavior throughout A one dollar increase in housing wealth increases consumption 9 cents. Source: Wells Fargo Economics Group

12 CONSUMER SPENDING IS INCREASING MODERATLY WITH IMPROVED CONSUMER CONFIDENCE U.S. Retail Sales in May Beat Expectations +4.4% Level Off in June, Showing Continued Caution, Despite Job Growth +0.2% Consumer Confidence Hit Highest Level in June since January High-End and Off-Price Retailers Remain Resilient Source: Thomson Reuters/University of Michigan index

13 2014 RETAIL OUTLOOK

14 RETAIL CONTINUES TO EVOLVE The retail industry s evolution has accelerated over the last decade Online retail sales will grow at compound annual rate of 10% from By 2017, the web will account for 10% of U.S. retail sales. Smartphones/tablets account for 25% of those online sales. Source: Forrester Research

15 POPULATION SHIFT BACK TO URBAN CENTERS PARTICULARLY AMONG GEN Y AGE GROUPS CONVENIENCE IS A PRIORITY FOR YOUNG PROFESSIONALS

16 WHAT TO EXPECT Smaller footprints More opportunity to locate in previously unrealistic areas, such as downtown Reduction of overhead and occupancy costs More efficient locations Store closures New store formats Relocations to areas attracting population

17 WHAT TO EXPECT Continued emphasis on growth has led to fierce competition for prime retail space; this is expected to increase in Competition in the casual restaurant segment is particularly intense. Retail opportunities are less available than in the past 5 years.

18 POPULATION/RETAIL EXPOSURE RETAIL EXPOSURE BY REGION 2013 POPULATION: 4.4% RETAIL EXPOSURE: 4.0% POPULATION: 21.4% RETAIL EXPOSURE: 17.0% POPULATION: 17.7% RETAIL EXPOSURE: 18.0% POPULATION: 18.0% RETAIL EXPOSURE: 16.0% POPULATION: 25.0% RETAIL EXPOSURE: 33.0% POPULATION: 11.6% RETAIL EXPOSURE: 11% Source: Cassidy Turley Research

19 OVERLOOKED OPPORTUNITY Most important economic trend impacting mom-and-pop demand in smaller communities is the return of housing appreciation. Home equity lines of credit are the initial line of funding for most (an estimated 75%) of these startups. We will see small business creation gradually accelerating over the next 24 months.

20 WHO S EXPANDING IN BASIC FACTORS IMPACTING RETAILER DEMAND/EXPANSION 1 2 THE ECONOMY Strong activity on the far ends of the economic spectrum ENCROACHMENT OF E-COMMERCE Discount --- Luxury

21 TRACKING 3,000 NATIONAL RETAIL & RESTAURANT CHAINS 5% Increase in planned growth in 2014 from Approximately 43% of growth is from restaurants. Tenant mixes at local shopping centers become increasingly foodbased..

22 RETAIL GROWTH 2014 Source: Cassidy Turley Research Fitness/Health/Spa Concepts Drug Stores Thrift Stores Grocery (Smaller Format) -Discount -Ethnic -Organic -Upscale Fast Food Fast Casual Dining Automotive Discounters Dollar Stores Off-Price Apparel Pet Supplies Sporting Goods Wireless Stores

23 RETAIL CONTRACTION 2014 Bookstores Video Stores Do-It-Yourself Home Stores Mid-Priced Apparel Mid-Priced Grocery Office Supplies Stationary/Gift Shops Shipping/Postal Stores Source: Cassidy Turley Research

24 RETAIL STRATEGIES FOR YOUR COMMUNITY

25 THE NEW ECONOMIC DEVELOPMENT the application of public resources to stimulate private investment with an emphasis on new technologies, sustainability and local communities. - TIP Strategies

26 RETAIL Must Be A Component Of Your Community s Comprehensive Economic Development Strategy

27 CAUTION PREVAILS Despite an improving economy, recession-weary retailers remain cautious. The retailers and site selectors who survived the recession are taking an analytical, data-driven approach when choosing locations for new stores and restaurants. Retailers are looking for the sure thing.

28 RETAILERS ARE LOOKING FOR OPPORTUNITIES NOT JUST SITES Understand the retailer s essential location factors: Visibility Accessibility Regional exposure Population density Population growth Operational convenience Safety and security Adequate parking Adequate signage

29 UNDERSTAND THAT COMMUNITY DEVELOPMENT PRECEDES ECONOMIC DEVELOPMENT Understand that first impressions are important Community appearance Pride of ownership (residential and commercial) Functional infrastructure Evidence of crime Codes and code enforcement Downtown vitality

30 PEOPLE WANT TO LOCATE IN COMMUNITIES THAT OFFER EVERYTHING

31 An ipad allows access to all your marketing materials in one location and you can this information to prospects instantly. HAVE THE TOOLS YOU NEED TO BE PREPARED & RESPONSIVE Be ready to market your community and provide the current, accurate data site selectors need to make an informed decision.

32 AREA MARKET ANALYSIS Know your community and the surrounding area.

33 KNOW YOUR COMPETITION Know your competing communities advantages and disadvantages Be familiar with their retail recruitment programs Know how your community stacks up against competing communities in terms of socioeconomic factors

34 BE PROACTIVE Perform a SWOT Analysis of your community from a retailer s perspective. Know your advantages and understand your challenges Address challenges by coming up with an actionable to do plan based on priority Retailers, developers and/or investors want to know that something is being done Retailers, developers and/or investors look for stable or improving communities where their risk is minimized

35 KNOW WHERE EXISTING RETAIL IS LOCATED

36 RETAIL TRADE AREA CITY LIMITS KNOW YOUR RETAIL TRADE AREA SIZE The largest distance consumers are willing to travel to purchase retail goods and services Always greater than your community population Sell your community as a retail trade area population

37 RETAIL TRADE AREA DETERMINATION PRIMARY RETAIL TRADE AREA Consumers likely to shop community retailers more than once per week. SECONDARY RETAIL TRADE AREA Consumers likely to shop community retailers once per week, once every two weeks.

38 RETAIL TRADE AREA DETERMINATION LICENSE PLATE SURVEY

39 KNOW YOUR RETAIL TRADE AREA DEMOGRAPHICS With an emphasis on average and median household incomes. The return of the wealth effect is the single most important trend to watch for retail.

40 KNOW YOUR RETAIL TRADE AREA PSYCHOGRAPHICS Consumer values and lifestyles drive a desire for particular products/services.

41 PSYCHOGRAPHICS LIFESTYLE SEGMENTATION All U.S. households fall into 1 of 68 lifestyle segments. Divide your market into groups of consumers with similar demographic characteristics, lifestyles, purchase behaviors and work patterns.

42 IDENTIFY YOUR RETAIL TRADE AREA SALES GAP/OPPORTUNITY Identifies sales leakage occurring when residents dine or purchase products outside of your community.

43 RETAIL GAP/OPPORTUNITY ANALYSIS Measures consumer demand and retail opportunity. Analyzes retail categories to identify which sectors have retail leakages and which have retail surpluses.

44 KNOW THE WORKFORCE/DAYTIME POPULATION Particularly important for restaurants.

45 CONSUMER/COLLEGE STUDENT SPENDING SURVEY Purchasing habits/frequency % of purchases in community Where else do you shop/frequency Retailer-type preferences Specific retailer preferences Monthly retail expenditures

46 LAND USE ANALYSIS Analyze sites and identify those not serving their highest and best use and pursue improved uses.

47 KNOW AVAILABLE SITES AND PROPERTIES FOR RETAIL DEVELOPMENT The first questions an interested retailer asks: Where can I put my store? Send me possible sites that match fit my needs. Be aware of a retailers site selection criteria before you contact them. Don t waste your time or theirs!

48 RETAILER MATCHING & RECRUITMENT A community must utilize: Area Market Analysis Community Market Analysis Retail Trade Area Demographic Profile Dominant Lifestyle Profiles Retail Gap/Opportunity Analysis findings Available Properties Internal retailer and restaurant database Contact the targeted retailers and developers to determine the level of interest they may have in your community.

49 COMMUNITY MARKETING Retail Market Profile Retail - Specific Brochure Community Video Retail - Specific Website Property Visuals Developer Packaging

50 RETAILER FEASIBILITY STUDY

51 HAVE A PRO-BUSINESS ATTITUDE AND DEVELOPMENT PROCESS Retailers go where it s easy to do business.

52 BE INNOVATIVE! Interactive Mapping and Demographic Data

53 BE INNOVATIVE! Data Driven Retail Website with Available Retail Site Locations and Interactive Data Visualization.

54 DON T OVERLOOK YOUR EXISTING RETAILERS Retail retention is vital to the long-term economic strength of your community. The success of your existing retailers leads to increased sales tax revenue as well as job growth. These businesses are ambassadors who present a positive image for new retail and business recruitment.

55 BE SEEN AT ICSC EVENTS

56 PRACTICE RECRUITMENT PRIORITIES AND PROCESS Sell your community first, then sell the sites. Goal: Get the retailer to the community.

57 TAKE A LONG-TERM APPROACH Retail recruitment is a process, not an event. Your elected and staff leadership must commit to a long-term Retail Economic Development Plan tied to your vision for the community and its forecast for population growth and build-out.

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