Smart Signs for Changing Times

#LetsGetSmart – Smart Signs for Changing Times

 25th June 2017    Mary Keough

Mike McClure

Mike McClure, senior account executive and image consultant for Ad Art Sign Company, was one of the inspirations for the #LetsGetSmart17 speaker series, according to host David Perlmutter. Mike is someone who enjoys not only talking about his craft, but also hearing about others’ insights into businesses and the future.

Ad Art Sign Company is an award-winning national sign company that is primarily based out of California, Nevada, and Texas. Mike started in the sign business as an apprentice sign installer more than thirty years ago.

Mike began his talk by discussing broadly how important it is for companies today to constantly adapt to the changing times. As an example, Mike cited Sears and how the company got its start. The Amazon business model is nothing new; he drew parallels to that model and Sears Roebuck’s model of ordering via catalogs and picking up your product from your local Sears store. Mike brought up this story to discuss the importance of adapting to the current conditions, citing Sears’ inability to do so as one of its greatest downfalls and the reason it is not a major player in retail today.

Mike spent time talking about how the information age has helped retailers to build better products, while also helping consumers make smarter, more informed decisions. Today, we are entering into a new era marked by machine learning, virtual reality, and artificial intelligence that Mike believes will impact the future of retail.

Another important change has come in the way that signs are used. Today, digital signs incorporate instant visual changes based on data, which can be done from anywhere across the world with internet access.

Mike believes that amidst these great changes, a successful business will be determined by who can adapt their technology to best satisfy the consumer need.

One major change that Mike predicted in his own industry is the increasing use of virtual reality. Today, technology exists that allows customers to use virtual reality to see, in real-time, what a clothing item will look like on them without even having to try it on. Mike believes this new technology provides an opportunity for businesses to adapt and better serve consumers.

Another area of the sign industry that Mike sees as an opportunity to adapt is in using data to inform sign displays. Retailers are working to create signs that can display tenant information, meaning that the display on a sign can be tailored to fit a specific audience.

Furthermore, Mike discussed near field communication and the effects it will have on the future of the sign industry. He explained how, through near field communication, future signs will be able to detect your recent purchases and subsequently display an ad for what you might be interested in.

With this consumer-specific technology, retailers must consider the importance of changing privacy settings on their signs. Though this was never an issue with the classic neon signs, retailers today must adapt to make sure that signs are password-protected and have software that allows only for administrator-approved changes.

In the future, as the sign industry changes, it will be imperative for businesses to be flexible and adjust accordingly.

Watch Mike McClure’s presentation at #LetsGetSmart:

Mary Keough is a recent graduate of University of Virginia, where she earned her bachelors degree in psychology and her masters degree in teaching. She is looking to pursue a career in elementary education. She can be reached at [email protected]

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Data Insights Drive Sales Productivity

#LetsGetSmart – Data Insights Drive Sales Productivity

 15th June 2017    Ben Perlmutter

Andrew Bermudez

Andrew Bermudez flew in from California to talk at #LetsGetSmart about how data insights can drive sales productivity. Andrew is the CEO and Co-Founder of Digsy AI, a commercial real estate tech startup. Andrew began his career as an agent with Lee & Associates in California, and Digsy evolved from tech tools he had developed to enhance his own practice. Andrew took it a step further with Digsy AI, using data gleaned from thousands of deals to extrapolate best practices for driving sales productivity, and it’s applicable to virtually any industry.

Andrew began his talk describing Digsy AI. The company examines data to influence companies’ behavior. Digsy integrates directly with technology that its users already employ. With the data from these other sources, Digsy gives users information they need to be more productive. As Digsy collects data passively in the background, it eliminates approximately 95 percent of data entry, according to Andrew.

Digsy addresses a problem that plagues the commercial real estate industry, and all other industries that do sales: most people hate their customer relationship management (CRM) software. Because of this, many CRM deployments fail because of lack of adoption. In contrast, Digsy does away with all the tedious data entry that deters adoption.

With all the data Digsy collects, Digsy has learned some surprising insights about the commercial real estate industry.

Andrew spent much of the talk revealing these insights to the audience.

Andrew told the crowd about a “hack” to get people to respond to inquiries. To get the best chances of a response, people should leave a voicemail and send an email saying that the voicemail has been sent. The recipient of the email and voicemail can just respond to the email, not having to leave a voicemail of their own. This hack plays on the fact that people hate the prospect of having to leave a voicemail in response to the inquiry. It is much easier for them to simply respond to the email.

Another hack Andrew told the audience about was to get a phone call with a potential client, rather than leaving a voicemail or email. Even though it may take a few calls to get the person on the line, it is worth it because people respond better to the sociality of a phone call compared to the impersonality of voicemail and email.

When a voicemail is necessary, Andrew recommended that the optimal length for getting a reply is 18 seconds.

From here, the conversation shifted to millennial employees’ distaste for phone calls. Andrew said that millennials prefer more modern, impersonal forms of communication like texting and email. Many members of the audience strongly agreed and voiced their grievances at their millennial employees. This is problematic because data indicates that phone calls are better for getting a response.

Luckily, millennials are also very responsive to data, Andrew reassured the audience. So, when they see that phone calls get higher response rates than email and text, they adjust their behavior accordingly.

Conversation moved to how brokers can get clients when the prospective client already has a relationship with a broker. For this, Andrew recommended that the best way to get a client who already has a broker is to build trust over time. Trust can be built through occasional discovery calls and friendly interaction. With a relationship in place, the broker may have opportunities to do deals for the client.

Using one’s pre-existing personal network is a good way to get in touch with desired clients, Andrew explained. A customer is four times more likely to buy a product if it is personally referred to them by someone they know.

Andrew went on to explain why Digsy has been so successful compared to some other CRM platforms. Digsy has four times the adoption rate of traditional sales systems. This is because Digsy “removes friction and adds value.” Digsy removes friction because people do not have to change their behavior when using the program, as it passively collects information in the background, and it of course adds value with all the information that it provides users. 

“People don’t have to be data scientists,” Andrew said, “the [Digsy] system does it for us.”

The talk then turned to the question and answer portion. Once again, the audience was curious about millennials. Andrew noted that he is chronologically part of the millennial cohort, but he does not consider himself a millennial in terms of behavior.

One audience member was frustrated with how her millennial employees tend to leave their company sooner than she would like.

Andrew responded that millennial employees want to believe in the company they work for, its mission, and its impact. Millennials are less about making money as being part of a culture that they agree with, according to Andrew. These young employees will not move companies if they love their job.

Andrew gave an example from his own experience at Digsy. Some of his millennial employees took lower salaries to join Digsy when it was in its startup phase because they supported its mission. These employees wanted to personally grow with a growing business, not just do a task robotically.

If a company wants to retain its employees, it needs to really care about its people. Plus, this strategy makes economic sense because it is easier to hire from within the company rather than bringing in outside talent. 

Watch Andrew Bermudez’ presentation at #LetsGetSmart:

Ben Perlmutter is a freelance writer and English teacher in Seoul, South Korea. He can be contacted for inquiries at [email protected]

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A DATA-DRIVEN LOOK AT THE FUTURE OF RETAIL

#LetsGetSmart – A Data-Driven Look at the Future of Retail

 13th June 2017    Ben Perlmutter

Pamela FloraPamela Flora discussed various trends in retail that her research has uncovered during her #LetsGetSmart17 talk at ICSC RECon. As the director of research at Cushman and Wakefield, a global real estate services firm, her work involves conducting general research that identifies trends in retail and publishing analyses of this information.

Pam began by  discussing the media’s negative coverage of retail. According to the media, the state of retail is dark: “it’s the armageddon, the apocalypse, and the world is coming to an end.” Her vivid description of the media’s take on retail drew laughs from the crowd.

Supporting the media’s reports of doom and gloom, Pamela noted that retail stores closures are at their highest since 2010. Four thousand stores closed last year and over 8,000 are projected to close this year.

Despite these dark figures, There are things to be hopeful for in retail, Pam reassured the audience. While many big stores are closing, there are many new concepts coming out in the food and entertainment sectors that are promising for retail.

Such changes are occurring because the economy is fundamentally moving in a new direction. The closures are not a reflection of mere economic cycles.

The United States has had an “over-retailed” market, according to Pamela. The country has significantly more retail space per capita than every other developed country. American retail stores consequently have the lowest sales per square foot.

The rise of ecommerce has fundamentally disrupted the American market. Online sales now account for approximately 30 percent of GAFO sales.

Some online retailers are even moving into physical spaces, like Warby Parker and Bonobos. This development further cuts away at traditional retail stores.

The categories that have taken the biggest hit are media, sporting goods, and hobbies. Over half of sales in these categories are from ecommerce. The video store chain Blockbuster is possibly the most notable retail store in these categories to have gone under because of the transition to ecommerce. People stopped wanting to go to Blockbuster to get their movies when they could get it more cheaply and easily online.

Ecommerce sales also account for 20 percent of sales for apparel and furniture.

The giant of ecommerce, Amazon, dominates digital sales.  Amazon has a market capitalization higher than the next top eight retailers combined, Pamela noted. Last year, Amazon accounted for 43 percent of online sales. Its dominance is only increasing, with 2016 revenues up 26 percent from the year before. Much of this growth is from selling products that they directly own.

Traditional retail is not without hope, Pamela reassured the audience of people almost exclusively involved in the retail sector. Stores like Nordstrom, TJ Maxx, and Marshalls are doing well. Shopping at these places is “like a treasure hunt.” Consumers go through all the racks to find what they need. Such sensory experiences cannot be duplicated online. If current trends continue, TJ Maxx could actually become the top seller of apparel within a few years.

Grocery and dollar stores are also growing. The top five dollar store chains have opened over 7,000 numbers in the past five years.

Different types of retail spaces will be affected differently by ecommerce. Neighborhood centers are probably going to fair the best because they have stores that are less susceptible to having business taken by ecommerce, such as drug stores and restaurants.

Power centers are probably going to have a lot of spaces opening as big box stores close. Between 1,000 and 1,500 big box stores are projected to close soon.

Many of these big box stores will be filled by entertainment stores, though. Dave & Buster’s has recently taken over the space of some recently closed Sears.

A large sector of growth will be what Pamela calls “Surban” places. These places are walkable and have an urban feel, but are in a suburban area. Urban developments are mixed use, with apartments and stores that the people in the apartments use like restaurants and gyms.

Food halls are also increasingly popular. The mammoth World Trade Center in Manhattan even has a food hall now.

Pamala also said that craft breweries are becoming more popular as anchors, with the caveat that their technical equipment requires an industrial-specific space. Many shopping centers do not have the facilities to house a craft brewery, Pamela cautioned. 

Pamela mentioned a few other experience-based stores that herald the future in retail. These include full service movie theaters, escape rooms, Dave & Buster’s, and bowling alleys.

In the question and answer portion of the talk, the audience wanted more of Pamela’s opinion of the effects of ecommerce on retail.

When the subject of malls came up, Pamela opined that people are going to the mall these days for food, entertainment, or to buy a specific thing. Gone are the days of old when people would make a day out of wandering around the mall shopping. Regarding people’s mall going habits today, Pamela surmised, “they’re not making the trip to the mall to buy the thing that they could buy online otherwise.”

The audience was particularly captivated by the question of why this revolution is coming to retail so fast. Pamela did not have a full answer to this difficult question, but she offered that internet sales have gotten much better and more accessible in recent years. These recent improvements in ecommerce have accelerated a trend that was already underway.

Watch Pamela Flora’s presentation at #LetsGetSmart:

Ben Perlmutter is a freelance writer and English teacher in Seoul, South Korea. He can be contacted for inquiries at [email protected]

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The Evolution of Retail: Gatherers Become Hunters

#LetsGetSmart – The Evolution of Retail: Gatherers Become Hunters

 7th June 2017    Ben Perlmutter

Liz HollandPrior to ICSC RECon, David Perlmutter wrote an article, “What’s Wrong with ICSC RECon?,” which challenged ICSC’s leadership to make Wednesday at ICSC better than it has been, and how the #LetsGetSmart17 Speaker Series was a grass roots effort to do just that. Liz Holland, the CEO of Abbell Associates, a real estate investment and management company based in Chicago and 2016-2017 Chairman of the International Council of Shopping Centers (ICSC) accepted the challenge.

During her term as ICSC Chairman, Liz has focused on whether internet sales are really killing brick and mortar stores, as so many media reports lead us to believe. In her talk, she analyzed whether online sales are really killing physical retail to the extent that it is so often presented and how the internet is changing people’s shopping behavior.

Liz began by discussing a talk that she had with representatives from the U.S. Census Bureau. Their meeting was to analyze the data that the Census Bureau has about retail.

The meeting revealed that the Census Bureau’s data does not reveal as much about the real estate as was hoped. The data was more about the economy and information that could benefit federal policy. This is not the information that is most beneficial for the retail industry. Moreover, this information is often misrepresented (unintentionally or not) in a way that makes the retail industry seem to be doing worse than it actually is.

To explain why the data was insufficient, Liz provided the example of the often-cited statistic that 9.2 percent of retail sales are no longer coming from brick and mortar stores. This number may sound relatively large, but when broken down into its component parts, it becomes less intimidating. For example, a tenth of the number accounts for shipping costs, like FedEx and UPS. Mail order accounts for a further third of the statistic—and half of this is for mail order prescription drugs. These numbers, according to Liz, put serious dents in the idea that ecommerce is rapidly replacing traditional retail.

Even Amazon, Liz noted, barely makes a profit from its ecommerce business, and these profits have been shrinking in recent years. In the past couple of years, Amazon has entered the brick and mortar retail business, opening large stores in major cities.

Liz discussed at length the Amazon store in Chicago, her home town. The 6,000 square foot location uses the vast troves of digital marketing data from its website to know which books to stock. With the demographic information about the online book choices of the area, Amazon can stock probably only a quarter of the books stocked in a traditional bookstore. This creates synergy between data and physical retail and could prove to be a powerful force in retail going forward.

While Amazon’s physical locations have a long way to go before matching the company’s digital revenue streams, the brick and mortar stores “create customer loyalty and brand identity,” according to Liz.

Ulta, a chain of beauty stores, is another example of a company that utilizes digital technology at its retail locations to improve the customer experience. If a customer who is a member of the frequent buyer program logs into the store Wi-Fi, they will get a notification telling them which of their previously bought items is on sale.

As these examples demonstrate, the internet is not killing brick and mortar retail as much as it is changing how retail is done.

In the past, said Liz, “there used to be two kinds of shoppers: there were hunters and there were gatherers. Hunters go into a store knowing what they want, buy the product, and leave. Gatherers have a less purposeful shopping mindset, going store to store while looking at a broader selection of products. After lots of looking, gatherers finally make their purchase.

The internet has led to many more people “hunting” rather than “gathering”. People can suss out what they want beforehand online, and then go shopping for the specific product they they know they want.

Consumers are now “channel agnostic”, according to Liz. They care much more about the product that they buy more than where they are buying the product.

This new paradigm of retail requires greater coordination between landlords and retailers than in the past. There needs to be communication about inventory to ensure that the hunters can get the products they seek. Liz said, “technology can go such a long way to supporting shopping in what we all invest in as real estate people.”

Liz cited Homeplus, a supermarket chain in South Korea, as a model example for integration of digital technology in brick and mortar retail. Homeplus plastered subway stations in Seoul, South Korea with pictures of the shelves on their grocery stores with QR codes next to each item. People could scan the QR codes with the Homeplus app on their phone to put items in their digital shopping cart. Then, they could choose a time to pick up their items from a physical store or have the groceries delivered to their home. Liz emphasized that this very novel idea was done completely with very much established technology, meaning something like this is very possible in the United States as well.

After Liz finished her talk, the audience engaged her with various questions about the ICSC, large malls, and using social media to reach millennial users. The audience was particularly interested with Liz’s knowledge of millennials. They discussed how the rise of social media has made everything part of people’s “personal brand”, making people identify more with the things they buy. This further accentuates people’s “hunting” mentality.

In parting, Liz shared some thoughts on how best to reposition retail for the future. As millennials are more likely to shop online then their older counterparts, they crave shopping experiences. So, popular stores for millennials, and growth sectors as millennials become more established consumers, are things like craft breweries, bowling alleys, and movie theaters.

Watch Liz Holland’s talk at #LetsGetSmart

Ben Perlmutter is a freelance writer and English teacher in Seoul, South Korea. He can be contacted for inquiries at [email protected]

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digitalization

#LetsGetSmart – Digitalization Will Create Opportunities for Shopping Centers

 4th June 2017    Ben Perlmutter

Doug Jerum of Ferrara Jerum Speaks at #LetsGetSmartThe first speaker of #LetsGetSmart17 was Doug Jerum. Doug is a managing partner at Ferrara Jerum International, a real estate brokerage firm based out of Rochester, NY that specializes in big box stores like Walmart and Kohl’s and is now developing several locations for Seritage.

Doug focused his talk on how digitalization is affecting the direction of retail. Gartner Research defines digitialization as, “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities.”

The internet is the biggest factor changing retail. This especially applies for people who’re under 40 today. These under-40s, often referred to as Millennials, do large amounts of shopping online, and are thus less likely to shop in a physical retail location. “The younger side is sweeping away everything we thought to be true,” according to Doug.

These younger shoppers “need everything to be an experience in one way or another.” For shopping that is not an experience, younger shoppers prefer the convenience of online shopping.

This experience-based shopping includes entertainment venues, such as movies and bars, and also “internet-proof” things, like barbers and gyms. In addition to being “internet-proof”, retail should also be “boring-proof”, meaning that it should hold the shoppers’ interest with some unique and enriching element.

At this point in the talk, an audience member asked a question about how Walmart and similar big box stores will do in this new retail environment. As Doug has been involved with over 60 Walmart locations, he was well positioned to answer.

Doug said that it is unlikely that another behemoth like Walmart will emerge in the foreseeable future. There is simply no need for another retail store of Walmart’s scale when so much can now be bought online. In fact, most of Walmart’s recent growth has been from its website. Walmart’s business has had to evolve to accommodate this new world of digital retail, even given its predominant place in traditional retail.

The winners in the future of retail will be services, food, and entertainment—businesses that provide experiences.

At this point in the talk, Doug pivoted to discuss a few emerging sectors that will provide growth for retail going forward, eSports and location-based virtual reality.

If you are unsure of what eSports are, it is playing video games professionally. Do not worry if you are unfamiliar with this term, as when Doug asked the audience who knew what eSports are, only a paltry two hands went up.

While the commercial real estate brokers and other participants in #LetsGetSmart17 may not follow eSports, these digital competitions are quite popular among young people. The industry is currently worth $700 million, and has grown 40 percent since last year. Future rapid growth is certain. Heralding eSport’s emergence to the mainstream, eSports arenas are popping up all around the country. There is currently a 20,000 square foot eSports arena being built at the Luxor in Las Vegas.

Also like with traditional sports, there is are retail opportunities with eSport merchandise, particularly as popular teams and celebrities emerge begin to get more mainstream media attention.

It remains to be seen how eSports will play out, but the industry is a worth watching because it is certain to boom in coming years.

Doug also talked about location-based virtual reality (LBVR), another digital development that will grow in the near future. LBVR is virtual reality (VR) that is experienced outside of the home. Having a VR set up at home can be prohibitively expensive and complicated for many people, so they would rather just go to a dedicated LBVR space.

There are almost limitless possibilities for VR, such as putting a headset on to take a tour of a museum 2,000 miles away, or even climbing a mountain with more advanced VR equipment.

Doug cited the Ghostbusters exhibit at Madame Tussauds in Manhattan as a great example of LBVR’s potential. Similar LBVR experiences will be spreading across shopping centers in the near future.

LBVR is a new area, so nobody has yet figured out a formula for its success. But, Doug believes, “in the next year or two someone will have one [location based VR] that blows everyone away.”

Given younger people’s desire for experiences while shopping, such as going to a LBVR center, many new retail businesses will be local stores, regional firms, and franchises, according to Doug. These types of stores can cater to local tastes better than the big national corporations that drew customers in the past.

While these smaller business will create more revenue in coming years, they present challenges as well. It is often harder to suss out if a smaller firm is a good operator than it is for a big national business. There is less transparency and information about smaller businesses than their large national counterparts. Therefore, Doug said, it is very important to know how to analyze financial statements to better-understand smaller businesses.

Doug concluded his time discussing the role of digital technology in the commercial real estate industry. He said, “there is a long way to go before anybody is going to tell us our industry is tech savvy.” Compared to other industries’ digitalization, commercial real estate is the “caboose on the train.” But, this lack of digitalization means that there is enormous opportunity to be made digitizing the industry. There has yet to be a “killer app” for commercial real estate, but the industry is ready for such innovation.

Watch Doug Jerum’s presentation at #LetsGetSmart below.

 

Ben Perlmutter is a freelance writer and English teacher in Seoul, South Korea. He can be contacted for inquiries at [email protected]

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