A thriving plaza energizes a community. So whether you are starting brand new or transforming an older space, following the steps to create a successful shopping area is imperative. RMA’s Sarah Blake, Marketing Coordinator, recently returned from a training program in Arizona hosted by the International Council of Shopping Centers (ICSC) where they discussed key industry strategies for success.
According to Blake one of the most important steps is often overlooked: study the customers. Blake stresses understanding who your consumers are now and who they will be in the future.
“It is imperative to know consumers when discussing business attraction and retention,” she said. “The research can be accomplished through focus groups, intercept surveys, online surveys and mobile surveys.” The data that is most important to collect includes demographic segments, mindset segments, patterns, propensities, opinions and preferences.
The next strategy Blake emphasizes is businesses developing a merchandising plan to increase profitability, making business retention more likely.
“Essentially, this approach is aimed at maximizing the return on investment, planning sales and controlling inventory in order to increase profitability by maximizing sales potential and minimizing losses,” she explained. This strategy is more easily accomplished if you have the accurate consumer data as described above to work from.
Losing tenants? Blake says you must learn to identify the troubled businesses; learn the ‘who’ and ‘why.’ Then determine an appropriate landlord strategy: retention vs. replacement. These decisions are typically based on the length of time the tenant has been in the space and the relationship with the landlord.
“Consider crafting rent relief, landlord concession, rent reductions, or even free rent,” she said. “The goal is to retain good businesses that may be going through a rough patch. It’s much easier for a landlord to retain a good tenant than to find a new good one.” Business retention of quality vendors is key to building and maintaining a thriving retail area.
What about business attraction for vacant spaces? When it comes to filling voids in shopping centers, downtown retail districts or main streets, you must identify the appropriate tenant mix; know where to put them and how to find them.
First, know your market! Where is the leakage from your market going? Knowing this provides you with a pool of merchants who may have a built-in customer base from your market. In prospecting tenants, start by canvassing other centers or districts that are successful. Advertising and actively marketing vacancies is also key for business attraction.
Once you have reviewed the prospects, the most critical step is determining which tenants are the right fit for your location. Consider if this is a filler tenant (like a pop-up gallery or shop) or someone you want long term? Do you have the type of space they need? Consider the suitability of merchandise; does it fit the area’s demand? Be sure to examine tenant financials such as profit/loss statement and at least 3 years of taxes or if it’s a new start-up, review the business plan – is it solid? Lastly, determine the sales to rent ratio: Can they afford the rent and extras or will you be looking for another new tenant in 6 months?
“Studying, planning and constantly reevaluating the changing environment is imperative for owners of shopping centers and commercial buildings in downtown retail districts, main streets, and shopping areas. If they skip a step they can easily be taken off course,” explained Blake. “RMA takes an active role in helping area businesses build a strong foundation for success. Attending conferences such as ICSC, gives us an added edge in helping our clients create vibrant communities.”