Topics: NRF, retail leasing, mailbox money, being proactive

This week is a Chris Ressa solo episode, he discusses some interesting articles he came across and a recent deal at a DLC center in Fayetteville, Arkansas

What You’ll Learn:

1. What kinds of retailers are in this years NRF top 100 retailers?
2. What % of online shopping carts are abandoned?
3. What influences purchasing decisions of consumers?
4. How does being proactive create value in retail real estate?

About Retail Retold:

The Retail Retold Podcast highlights community retailer stories from across the country and gives a behind-the-scenes perspective from business leaders in both retail and real estate industries. The show’s episodes contain valuable insights that help solve the needs of entrepreneurs and real estate pros. Join host Chris Ressa and new guests weekly for amazing insights and thought-provoking stories.

Transcript:

Chris Ressa  00:00

Welcome to retail retold everyone. I’m your host, Chris Ressa, and I’m excited for you to join me today. I’m going to talk about a bunch of things today. But, the core of it will be a story of how a junior box retailer ended up in Fayetteville, Arkansas. Before I get there, I wanted to talk about some retail and retail real estate happenings. Two articles I stumbled upon that I think are interesting. One, the NRF just put out it’s top 100 retailer list, they do it by sales volume, global retail sales. Walmart topping the list by a landslide, really, almost double the sales of Amazon globally from a retail perspective. But what I found interesting on the list was that a majority of the retailers on this list operate in a open-air real estate format. That was one thing I found super interesting.

Chris Ressa  01:01

The other thing I found interesting is a lot of the retailers on the list really focused on the value retail space. So these are two areas that we’ve been focused on here at DLC. So take a look at the list. I think it’s interesting, you might find some surprises. One that I found was a surprise. You know, Ace Hardware was number 21 on the list. I didn’t know they were that big. I knew they were big obviously, they had a lot of locations. But I thought it was pretty impressive. It got me to look at some past reports on Ace hardware and see what they were up to. I hadn’t been up to speed on what they were up to, so articles like this, get me doing some homework and research. And I think it’ll be good for you to check out.

Chris Ressa  01:47

 Second article that I found interesting recently was an article by Christy Snyder, this this is from late March, but I just stumbled upon it, which is thirty-five e-commerce statistics of 2024. So I found this super interesting. So what are some of the things I found interesting about it? I’ll give like two or three snapshots. So one, first one that I thought was super interesting was that about 70% and this study has gone around for, there’s 48 studies on this. And the number’s been relatively steady since 2014. But about seven, there’s about a 70% online shopping cart abandonment rate.

Chris Ressa  02:51

That is wild to me, that so many people abandon their shopping carts. And now, what struck me with that was, like, I think about what are the reasons? And then they highlight here, right? They talk about that it is shipping costs, turnaround times, right? People see how long it’s gonna take to get it, how much it costs to get it longer than they want to wait. And this causes people to abandon their cart, I think about the advantage of a store, at least me as like a shopper, I go into a store, you know, and the product’s, you know, $10. And then you go to the, you go to the register, and there’s some tax and a line. And I still buy that product, I think, and why is that? either A. I need it in that moment. Or B. it’s in my hand. Right? It’s in my hand. And the value of that clearly is powerful, even at the you know, when I’m not thinking about the tax cost that I might have to pay when I go to the register, even though I might have to wait in a line.

Chris Ressa  04:07

So that was an interesting stat that I think is pretty challenging to overcome is you know, shipping is not getting easier, might get faster. But at the moment, it’s not getting easier. Something else I found interesting. I don’t know why I found this so interesting. But 40% of people make a purchase because of a social influence. Now, this is a concept as old this time, right? Like Keeping Up with the Joneses. And we’ve seen this on TV ads for years right? Some famous celebrity is the highlight of a TV ad. But it just struck me as a significant number of people who, where social media is influencing them. And so, then the next stat that was even more was that 49% of social commerce shoppers have had an influencers recommendation impact their purchase. So this just stay tells the fact that celebrities and endorsements are going to keep on keeping on from the ability to promote products because it clearly works. And I think as I think about real estate, I think about that, and how could it impact real estate and I’ll let you let that formulate in your head. But I think that’s was interesting to me. You know, I always knew there was an impact, but it’s interesting when we see the exact number.

Chris Ressa  05:56

Okay. So that’s what I got on some stuff today on some articles, maybe you’ve seen those articles, maybe you haven’t, but take a look. Alright, so next one is Fayetteville, Arkansas. So we’ve owned these assets for a while in Fayetteville, Arkansas, Spring Creek and Steel Crossing, and they are power centers in what I would call a boom town. One is target anchored one is Walmart anchored. And if you’re familiar with Fayetteville, Arkansas, if you’re not familiar with Fayetteville, Arkansas, it’s northwest Arkansas. It’s the Bentonville Arkansas area. So Walmart corporate headquarters, Tyson Foods, JB Hunt, Fayetteville, Arkansas is the home of University Arkansas.

Chris Ressa  06:47

So there’s a lot of macro-economic drivers in the marketplace there. And by the way, Bentonville, one of the top public school systems in the country. And, that was super interesting to me. And the market keeps growing and getting better and better. And our properties have been pretty full for a long time. And we’ve, you know, the demand that everyone talks about in retail, we’ve had these assets for years, but we had no space and no ability to develop to put them in. The only time that we were able to is like if one tenant didn’t make it, and we were able to put in another and usually that was in a small shop front. Rarely was it on the box front. And we had retailers for years, major national retailers coming to us and talking to us about like, how could we get them in here? And, we struggled quite candidly to figure out a way we had a lot of plans and a lot of ideations of different scenarios of how to, you know, densify the projects to try to get more retailers here.

Chris Ressa  08:04

And then when Bed Bath filed bankruptcy, we had a slew of LOI’s, five, six national retailers wanting that space. So that put us in a pretty good position. And we ended up and you’ll see now we ended up signing the deal with Ross Dress for Less. And they will be opening soon. And that’s who we ended up putting in the center. We have a great relationship with Ross and they’ve got a bunch of stores in the DLC portfolio. But so what’s the punch line? The punch line is is the following. Even if your real estate is 100% leased, it is not a set it and forget it business. Real estate is this living breathing thing. And it might be it might not happen in a blink of an eye. But there’s always changing factors at the real estate level. So you need to be operating that real estate as if there is they can see as if there is things to do.

Chris Ressa  09:28

So when the opportunity is presented to you, you can strike. And the reason that we were able to sign a deal so quickly after the bankruptcy was because we had been proactive on trying to get retailers into these projects, even though they were 100% leased for four years. And so the moment that Bed & Bath went into bankruptcy and we knew we were going to get that space back, we started reaching out to retailers. Hey, don’t forget about this space we’ve been talking about for years, and boom, they were on it. We didn’t know who was going to be the most interested at that moment in time. But we knew that we had demand for these spaces for years, and someone was going to take it. But only because it wasn’t set it and forget it. And I think one of the things people get into real estate, you know, there’s this word of mailbox money. Shopping Centers are not mailbox money. Shopping centers need to operate, they’re complex. There’s significant returns you can make, if you can operate them, but it’s a business of operating the shopping center. And if you’re in a set-it and forget-it phase, you can end up being forgotten.

Chris Ressa  10:49

And so that’s the punch line here for this episode. And I think it’s, you know, if you’ve got a center that’s well leased, are you keeping a waiting list? Are you just reaching out saying, hey, just want to make sure you’re still interested if a space comes back? That’s something we do when a center that’s fully leased, right? We’ll reach out to a retailer, hey, still have nothing available, keeping you in mind, just want to make sure if something comes available, you’re interested. And it’s a simple concept. But, you know, because if you don’t keep tabs on it, and you’re not talking to them, by the way, you’ll find out significant information.

Chris Ressa  11:32

You know I would be but just so you know, they might say, I would be interested. But you know, my, I’ve got my capital tied up for the year, because you couldn’t accommodate me so I had to deploy that capital elsewhere. So even if they were interested, maybe the capital and their budgets being used elsewhere. Maybe, unbeknownst to you, there was a space in the market that was coming up for renewal. And they got their arms around it, and they decided to start working on that. And by the time you called them, it was too late. So like, just because they told you a year ago, they were interested. And you have no vacancy. And now you do, they might not be. You need to be you know, you need to keep tabs on that every 90 days. Make sure hey, are you still interested in this? I don’t have anything available, keeping track of what’s going on in the market and want to keep you apprised of what we have going on at the property. So anyway, that’s my takeaway. Real Estate’s not set and forget it. And even though sometimes, I think real estate investors would want it to be. That’s what I got. Hope everyone has a great day. Thanks for joining and tuning in.