John Bucksbaum is CEO of Chicago-based General Growth Properties (GGP), one of the largest developers of shopping centers. His company has invested heavily in technology to keep up with the increasing use of the Internet, released its eBusiness strategy in March and holted an eRetail Summit in Chicago in April with industry leaders from Cisco, IBM and Inter. GGP has Websites for shopping center customers, business-to-business dealings and even an international shopping Website in Hawaii. NREI recently interviewed Bucksbaum to get his perspective on the importance of real estate technology today.
RETech: Tell me about General Growth's eBusiness strategies Mallibu.com, Generalgrowth.com and AlaMoana.com.
John Bucksbaum: Probably the simplest way to describe Mallibu. com is the convergence of the traditional retail experience with the digital marketplace. When the Internet started to take the world by storm, we said, "Where is the opportunity for us, and more importantly, for our retailers?" What we have always tried to do is increase traffic in the malls and drive business to stores to generate sales. That is also our philosophy for our Internet strategy. You hear all about distribution building big new centers for Internet companies. But our retailers already have that. The stores in all of our malls are ideal distribution centers. So we needed to design a system that was going to incorporate the existing store so that e-commerce was conducted at a local level as opposed to doing something at a national site.
We decided to work with our retailers to take advantage of what they already have. That was our philosophy behind Mallibu.com, and that is what we built the program around. Today on Mallibu. com, you can do transactional e-commerce from each mall and the various retailers within that mall. You can buy items out of the stores just as if you had walked into the store. You may choose to walk in and pick it up or have it delivered to your home. The Website is all about giving customers what they want, when they want it and where they want it. Today, people want more choices, and they want to be able to do things in their own time frame.
As a mall owner we are now able to deliver that to our customers. We have 35 million people in our malls, 1.3 billion visits per year, so unlike pure e-commerce retail companies we don't have to do a national advertising campaign and spend billions of dollars trying to attract customers.
Another advantage is our retailers already have brand identity.
E-tailers are spending literally tens, even hundreds of millions of dollars, trying to create brand identity. The two things you need most - customers and brand identity - already exist in each and every mall. So it is just a matter of creating the business or Internet platform in which to continue to utilize what is already there. Convergence - that is what Mallibu.com is all about.
Generalgrowth.com is our corporate site. You can get corporate information on this site: press releases, investor relations materials, leasing information, it's an informational site only.
AlaMoana.com is similiar to Mallibu.com but far more international. With Asian customers shopping at Ala Moana shopping center when they are in Hawaii, it is our goal to make the center accessible for e-commerce activity. GGP makes it possible for a Japanese visitor to shop at Ala Moana not only when they are in Hawaii, but also in Japan as well. We want to take the Ala Moana shopping center to our customers in Japan and to the entire Pacific Rim via the Internet.
RETech: Will there be other malls that will have international access on Mallibu.com?
Bucksbaum: You will be able to access any center from anywhere in the world. If someone who lives outside the United States wants to shop at a GGP mall, they are not limited. They can easily do it if they know about Mallibu.com and the name of the mall. But it is difficult in terms of shipping and exchange rates. You have to be set up for international e-commerce activity.
RETech: How successful do you think these sites have been?
Bucksbaum: Being able to purchase products online from Mallibu.com was initiated [in May] and is operational. Before, all you could get was information about the stores and promotional activities. But all shopping centers are e-commerce enabled now. The feedback from the retailers has been terrific, and we are excited and enthused about how it has been received. We'll learn how customers react to this as we go forward.
RETech: Tell me about the company's "digital strategy" and the broadband service you are providing to your retailers.
Bucksbaum: Broadband is going to be wired into all our malls. We are going to make it accessible to retailers because we think this is a service that all of them are going to want and need.
RETech: Why are they going to need it?
Bucksbaum: If retailers want to take advantage of any of the technology that exists, store training, promotions or informational data transmissions, they will need broadband. I think that everything is going to be done over the Internet, and retailers are going to need the bandwidth to do it.
RETech: When you say data transmissions, what kind of transmissions would they be sending?
Bucksbaum: Instead of cash registers, retailers could ring purchases up on a machine that sends the sales information back to headquarters the second items are sold. For inventory control and buying decisions, there will be instantaneous information.
RETech: How important do you think technology is to your company?
Bucksbaum: The two most important things we have as a company are customer service and technology. Technology ranks at the very top and is very important.
RETech: How do think the Internet has affected traditional retailers' sales?
Bucksbaum: Today, I don't think it has had a large impact on anybody's sales because it is still just a small percentage of the overall commerce activity that goes on in this country. But it is going to continue to grow and certain categories will be more susceptible to impact than others. Commodity type items such as books, music, flowers are susceptible categories. That does not suggest a bright future for bricks-and-mortar booksellers and music sellers. With a book, you don't buy it because it is a Barnes & Noble or a Border's book. You buy it because the author wrote it, and you can buy it in any store.
RETech: What is the reaction from GGP retailers' to Internet shopping?
Bucksbaum: Mallibu.com is purely a complement to their existing stores and doesn't exploit or compete with anything they are doing. I think that GGP mall retailers see this as a great idea, an enhancement.
RETech: What are your technology plans?
Bucksbaum: The plans are never ending. Within our own company we are "GGP paperless." We are working on all reports being formatted electronically, and no inter-office mail. We are getting all the lawyers from GGP and all our retail partners to negotiate leases electronically. We are encouraging our architects to put all drawings online and to make changes online.My challenge to our company is to approve leases and get retailers open for business in half the time it takes now by using technology. Obviously, we need the retailers to buy into this so we all can become more efficient. Retailers can start to sell more quickly, and obviously, the sooner we can get retailers open, the sooner cash flow is generated for us.
RETech: How successful has using the Internet for business dealings with retailers been?
Bucksbaum: [Acceptance of the Internet] is starting to happen. We are approving more and more drawings electronically and the business and legal people are coming around to the speed and efficiently of the Internet.
RETech: How is it working in your office?
Bucksbaum: Beautifully! No more inter-office mail and all reports are done electronically.