Trying to describe what Lucernex Technologies tries to achieve with its retailer-centered software package, Ken Brown, the firmâ€™s chief information officer, recalls a harrowing episode from his earlier life as a real estate consultant.
The tale involves a real estate staffer at a large retail chain who, in the course of dealing with his everyday responsibilities, accidentally missed the deadline to exercise early renewal options on some of the companyâ€™s leases. The oversight cost the retailer $3 million and the real estate staffer found himself having an unscheduled (and unpleasant) meeting with the CEO, Brown says. Though the man escaped the chopping block, the lesson for Brown was clear: You donâ€™t want to rely on your memory alone when trying to run a multi-unit real estate operation.
Of course over the past 15 years the world of retail real estate management has become more sophisticated, with software packages available for site selection, construction management, lease administration and other aspects of the business.
The issue, according to Brown and Lucernex Chairman and CEO Mike Nuzum, is that retailers often continue to rely on dozens of different programs to manage their stores, creating a lot of extra work and confusion.
â€śTypically, when you go to a retailer, you would have one system that would do the percentage rent calculation, one that would do renewal optionsâ€ť and so on, says Nuzum. â€śFor a person managing the process, itâ€™s difficult to compile all of that information and actually get a report.â€ť
And the challenge only balloons as the store portfolio grows, Brown notes.
All in one place
Lucernexâ€™ solution has been to create a software package that helps manage every aspect of the storeâ€™s lifecycle, from site acquisition to common area maintenance (CAM) charge reconciliation to early renewal options. The softwareâ€™s functions include location planning and market research and analysis, lease origination, RFP processing, bidding, space management, budgeting, tax reporting, and disposition strategy, among a number of other things.
According to Nuzum, it gives real estate executives access to all the relevant information and reports they need in one placeâ€”for example, the system automatically prepares site approval packages and tracks certificates of occupancy. It keeps tabs on work contracts, including construction management and maintenance of existing stores. And it allows the accounting department to calculate occupancy costs and manage expenses.
Plus, the software keeps real estate professionals updated on what needs to be done during each step of the store construction and store management process with its critical date alerts. Having all the necessary information in one place can mean significant savings for the retailer, according to Nuzum, because it helps speed up store construction and allows companies to take full advantage of their lease options.
Nuzum points out that when Lucernex worked with Chipotle Mexican Grill in the early 2000s, it helped the chain cut down the time it took to sign new leases from several weeks to two days.
â€śWhatâ€™s in the product is a lot of the things I learned when you go out to open or manage stores,â€ť says Nuzum, who over the course of his career founded an electronics chain and worked as a store development consultant. â€śA lot of things can go wrong and typically do, particularly in construction.â€ť
One of the main goals of the Lucernex software is to minimize the likelihood of oversights when possible.
In addition, during the recent RECon event in Las Vegas, Lucernex unveiled a new version of its software package, Lx Retail 9. Most of the new functions in the software focus on workflow reporting and lease administration, including a new CAM reconciliation module, lease analysis and support for the FASB rule changes, according to Brown.
â€śThere is a feature that allows you to compare, based on existing rules, what the financial transactions would be treated as under new FASB rules,â€ť he notes.
How it works
Lucernexâ€™ product comes in software-as-a-service form, which means it requires no investment outside of an Internet connection. Later this year the company plans to unveil additional features that would target mobile devices.
The pricing on the software is based on the number of units the client operatesâ€”the more stores the system has to handle, the higher the fee, according to Brown. Once a company purchases the software, however, an unlimited number of people can access it. It takes anywhere from a few hours to a couple of days to train real estate and accounting personnel to work with it, depending on how many of the functions they will be using in the course of their daily work.
Brown is also careful to point out that although the software is configured to fit each companyâ€™s unique needs, there is no extra charge if the client wants to expand the scope of the functions it uses.
â€śYou can configure it in such a way that areas of the product that you donâ€™t require donâ€™t get in your way, but itâ€™s all in there; itâ€™s one system,â€ť he notes. â€śWe donâ€™t nickel and dime for every little feature.â€ť
Today, Lucernexâ€™ retail clients include Jack-in-the-Box and Buffalo Wild Wings, as well as Yum! Brands, which operates KFC, Taco Bell, Long John Silverâ€™s and Pizza Hut restaurants.