With the growth of the Internet, the influx of new competitors from overseas and the spreading dominance of Wal-Mart into more phases of the business, retailers are struggling to find new ways to reach and retain customers. But that is easier said than done. With the proliferation of ways in which consumers get their information, reaching desired customers is becoming more difficult.
"We’re going from mass marketing to ‘me’ marketing," said Alex DeMeo, president of retail consulting firm Loyalty Exchange, at a panel at ULI’s Fall Conference in New York City. "Mass marketing used to be about reaching one market of millions. Now it’s millions of markets of ones."
In the past, it was enough to throw money at the problem. Times were that 80% of households read newspapers. Retailers could advertise in every paper and feel assured of reaching their target within that mass.
The first step to changing strategy for most retailers was creating customer loyalty cards. The cards provide retailers information about who is buying what at their stores and how often they shop. Those patterns then influence how the retailer markets to those customers. Similarly, some owners have instituted mall-wide loyalty programs.
Another method developers and retailers are employing is creating store experiences. That concept is feeding into how entire shopping centers are designed and built. Nate Fishkin, a senior vice president of Federal Realty Trust, pointed to Mills Corp.’s 5 million sq. ft. Meadowlands Xanadu as a watershed project.
"That’s the most futuristic thing anyone is putting on the map. It’s a place that people can be at from the moment they wake up to the moment they go to bed," Fishkin says. The project includes a mix of retail and entertainment tenants organized into different themed zones. "There’s not many places in the world where you could build something that, but pieces of it can get moved out."
Other developers are mixing up their tenant mix to create new experiences for consumers. Westfield Group has created a new division devoted to hybrid centers. And Macerich Co. last week unveiled a new arm of its company aimed at bringing luxury buyers to its malls. It will cluster high-end retailers in sections of its properties and introduce valet parking and other services.
At the store level, Apple Corp. remains the talk of the industry due to its massive success with its brick-and-mortar locations. By the end of 2004 it will have more than 100 stores in its portfolio — including international locations in Japan and the United Kingdom. Its stores now generate $1.2 billion in sales and 50% of the U.S. population is within a 15-minute drive of an Apple Store.