down is the new up. up is the new up. how innovative retail models are making consumers spend again
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2010 ULI Fall Meeting PresentationOctober 14, 20109:30 am to 10:45 amTRANSCRIPT
Down is the New Up.Down is the New Up. Up is the New Up: How Innovative Retail Models are Making Consumers
Spend Again
Thursday,
October 14
9:30 a.m. – 10:45 a.m.
Alan McKeonAlan McKeonPresident & CEO
Alexander Babbage, Inc.
While the “Great Recession” lasted 4 quarters and reduced Real GDP by nearly 7%, it ended in June 2009 ‐ 16 months ago
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 3
Is Down, the new Up?
ALEXANDER BABBAGE
Job growth continues to trail previous recoveries
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 5
Vertical axis shows the ratio of that month’s nonfarm payrolls to the nonfarm payrolls at the start of recession.
http://economix.blogs.nytimes.com/2010/07/02/comparing-this-recession-to-previous-ones-job-changes--/?scp=5&sq=recession%20comparison&st=Search
Within all the doom and gloom, some retail models and retail sectors are still growing
40,000
U.S. Retail Sales (Seasonally Adjusted) Recession
30,000
35,000
15,000
20,000
25,000
In M
illions $
5,000
10,000
0
Jan‐93
Jul‐9
3
Jan‐94
Jul‐9
4
Jan‐95
Jul‐9
5
Jan‐96
Jul‐9
6
Jan‐97
Jul‐9
7
Jan‐98
Jul‐9
8
Jan‐99
Jul‐9
9
Jan‐00
Jul‐0
0
Jan‐01
Jul‐0
1
Jan‐02
Jul‐0
2
Jan‐03
Jul‐0
3
Jan‐04
Jul‐0
4
Jan‐05
Jul‐0
5
Jan‐06
Jul‐0
6
Jan‐07
Jul‐0
7
Jan‐08
Jul‐0
8
Jan‐09
Jul‐0
9
Jan‐10
Jul‐1
0
Health and personal care stores Clothing and clothing access. stores
1993 20101993 2010
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 6
Department stores (excl. L.D.) Warehouse clubs and superstores
Food services and drinking places
Services as a proportion of consumers personal consumption expenditures continues to grow
100%
U.S. Share of Personal Consumption Expenditures
80%
90%
50%
60%
70%
Total PCE
30%
40%% of T
0%
10%
20%
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 7
1929 1939 1949 1959 1969 1979 1989 1999 2009
Share of Goods in PCE Share of Services in PCEServicesGoods
Experience matters
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 8
Experience overload…1001+ Books about 1001 things you must do …… before you die
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 9
Value matters100.0%
Designer26.6% 20.1%
80.0%
es g e“I buy designer merchandise and am willing to pay for the style and workmanship”
50.4% 52.2%
60.0% Brand“I buy well-known brands because they provide the best quality for my money”
40.0%
23.0% 27.7%
20.0%
Value“I prefer to pay the lowest price, so I shop primarily for values”
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 10
0.0%
2005 2006 2007 2008 2009 2010
Value doesn't just mean low price
EXPERIENCEEXPERIENCEPRICEPRICE
EXPERIENCEEXPERIENCEVALUE = VALUE =
PRICEPRICE
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 11
*Definition of value inspired by AlixPartners
Consumers can check prices quickly and easily online:NexTag, 201st most popular website in US
Rank Website1 Google2 Facebook3 Yahoo4 YouTube5 Amazon.com6 Wikipedia7 Twitter8 eBay9 C i li9 Craigslist.org10 Blogger.com11 Windows Live12 MSN13 Go14 Bing15 LinkedIn15 LinkedIn16 AOL17 ESPN18 Myspace19 CNN Interactive20 WordPress.com21 Netflix22 PayPal23 The Internet Movie Database24 Flikr25 The New York Times26 Microsoft Corporation27 The Weather Channel28 About
ALEXANDER BABBAGE
http://www.alexa.com/siteinfo/nextag.com
© Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 12
28 About29 Bank of America30 Apple Inc.
……201 Nextag.com
Consumers can check prices quickly and easily in‐store:Red Laser, mobile price and stock checking application
iPhone Application
Scans and reads bar‐code on products, books, clothing
Uses GPS from phone to determine where local retailers are
Displays comparison of prices at different retailers online and offline
Displays in‐stock situation
ImplicationsImplications
Can drive in store purchase decision online
Can convert in store purchase to another local retailer
ALEXANDER BABBAGE
local retailer
© Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 13
Marketers are using price and value to drive sales back to retail outlets
Groupon (Group‐Coupon) launched November 2008launched November 2008
A coupon “tips” when a set number of customers buy the “deal”
Gap was the first nation‐wide Groupon deal, tipped at 600 customers
Results:
445,000 shoppers purchased the $25 Gap Groupon dealthe $25 Gap Groupon deal
$11 million in revenue in one day
An average of 10 Groupons
ALEXANDER BABBAGE
http://mashable.com/2010/08/19/gap‐groupon/
An average of 10 Groupons sold per second
© Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 14
Consumers are smarter in determining how and where to part with their hard‐won dollars…and voting with their feet
Experience exceeds price paid = high value
Result: gain market share
Price exceeds value of the experiencePrice exceeds value of the experience
Result: lose market share
ALEXANDER BABBAGE © Copyright 2010, Alexander Babbage. All Rights Reserved, Confidential and Proprietary. 15
Anselm FuscoAnselm FuscoSenior Vice President of Investments
Madison Marquette
Asbury Park History
18
Asbury Park History
19
Recent Past
20
Recent Past
21
Stone Pony Summerstage
23
Boardwalk Overview
24
Restaurants
25
Retail
26
Southwest Waterfront
28
Southwest Waterfront
29
Blake L CordishBlake L. CordishVice President
The Cordish Company
The Cordish Company 601 East Pratt St., 6th Floor Baltimore, MD 21202 Phone: 410.752.5444 Toll Free: 1.800.733.5444
Power Plant- Baltimore, MD
Power Plant- Baltimore, MD
Bayou Place- Houston, TX
Atlantic City Outlets- The Walk- Atlantic City, NJ
Atlantic City Outlets-The Walk- Atlantic City, NJ
Atlantic City Outlets-The Walk- Atlantic City, NJ
Seminole Hard Rock Hotel & Casino- Hollywood, FL
Power Plant Live- Baltimore, MD
Fourth Street Live!- Louisville, KY
Power & Light District – Kansas City, MO
Ballpark Village- St. Louis, MO
Ballpark Village- St. Louis, MO
Ballpark Village- St. Louis, MO
Woodbine Live!-Toronto, Canada
Philly Live!- Philadelphia, PA
Mission Rock- San Francisco, CA
Seminole Hard Rock Hotel & Casino- Hollywood, FL
Seminole Hard Rock Hotel & Casino- Tampa, FL
Charleston Place- Charleston, SC
NASCAR Sports Grille
NASCAR Sports Grille- Orlando, FL
Maker’s Mark Bourbon House and Lounge- Louisville, KY
MEX
Vinino
Mosaic Lounge
Mosaic Lounge
Hotel Night Club
Rams Head Live!
Hard Rock Live!
Portfolio Profile M i t F Mainstream Focus
Play to the Deep End of the Pool Dominate Mid-Size Markets with Category
Killer Destinations T h B d D hi C i Touch Broad Demographic Categories
Regional Drive-To Destinations Unique Entertainment Experiences for
Guests
Portfolio Trends in Sales & Per Capita Spending
Vertical IntegrationD f Fi t W Will P t t Thi H Defense First: We Will Protect This House
Challenge of High Energy Concepts Shadow GovernmentsShadow Governments Inevitable Meltdown With Broad Negatives Brain Damage of Complexity & Investment Offense: Create Unique Venues Database Building Multiple Consumer Touch Points Multiple Consumer Touch Points Improve Experiences for Patrons Additional Sponsorship Opportunities
Kansas City Power & Light District- Kansas City, MO
Kansas City Power & Light District- Kansas City, MO
Power & Light District- Kansas City, MO
Sprint Center- Kansas City, MO
Midland Theater- Kansas City Power & Light District- Kansas City, MO
AMC Mainstreet Theater
AMC Mainstreet Theater
AMC Mainstreet Theater
Power & Light District – Kansas City, MO
Power & Light District – Kansas City, MO
Power & Light District – Kansas City, MO
Power & Light District – Kansas City, MO
Power & Light District – Kansas City, MO
Power & Light District – Kansas City, MO
Power & Light District – Kansas City, MO
Power & Light District – Kansas City, MO
The Jones
Activation of Public Spaces
Treat Public Spaces as Active Businesses Commitment to Operational Expertise and Depth ofCommitment to Operational Expertise and Depth of
Human Resources: Production, Marketing, Sponsorship Discipline of Distinct P&L Statements: Balancing $4.0
Million in Revenues and ExpensesMillion in Revenues and Expenses Limited Sources of Revenues: Landlord, Tenant,
Common Area Sales and Sponsorships Value For Free & Unique Experiences Regional Destination: Drive Times & Repeat Visitation
Making MarketsBi t Ch ll Ch i P ti d P tt f Biggest Challenge: Changing Perceptions and Patterns of Behavior
Recognition that Consumers are More Judicious With Higher E pectationsExpectations
Quality of the Experience is Critical Exceed Expectations: Mainstreet, Midland, Cosentinos Focus on Immersive and Departure Based Entertainment
Experiences: Bright Lights, Big City Events and Anchors that are Purchasing Enablers Such as g
Sports and Concerts in Terms of Mindset and Drive-Time
Strategy Adjustments Increased Calendar of Events and Budget by approximately Increased Calendar of Events and Budget by approximately
15% to 210 Event Per Annum Increased Diversity of Event Calendar to Reach a Broader
DemographicDemographic Debated But Kept With 100% Free Events Opened up Additional Sponsorship Assets in Sought After
Activation Experiencesp Limitations on Sponsorship Dollars: 3 for 2 Increased Trade Emphasized Media Partners Including Social Media Outlets p as ed ed a a t e s c ud g Soc a ed a Out ets
Brand Alliances
Execution is The Key
Ambiance is the Anchor Not Concepts Experience Over Brands Large Scale Mixed-Use Districts Versus
Projects Delivering Enhanced Value
The Cordish Company 601 East Pratt St., 6th Floor Baltimore, MD 21202 Phone: 410.752.5444 Toll Free: 1.800.733.5444
Julie Brinkerhoff‐JacobsJulie Brinkerhoff JacobsPresident & CFO
Lifescapes International, Inc.
NormaLynn CutlerNormaLynn CutlerLead Drum Majorette
Cutler Enterprises
The EmThe Em--urgenturgentThe EmThe Em--urgent urgent Theater of RetailTheater of Retail
Playing for Dramatic ResultsPlaying for Dramatic ResultsWhat’s NewWhat’s New
NormaLynn CutlerNormaLynn CutlerCutler EnterprisesCutler Enterprises
WHAT’S WRONG WITH WHAT’S WRONG WITH S C ???S C ???
WHAT’S WRONG WITH WHAT’S WRONG WITH S C ???S C ???THIS PICTURE???THIS PICTURE???THIS PICTURE???THIS PICTURE???
OPEN SPACEOPEN SPACEOPEN SPACEOPEN SPACEOPEN SPACE OPEN SPACE ANIMATION FORANIMATION FOR
OPEN SPACE OPEN SPACE ANIMATION FORANIMATION FORANIMATION FOR ANIMATION FOR OPEN WALLETOPEN WALLET
ANIMATION FOR ANIMATION FOR OPEN WALLETOPEN WALLETOPEN WALLET OPEN WALLET DOMINATIONDOMINATIONOPEN WALLET OPEN WALLET DOMINATIONDOMINATIONDOMINATION.DOMINATION.DOMINATION.DOMINATION.
C S OC S OC S OC S OTRICKS TO HELP TRICKS TO HELP YOUR PROPERTYYOUR PROPERTYTRICKS TO HELP TRICKS TO HELP YOUR PROPERTYYOUR PROPERTYYOUR PROPERTY YOUR PROPERTY
ROCKROCKYOUR PROPERTY YOUR PROPERTY
ROCKROCKROCK.ROCK.ROCK.ROCK.
1. DON’T BE AFRAID 1. DON’T BE AFRAID TO BE INSPIRED BYTO BE INSPIRED BY1. DON’T BE AFRAID 1. DON’T BE AFRAID TO BE INSPIRED BYTO BE INSPIRED BYTO BE INSPIRED BY TO BE INSPIRED BY
OTHERSOTHERSTO BE INSPIRED BY TO BE INSPIRED BY
OTHERSOTHERSOTHERS.OTHERS.OTHERS.OTHERS.
2. DO COLLABORATE 2. DO COLLABORATE 2. DO COLLABORATE 2. DO COLLABORATE WITH ARTISTS, LOCAL WITH ARTISTS, LOCAL
IF POSSIBLEIF POSSIBLEWITH ARTISTS, LOCAL WITH ARTISTS, LOCAL
IF POSSIBLEIF POSSIBLEIF POSSIBLE.IF POSSIBLE.IF POSSIBLE.IF POSSIBLE.
3. DON’T BE3. DON’T BE3. DON’T BE3. DON’T BE3. DON T BE 3. DON T BE PREDICTABLE.PREDICTABLE.
3. DON T BE 3. DON T BE PREDICTABLE.PREDICTABLE.
4. DO MIX LOW &4. DO MIX LOW &4. DO MIX LOW &4. DO MIX LOW &4. DO MIX LOW & 4. DO MIX LOW & HIGH CULTURE.HIGH CULTURE.
4. DO MIX LOW & 4. DO MIX LOW & HIGH CULTURE.HIGH CULTURE.
5. DO SUBSCRIBE TO 5. DO SUBSCRIBE TO EDGY MAGS OF ALLEDGY MAGS OF ALL
5. DO SUBSCRIBE TO 5. DO SUBSCRIBE TO EDGY MAGS OF ALLEDGY MAGS OF ALLEDGY MAGS OF ALL EDGY MAGS OF ALL
KINDSKINDSEDGY MAGS OF ALL EDGY MAGS OF ALL
KINDSKINDSKINDS.KINDS.KINDS.KINDS.
6. DO LAMPOON &6. DO LAMPOON &6. DO LAMPOON &6. DO LAMPOON &6. DO LAMPOON & 6. DO LAMPOON & SATIRIZE.SATIRIZE.
6. DO LAMPOON & 6. DO LAMPOON & SATIRIZE.SATIRIZE.
7. DON’T AVOID TEXT.7. DON’T AVOID TEXT.7. DON’T AVOID TEXT.7. DON’T AVOID TEXT.7. DON T AVOID TEXT. 7. DON T AVOID TEXT. EMBRACE IT!EMBRACE IT!
7. DON T AVOID TEXT. 7. DON T AVOID TEXT. EMBRACE IT!EMBRACE IT!
8 DON’T BE AFRAID8 DON’T BE AFRAID8 DON’T BE AFRAID8 DON’T BE AFRAID8. DON’T BE AFRAID 8. DON’T BE AFRAID OF THEMES DON’TOF THEMES DON’T8. DON’T BE AFRAID 8. DON’T BE AFRAID OF THEMES DON’TOF THEMES DON’TOF THEMES. DON T OF THEMES. DON T
OVERDO THEMOVERDO THEMOF THEMES. DON T OF THEMES. DON T
OVERDO THEMOVERDO THEMOVERDO THEM, OVERDO THEM, EITHER.EITHER.
OVERDO THEM, OVERDO THEM, EITHER.EITHER.EITHER.EITHER.EITHER.EITHER.
9 DON’T SPEND A9 DON’T SPEND A9 DON’T SPEND A9 DON’T SPEND A9. DON’T SPEND A 9. DON’T SPEND A FORTUNE ONFORTUNE ON
9. DON’T SPEND A 9. DON’T SPEND A FORTUNE ONFORTUNE ONFORTUNE ON FORTUNE ON
HOLIDAYS (UNLESSHOLIDAYS (UNLESSFORTUNE ON FORTUNE ON
HOLIDAYS (UNLESSHOLIDAYS (UNLESSHOLIDAYS (UNLESS HOLIDAYS (UNLESS YOU HAVE ONE).YOU HAVE ONE).
HOLIDAYS (UNLESS HOLIDAYS (UNLESS YOU HAVE ONE).YOU HAVE ONE).YOU HAVE ONE).YOU HAVE ONE).YOU HAVE ONE).YOU HAVE ONE).
NEW PARADIGMSNEW PARADIGMSNEW PARADIGMSNEW PARADIGMSNEW PARADIGMS NEW PARADIGMS IN RETAILIN RETAIL
NEW PARADIGMS NEW PARADIGMS IN RETAILIN RETAIL
Down is the New Up. Up is the New Up: HowUp is the New Up: How Innovative Retail Models are Making Consumers
Spend Again
Q&A