Winter 2016
Celebrating 20 Years of Specialty Retail!

Since Specialty Retail Report launched nearly 20 years ago, its pages have always discussed retail trends in the shopping center industry and presented opportunities for specialty retail entrepreneurs. Along with the industry the magazine has shared the ups and downs, the questions and answers, the roadblocks and breakthroughs and, sometimes, even the controversies of the specialty leasing industry. With the advent and growth of the digital world, there’s much to be said about a magazine with the staying power of Specialty Retail Report. Twenty years! A true milestone in today’s “here today, gone tomorrow” society.

Like a trip down memory lane, paging through the accumulation of 20 years of Specialty Retail Report is like perusing this industry’s scrapbook and time capsule. It’s like a treasure chest storing everything good that’s ever been sold so we can look, in retrospect, at the best products and most successful entrepreneurs who had the perseverance and insight to grow this industry to where it is today. While many of the industry’s forebearers are still going strong, there is also new generation of young, energetic marketers, entrepreneurs and writers that will ensure the industry keeps growing.

In an economy that offers fewer opportunities to young people and those re-entering the workforce after a break, specialty retail offers individuals a chance to become their own boss and build a successful small business that’s an integral part of his or her hometown shopping center. Specialty retail has always been—and will always be—a place where those who are willing to take chances can score huge rewards.

How will the last 20 years of specialty retail be remembered and what will it become in the next 20 years? Specialty Retail Report asked some of the legends in the industry and everyone had a story to share. Along with their stories, certain themes resonated: the success of demonstration products, the breakthrough potential of products with 3x mark ups, the downscaling of mom and pop entrepreneurs, the growth of national retailers and the prevalence of selling products produced overseas versus those made right here in the USA.

Products that popped

Do Beanie Babies still have a place in your heart? Some specialty retail trends defined an era, says Gary Yanosick, Senior Vice President of Leasing for Rouse Properties.

“These things were on fire! Other products come to mind but nothing can ever match the surge in Beanie Babies and how prolific the product became as a RMU staple in 1991–1992,” Yanosick recalls.

Mark Klockner, Owner of Retail Fusion, will mark his 40th year in the specialty retail industry. How is that possible? Klockner got his start at The Cafaro Company in 1976, where he began to change the face of the temporary tenant industry. “When I started, specialty leasing consisted of two forms—operational trade outs and temporary displays,” Klockner remembers. “To my knowledge, we never questioned the look of undraped card tables. It was the norm,” he says. His memories trace to products like paintings on velvet, rock band T-shirts and rolling papers. There were no ancillary fixtures or overhead lighting and the cash wrap was a canvas apron with pockets. He believes unlicensed NFL products were even sold by some opportunistic entrepreneurs at the dawn of the industry.

In its early years, specialty retail was plagued by a flea market mentality, which it never thought it would outgrow. It became the “expandable rubber band” and center managers and owners used it to drive more revenue for net operating income when permanent leasing was under-performing and/or expenses were over budget. Leasing agents looked at specialty leasing with crossed eyes. “It was a natural extension of expanding a mall’s leasable area, thus increasing retail choices and in return rental revenue,” Yanosick says. “As programs grew, landlords needed to both improve the kiosk and RMU design so that consumers remained confident that these were legitimate retailers, creating mini-mobile stores that were less temporary or ‘fly by night’ in appearance,” he says.

But back then, carnival operators such as Chop Chop kept it real and became one of the best and most successful demonstration products in specialty leasing’s history. It was an ingenious product that claimed it made kitchen life simpler by chopping veggies quicker and better than you could with a paring knife.

Melinda Holland, Senior Vice President of Business Development at General Growth Properties recalls, “troll dolls, pogs [a children’s game of discs] and razor scooters.”

“Other product has defined the specialty retail industry over the years,” she says. “In the ’90s, unique or handmade goods dominated RMU merchandising. The globalization of the economy led to cheaper manufacturing overseas. That’s when RMU products evolved from handmade to trendy inexpensive products. However, the trends were faster moving and shorter as manufacturers were able to produce goods quickly once a trend caught on. Concepts once dominated by small mom and pop retailers were quicker to show up on the shelves of major retailers,” Holland notes.

Certain products over the past 20 years have defined the industry including Inkadinkado rubber stamps, NYS Collection sunglasses, Proactiv acne solution, Calendar Club, personalized ornaments, glowing candles, pet rocks, Your Name on A Grain of Rice, Bighorn Sheepskin, Chain by the Inch, and Metabolife (a diet product now banned
from distribution).

Products evolved from cellular pagers to cellular phones and accessory kiosks occupying at least four locations in every mall. “The cell phone market created a whole line of goods, which spurred single category retail concepts that sold well on an RMU or kiosk,” explains Sharon Loeff, President at Shopworks. “In addition, there is an aftermarket segment growing for electronics as well as the addition of common area retailers that are servicing broken equipment. I believe this segment will continue to evolve as the equipment changes,” she asserts.

In contrast, a relative newcomer to our industry with seven years under his belt, Marc Batten, Vice President and District Manager Mall Retail, responsible for Westfield’s San Diego properties, recalls top players have been Dead Sea Cosmetics, NYS Collection, Happy Feet and cell phone repairs and protective shields.

On design

Over 20 years a lot has changed in terms of specialty retail’s outward appearance. According to Klockner, two major changes altered the quality of design and the image of specialty retail: 1) When landlords allowed temporary tenants to lease temporary inline stores and; 2) the creation of design standards for cart and kiosks in the common area. That’s when thoughtful visual merchandising came about. The problem with today’s RMU is that it has gotten so small that you can’t sell enough products to even pay the rent!” says Klockner. “The evolution of common area equipment has been striking, from wagon wheel pushcarts to the upscale, well-designed units now seen in today’s malls,” notes Loeff. “By the 1990s, developers believed that if they bought RMUs with built-in multiple levels and risers that they could force the merchant to showcase products on a fixture that wasn’t necessarily correct for their products.” While RMUs still have a place in today’s specialty retail scene, more and more landlords are moving to kiosks. Westfield has focused on making their kiosk business “Three-hundred-sixty-degree retail,” Batten says. Today, kiosks have their own personality and the majority of Westfield’s kiosks are walk-ins.

Developers now work closely with design and tenant coordinators to match a center’s aesthetic and showcase the retailer’s products in a more advantageous way.

Pop-ups

Do you recall the first “pop-up shop” that you ever saw? For many who have been in the industry longer than 20 years, their first recollection is the original Christmas store that filled vacant inline space annually. “Before the days of discount stores or the Internet having the vast presence it has today, pop-up holiday stores became a major destination during the holiday season. These were the one-stop shopping locations consumers were seeking to get everything they needed for the Christmas season,” Yanosick says.

What about the future?

These are only a few of the forces that have shaped 20 years of specialty leasing. What will the future be? “To me, it’s all about trends,” admits Yanosick. “Also, food has become a major draw in the common area and consumers are interested in easy to access “hand carried snacks,”
he says.

Klockner thinks the Internet has stripped niche products out of the hands of entrepreneurs, which he says, “leaves a very narrow margin for what can be sold.” He sees pitch products as the most natural, though he recognizes landlords are limiting and sometimes cracking down on these types of retailers.

For the temporary tenant industry that didn’t think it would survive a flea market mentality and criticism from the heavyweights of national retailers who complained about the common area, it has survived and, more impressively, thrived. Today, specially leasing contributes over $25 billion to the global economy. Some of today’s directors of specialty leasing are C-suite executives who manage not only specialty leasing but also sponsorship, partnership marketing and advertising.

Specialty Retail Report will continue to bring readers the insights that guide the next generation. Specialty retail leasing is now a global enterprise owing in large part to ICSC’s enthusiasm. The association will continue to expand SPREE, the world’s largest tradeshow for the cart, kiosk and temporary retail industry. It’s held each year in conjunction with RECon in Las Vegas. (Join SRR in Las Vegas from May 23–25, 2016 for the next SPREE RECon.) SPREE events are also held in Canada, Europe and the Middle East. The magazine has always championed networking among specialty retail entrepreneurs and leasing managers. In the next 20 years SRR will continue to help this industry grow further by developing additional networking and educational opportunities for all. Let’s just see what the future holds for all of us!

Duffy C. Weir

Duffy Weir is the former vice president and director of specialty retail and marketing at The Rouse Company of Columbia, MD. Now an independent retail marketing and sponsorship consultant and writer, Weir travels the world searching for what she says "makes marketplaces tick." She can be reached at Duffyllc@comcast.net or 410.252.8885.
Publications of ICSC

1221 Avenue of the Americas, 41st Floor
New York, NY 10020
Phone: 781.709.2420
Fax: 781.829.1042

© 2000-2017 International Council of Shopping Centers

DRIVE business.
Make MONEY.
Find UNIQUE concepts.
DISCOVER hot products.

For only $29.95 you can have the industry's #1 resource.

Subscribe today and save!