In a global market cluttered with brands, retailers need to rethink the role real estate plays in their business strategy, said Tony Marano, chief executive officer of the Americas for Cushman & Wakefield.
Marano said in a presentation that the “traditional notion of real estate has evolved into a value proposition that you may not fully appreciate.”
Consumers are swamped with 3,000 to 6,000 media messages each day, he said, so companies need to cut through the din, and they are increasingly using real estate strategies to do just that. Retailers can win the competitive battle by creating an in-store shopping experience for consumers that also leverages the right location in an existing or emerging market.
By implementing a new real estate strategy, “consumers are provided with a total experience of your brand instead of just another opportunity to purchase your product.” Marano said this results in an unbreakable bond with a retailer’s brand.
The idea is to take a real estate strategy and marry it to a marketing strategy. “You create a three-dimensional experience for the consumer,” which “holds onto a consumer,” keeping him or her in the store longer, he said. It’s what the Apple stores do so well.
The ceo said the strategy goes beyond the traditional real estate methods of shopping center leasing, “where you’re the tenant and you pay the landlord the rent.” The new approach is akin to working in partnership with real estate firms.
At Cushman & Wakefield, the marketing/real estate strategy involves urban street location sites “housed in prime real estate,” Marano said. The real estate value is affected by supply and demand, “but locations also reach a premium based on exposure to global consumers.”
Marano said with rents exceeding $1,300 a square foot on Fifth Avenue, “a new dynamic is needed to leverage your ability to pay the rent. You need visibility by leveraging this reality with the new metric.”
It is also important to consider new markets, he said. Current hot spots include: the Financial District in Lower Manhattan, plus the outer boroughs in New York; St. Petersburg in Russia, which targets Eastern Europeans; London; Macau, “which will be the Las Vegas of the East,” and Warsaw, “part of the new Europe” that is packed “with new intellectuals and young people wanting to spend money.”