12014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
2014 S TAT E O F T H E S H O P P I N G C E N T E R
2 2014 STATE OF THE SHOPPING CENTERS
ACTIVATING COMMUNITIES:SHOPPING CENTERS AS ACTIVITY CENTERSIn today’s digital age where consumers can connect with each other
via text in an instant and do their shopping from their couches, people
still crave a physical place to congregate, connect and engage. And
more and more, shopping centers are a big part of fulfilling that need.
So as shopping centers and malls remain prominent in our culture
and consciousness, developers and retailers have big opportunities
to activate communities and benefit from this consumer desire for
gathering space by becoming the center of their communities.
No longer just a place to shop, shopping centers are becoming key
activity centers in the social fabric of communities, elevating their
purpose beyond simply offering an outlet to buy groceries or pick up a
new blouse. This concept is nothing new, but implementation to activate
communities has been rare.
When Victor Gruen designed Southdale (the first enclosed shopping
center in the U.S.) in 1956, located in Edina, Minn., his vision was
that this shopping center would become the center of the community,
surrounded by schools, apartment buildings, offices, medical services,
parks, a lake and community art. Under Gruen’s vision, Southdale would
have become a dense, self-contained alternative downtown to live, work,
play and shop. This vision for Southdale did not come to fruition, but
the concept can be used today for inspiration on activating communities
through shopping centers. Consumers will reward shopping centers that
activate their communities with their shopping and dining dollars and
best of all–their loyalty.
SUCCESSFUL ACTIVATION OF A SHOPPING CENTER INCORPORATES DESIGN AND AMENITIES WHICH REFLECT THE CULTURE AND SENTIMENT OF THE SURROUNDING NEIGHBORHOOD
32014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
Keys to community activation include:
• Make private spaces feel public: Shopping centers are private
developments, but consumers will feel more at home if they are
made to feel public and are encouraged to stay a while. Make
consumers feel like they belong and feel like the shopping center is
as much a part of their community as their local park or library.
• Provide the “Main Street” feel: Nothing conjures up the image
of community quite like Main Street, USA. No matter where a
shopping center is located, capitalizing on the best characteristics
of Main Street will make consumers feel at home. Make centers
easily walkable and accessible. Provide places to sit down and
spontaneously run into friends and neighbors. Host community
events and incorporate local tenants for a hometown feel.
• Respect the authenticity and character of a community: Consumers
have made the decision to live in their communities for a reason–
whether it’s an ethnic enclave, strong job opportunities, attractive
housing options or proximity to nature. Pay attention to this local
character and incorporate it into shopping center design and tenant
mix to embed into the community. Shoppers can tell the difference
between true understanding of their communities and faking it.
In 2013, Nielsen examined the trends impacting the shopping center
industry and the implication for capturing the consumer’s shopping
dollars. In this report, Nielsen revisits the trends influencing the size
and shape of the shopping center industry, as well as some of the
shifting consumer factors influencing the strategic direction of this
powerful sector and their ability to capture the consumer’s dollar.
In this report, we examine:
• Shifts in the shopping center landscape: Lifestyle on the rise
• Shifts in retail formats: Think small
• Brick-and-mortar, e-commerce and m-commerce: Frenemies in the
retail space
• Market trends: Young, diverse and urban consumers are the future
of retail
• Consumer deep dive: Hispanic millennials in San Diego
• Location deep dive: Understanding market and retail activity to
make smarter location decisions
• What does it all mean?
4 2014 STATE OF THE SHOPPING CENTERS
S H I F T S I N T H E S H O P P I N G C E N T E R L A N D S C A P E:LIFESTYLE CENTERS ON THE RISEThe shopping center landscape remained stable from 2013 to 2014,
indicating growing stability in development. The number of large
shopping centers (200K+ Gross Leasable Area {GLA}) grew by just
3 percent in the past year. The composition of the large shopping
center landscape has also remained relatively stable over the past year.
Community centers, which feature neighborhood-serving amenities
like grocery stores and dry cleaners, are still the most common type
of shopping center in 2014, comprising 46 percent of centers. In 2013,
Nielsen reported the rise of lifestyle centers and the decline of traditional
malls like regional and super-regional centers. This trend is holding true
in 2014 as consumers continue to be drawn to the shopping experience
offered by lifestyle centers with their mix of retail, restaurants and
entertainment options.
SHOPPING
CENTER TYPESHOPPING CENTER CONCEPT
GLA SIZE
RANGE
2014%
COMP
2013%
COMP
2008%
COMP
Community Centers General Merchandise, Convenience 100K-350K 46% 45% 46%
Power Centers Category-Dominant Anchors, Few Small Tenants 250K-600K 18% 18% 13%
Lifestyle CentersUpscale, National Specialty, Entertainment,
Outdoors150K-500K 15% 15% 9%
Regional Centers General Merchandise, Fashion 400K-800K 11% 11% 18%
Super-Regional
Centers
General Merchandise and Fashion (more variety
than Regional)Over 800K 6% 6% 10%
Value Retail Centers Manufacturer's Outlet Stores 50K-400K 3% 3% 3%
Entertainment
CentersLeisure, Tourist-Oriented, Retail & Service 80K-250K 1% 1% 1%
Source: Directory of Major Malls (DMM) 2014, 2013 and 2008 and Runstad Center, ICSC
* Centers under 200K Gross Leasable Area (GLA) are not included in the Nielsen analysis.
52014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
The rise of lifestyle centers is driven in part by their newness.
Consumers are drawn to the excitement of a new concept and a new
shopping experience. Lifestyle centers are, on the whole, newer than
other types of centers with a median year opened date of 2006. In
contrast, traditional mall concepts like regional centers and super-
regional centers are much older with median open dates of 1981 and
1976, respectively.
While many malls have gone through updates and renovations during
their lifespans, they still lack the excitement of a brand new concept.
Older shopping centers can capitalize on the lifestyle center trend
by renovating and rebranding with emphasis on providing diverse
amenities like dining, recreation and gathering space in addition to
retail. No matter what the concept, consumers want a one-stop shop for
retail and entertainment they can’t get through online shopping–from
specialty cafes and wine bars, to concerts and yoga classes.
For example, The Headquarters, located in downtown San Diego, is
a new lifestyle center that opened in 2013 and was developed using
adaptive reuse to capitalize on the former headquarters of the San
Diego Police Department. The historic character, gardens and plazas,
in addition to trendy retailers like Kitson and upscale restaurants like
The Cheesecake Factory, create a shopping experience that consumers
can’t get shopping online. The center also blends into the downtown
landscape, making it a key center of activity within the community.
SHOPPING CENTER TYPE MEDIAN YEAR OPENED
Lifestyle Centers 2006
Power Centers 1999
Entertainment Centers 1999
Value Retail Centers 1995
Community Centers 1987
Regional Centers 1981
Super-Regional Centers 1976
Source: Directory of Major Malls (DMM) 2014
6 2014 STATE OF THE SHOPPING CENTERS
GROCERY
PERCENTAGE OF U.S. STORE EXPANSION IN THE TOP 20 EXPANSION CHAINS 2013 VS. 2007
DOLLAR STORES
MASS MERCHANDISERS
C-STORES DRUG STORES
16,570 NEW
STORES
36%
32%
21%
7% 5%
Source: Nielsen TDLinx, 2013
S H I F T S I N R E TA I L F O R M AT S:THINK SMALLBigger isn’t always better. Since the start of the Great Recession at the
end of 2007, small formats like dollar stores, convenience stores and drug
stores have driven retail chain expansion. Of the nearly 17,000 new stores
that opened between 2007 and 2013, 36 percent were dollar stores,
32 percent were convenience stores and 21 percent were drug stores.
72014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
PERCENTAGE OF U.S. STORE EXPANSION IN THE TOP 20 EXPANSION CHAINS 2013 VS. 2007
Larger retailers like Wal-Mart and Target are thinking small as well.
Wal-Mart is betting on its smaller Neighborhood Markets and Wal-Mart
Express concepts for future growth, putting them in a position to blend
in with their host communities and help them compete more directly
with the smaller store concepts. Target launched its smaller, urban
CityTarget concept in 2012 and has since opened eight locations in major
metros across the country.
Wal-Mart and Target are even opening smaller format locations on
college campuses and convenience store concepts to appeal to a
younger customer base that may not need to make big weekly shopping
trips. Wal-Mart has locations on the University of Arkansas-Fayetteville,
Arizona State University-Tempe and Georgia Tech-Atlanta campuses,
while Target is planning to open the first Target Express location near the
University of Minnesota campus in summer 2014 that will be 15 percent
the size of a typical Target location.
Pop-up stores are more prevalent inside shopping centers nationwide.
The number of pop-up stores jumped 16 percent from 2,043 in 2009 to
2,380 in 2012. And, the incentives for retailers to open pop-up locations
are great, particularly to experiment with new concepts or take advantage
of the holiday shopping season, as they can save up to 80 percent by
opening a pop-up location instead of a traditional store. Target opened
pop-up locations to support back-to-school shopping and Toys “R” Us
opened about 200 pop-up locations for the holiday shopping season.i
Not only retailers benefit from pop-up concepts, shopping center
developers benefit from pop-ups as a creative way to filling underutilized
or vacant space with an unexpected yet pleasant variety and diversity
of goods and services. It makes each visit stand out as a distinctive
experience. This is an interesting riff on the “shared economy” concept
where pop-ups are “sharing” underutilized mall space.
8 2014 STATE OF THE SHOPPING CENTERS
BRICK-AND-MORTAR, E-COMMERCE AND M-COMMERCE:FRENEMIES IN THE RETAIL SPACERetail sales have increased over the past year. Total retail and food service
sales increased 2.6 percent from January 2013 to $427.8 billion in January
2014.ii The biggest growth in sales came from non-store retailers at 6.5
percent, which includes e-commerce. While most retail types experienced
sales growth over the past year, not all retailers experienced gains.
Electronics and appliance stores, as well as furniture stores, did not fare
as well with drops in sales over the past year. The growth in e-commerce
compared to brick-and-mortar retailers cannot be ignored in the retail
space. E-commerce and brick-and-mortar are truly frenemies–there is
certainly rivalry, however, a friendship needs to be established to be
successful in the retail space of the future.
92014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
PERCENT CHANGE IN RETAIL SALES: JAN. 2014 FROM JAN. 2013
RETAIL SALES SAW GAINS
TOTAL RETAIL & FOOD SERVICES
NONSTORE RETAILERS
FOOD/BEVERAGE STORES
BUILDING MATERIAL/GARDEN EQUIP
MOTOR VEHICLE & PARTS DEALERS
HEALTH/PERSONAL CARE STORES
FOOD SERVICES/DRINKING PLACES
MISC. RETAILERS
CLOTHING STORES
GAS STATIONS
ELECTRONIC/APPLIANCE STORES
-6% 6% 8%-4% 4%-2% 2%0%
FURNITURE/HOME FURN. STORES
GENERAL MERCH. STORES
RETAIL E-COMMERCE SALES
U.S
DO
LLA
RS
(BIL
LIO
NS)
PERC
ENT
% OF TOTAL RETAIL SALESRETAIL E-COMMERCE SALES % CHANGE VS. YEAR AGO
SPORTING GOODS/HOBBY/BOOK/MUSIC STORES
Source: U.S. Census Bureau, Service Sector Statistics Division. February 2014
Source: Retail Indicators Branch, U.S. Census Bureau, Q4 2013
E-COMMERCE IS ON THE RISE; BRICK-AND-MORTAR STILL DOMINATES
70
Q42001
Q42007
Q42004
Q42010
Q42002
Q42008
Q42005
Q42011
Q42003
Q42009
Q42006
Q42012
Q42013
40
30
0
5020
10
6030
20
-10
40
10
0
10 2014 STATE OF THE SHOPPING CENTERS
HOW DO IN-STORE, ONLINE AND MOBILE PURCHASES COMPARE?
IN-STORE PURCHASE ONLINE PC PURCHASE MOBILE PURCHASE
MOST RELIABLE EASIESTOVERALL FAVORITE MOST CONVENIENT SAFEST
With improving mobile technology, the scope of e-commerce is expanding
beyond the PC to mobile devices, or m-commerce. Retail sales on
smartphones accounted for only 3 percent of total e-commerce sales in
2012, but figures are rising steeply.iii The majority (59%) of consumers
indicate that online shopping is their overall favorite way to shop. It’s also
the easiest and most convenient way to make purchases. However, despite
these positive feelings, consumers still indicate that making purchases in-
store continues to be the most reliable and safest means of shopping.iv The
power of touch is a very important part of the in-store shopping experience.
When consumers are able to touch products in the store, their perceived
ownership of those products increases which leads to greater emotional
connections and impulse purchases.v Shoppers seem to still be evaluating
mobile shopping, with 38 percent of shoppers expressing a preference for
mobile purchasing as the most convenient option.
69%
28%
11%
31%
59%
13%20%
68%
27%
13%
68%
38%
77%
22%
7%
PURCHASE PREFERENCE
Source: Nielsen Shopper Sentiment, June 2012
112014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
COMPARING ACTIVITIES AMONG MOBILE SHOPPERS
SMARTPHONE
TABLET
Source: Nielsen Mobile Shopping Report, Q3 2013
O M N I-C H A N N E L C O O R D I N AT I O N Despite the competition, brick-and-mortar, online and mobile are not
mutually exclusive in the consumer shopping experience. Retailers
should incorporate all three to create an integrated omni-channel retail
strategy that uses mobile as the glue between online and brick-and-mortar
shopping.
More than four in five (87%) smartphone and tablet owners use a mobile
device for shopping activities.vi Consumers also use mobile alongside in-
store shopping as an extended shelf, using their devices to locate stores,
get purchasing advice from friends and look up prices and product reviews.
This easy access to information has made consumers savvier shoppers.
Shopping centers and brick-and-mortar retailers can help strengthen the
ties between physical and digital shopping by ensuring their locations offer
free Wi-Fi and apps that make the shopping experience more convenient
and informative. And along with increased mobile usage, shopping centers
and retailers gain added insight into the consumer purchase journey, better
understanding consumer activity within the centers.vii
19%49%
65%59%
39%76%
51%66%
14%49%
55%47%
USING STORE LOCATOR TO FIND STORE
USING LISTS WHILE SHOPPING
CHECKING PRICE
USING MOBILE COUPON
RESEARCHING ITEM BEFORE PURCHASE
READING REVIEW OF RECENT/FUTURE PURCHASE
12 2014 STATE OF THE SHOPPING CENTERS
MARKET TRENDSYOUNG, DIVERSE AND URBAN CONSUMERS ARE THE FUTURE OF RETAILMillennials, consumers age 20-37 (born between 1977-1994), are the
most likely to adopt novel omni-channel shopping habits. They are an
ever-growing demographic and currently account for 24 percent of the
U.S. population–on par with Baby Boomers. Their large population size
equates to big buying power. Millennial shoppers spend about $600
billion each year. And as they come of age and establish their own
households, their impact on the retail industry will increase. By 2020,
Millennial shopping spend will increase to roughly $1.4 trillion annually
and represent one-third (30%) of retail sales.viii
Millennials are very different from their parent’s generation. They are
more racially and ethnically diverse than any previous generation.
They’ve been hard hit by the recent turbulence in the economy, but their
high education levels and optimism foreshadow their potential future
success.ix Shopping centers and retailers who cater to this generation’s
preferences will be in good position to capitalize on this growing market.
Millennials are leading a movement back to the cities. For the first
time since the 1920s, cities are the center of economic growth and
vitality. Megacities, those with over 10 million residents, are set to
rise dramatically over the next 25 years.x Millennials value the urban
environment and want to be able to live, work, play and shop all in the
same area.
They are taking longer to buy homes and start families which will keep
them in the cities longer than prior generations. Millennials who live
in the core of the nation’s major metros shop more often than their
suburban and rural counterparts in all types of shopping centers and
stores, making these urbanites even more valuable to retailers. They
are especially likely to shop in department stores, chain apparel stores
and upscale boutiques.xi And, older generations are following suit.
As Baby Boomers become empty nesters, they are likely downsizing
from their suburban McMansions to a smaller footprint. Shopping
center development will need to adjust for this urban preference.
132014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
Even shopping centers located in the suburbs can take on urban
characteristics by embracing “hipstubria” with mixed-use, walkability and
transit-oriented development.xii
Along with shifts in urbanicity, a seismic shift in the housing industry
has occurred since 2007, when the home bubble burst, giving way to the
Great Recession. With this shift, understanding the type of communities
consumers live in leads to greater understanding of the way they shop
and spend. The Demand Institute has classified the most prominent
cities, towns and villages into nine community segments. At one end of
the spectrum, communities are organized into “Affluent Metroburbs,”
where residents are within walking distance or close proximity to
commerce. Upscale retailers and luxury homebuilders, will find the
greatest opportunity in these “Affluent Metroburb” communities.
On the other end of the spectrum are “Deflated Bubble Communities,”
where the community conditions demand a focus on affordable housing
options and mass-market retail. Millennials living in different community
types will have different shopping habits and thus different needs from
shopping centers and retailers. In making shopping centers better,
developers, retailers and urban planners must understand the needs of
the community and address those needs in development.xiii
While lifestyle centers are on the rise, they don’t resonate with
Millennials because of their typical tenant mix, which tends to cater to
middle-aged to older women in the much sought after Mass Affluent
group–those with wealth between $250,000 and $1 million. Common
lifestyle centers stores include Chico’s and Coldwater Creek.xiv Yet,
Millennials will visit lifestyle centers for the restaurants. So these types
of centers can expand their Millennial appeal beyond restaurants by
incorporating tenants that cater to this younger generation with apparel
retailers like Old Navy and Victoria’s Secret, unique local boutiques,
movie theaters and gyms.
Two-thirds of Millennials visit big-box stores in power centers at least
once a month. However, e-commerce could have a negative impact
on visits to power centers as these types of retailers tend to offer
commodities like electronics that can easily be purchased online.
TECH-SAVVY MILLENNIALS LOVE TO SHOP ONLINE WITH 45 PERCENT SPENDING AT LEAST AN HOUR ON RETAIL-ORIENTED WEBSITES EACH DAY.XV
14 2014 STATE OF THE SHOPPING CENTERS
HISPANIC POPULATION PROJECTED TO DOUBLE BY 2050
70% 65% 60% 60% 51% 46%
4% 5% 6% 7%8% 9%
13% 14% 14% 14% 15% 15%
13% 16% 19% 23% 27% 30%
2000 2020 20402010 2030 2050
Source: U.S. Census Bureau, 2010
HISPANIC BLACK ASIAN WHITE NON-HISPANIC
Given their small paychecks, Millennials are savvy shoppers always
on the lookout for a good deal and looking to share purchases and
experiences. Millennials are 1.6 times more likely than Boomers to be
influenced by a coupon or promotion. When they want luxury items like
cars, vacations, watches or handbags, they are willing to save to buy
them. Over half (59%) of Millennials plan to save for personal luxury
items in the future, and 28 percent are saving for these items now.xvi
They are social shoppers with 65 percent taking friends or family on their
shopping trips. And for 20 percent of Millennials, a shopping center is
their favorite place to gather with friends. This younger generation puts
a premium on authentic, handmade, locally produced goods–and they’re
willing to pay more for products from companies with social impact
programs.xvii Getting a good deal is a priority, but they won’t compromise
on quality. They want to feel good about what they buy. And, when they
like a product or a brand, they will serve as advocates. Here again,
a thoughtful omni-channel strategy will help keep and capture their
dollars.
Along with the coming of age of Millennials, the U.S. consumer base is
becoming more and more diverse, with Hispanics driving much of that
growth. Hispanic consumers were 16 percent of the population in 2010.
That figure is set to almost double to 30 percent by 2050. Along with
the growth in the Hispanic population comes growth in buying power.
Hispanic consumer buyer power is expected to reach $1.7 trillion by 2017.
152014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
HISPANIC CONSUMER BUYING POWER IS RISING
1990 20102000 2012 2015 2017
$1.0 TRILLION
$1.7 TRILLION
$1.5 TRILLION
$1.2 TRILLION
$488 BILLION
$210 BILLION
Source: Selig Center for Economic Growth, University of Georgia, Athens
In order to capture Hispanic shoppers, developers and retailers must
appeal to their distinct shopping needs and preferences. Hispanic
families shop as a unit with Grandma, Mom, Dad and the kids all along
for the ride. Because of this, Hispanic consumers are looking for one
stop that has something for everyone from grocery and medical services
to clothes, entertainment and banking. It’s not just the tenant mix
that’s important in making a shopping center appealing to Hispanic
consumers–these consumers want a place to sit down and relax, a place
for kids to play and a place to attend cultural events.
The Legaspi Company, named one of Fast Company’s most innovative
companies of 2014, has built a reputation by doing just that. It has
successfully revitalized 10 failing shopping centers across the country
by turning them into Hispanic cultural centers, which subsequently
increased foot traffic and income by 30 percent.
One such shopping center is Plaza Fiesta located in Atlanta. The Legaspi
Company filled nearly 240,000 square feet of empty retail space in
the center by addressing the distinct needs of Hispanic consumers.
Boots, quinceañera shops and country-western retailers are popular
tenants in the center. And given the strong religious ties of the Hispanic
community, Easter, Christmas and the Day of the Virgin of Guadalupe
celebrations are held for the community and Sunday sales events don’t
start until 3 pm to avoid conflicting with Mass.xviii Paying attention to
these cultural cues makes Hispanic consumers feel a connection to the
shopping center as an important place within their community, like the
town plazas in their ancestral communities.
16 2014 STATE OF THE SHOPPING CENTERS
C O N S U M E R D E E P D I V EHISPANIC MILLENNIALS IN SAN DIEGONielsen has segmented the Hispanic subset of Millennials living in the
San Diego market for a distinct and localized view of these consumers.
Hispanic Millennials make up 5 percent of the U.S. population–but
they make up 10 percent of the San Diego market. The distinct profile
of this emerging segment of the population is important for shopping
center developers and retailers to pay attention to, in order to effectively
connect with these consumers.
The San Diego market spans many cities that fall into different
community types defined by the Nielsen Demand Institute. In San Diego
proper, the community is much an “Affluent Metroburb,” which tends to
be established, wealthy communities near big cities that offer an ideal
mix of urban and suburban lifestyles. On the other end of the spectrum
are cities like Lemon Grove, El Cajon and Imperial Beach. They are
classified as “Deflated Bubble Communities,” which tend to be ethnically
diverse communities that were hit hard by the real estate bubble and
bust over the last decade. Hispanic Millennials that come from wealthier
households in San Diego proper, Encinitas or Poway, will have different
experiences and expectations than those in less affluent and National
City or Lemon Grove, presenting opportunity to further segment this
generation for a more refined view.
I LOVE THE SMELL OF COMMERCE IN THE MORNING!
– BRODIE, MALLRATS MOVIE
172014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
D I F F E R I N G C O M M U N I T Y T Y P E S I N T H E S A N D I E G O D M A
The shopping experience for Hispanic Millennials is epitomized by
the concept of “flaneur”–to value leisure and exploration, they are
connoisseurs of the street–whether actual city streets or shopping
center pathways. They are looking for flaneur when they visit a shopping
center. Instead of dashing in and out of the mall, they enjoy wandering
around stores, looking for new and interesting products to discover.
A day at the mall is a relaxing experience and designing malls and
stores that give Hispanic Millennials the opportunity for leisure and
exploration will ensure that this valuable segment of the population
continues to visit.
When making shopping decisions, Hispanic Millennials care about
their image, and they’re willing to pay extra for products that are
consistent with that image and allow for customization. They are more
likely to consider or purchase products either endorsed or designed by
their favorite celebrities. But they’re not frivolous spenders. Hispanic
Millennials stick to a budget when they shop and get creative by mixing
high and low priced apparel items to stretch their shopping dollars.
Retailers who balance this preference for unique, image-friendly
products with affordability will appeal most to this group.
Transitional City
Place matters. Consumers living in different community types within the San Diego DMA have distinct characteristics that impact their shopping habits.
COMMUNITY TYPE
Vacation + Retirement Destinations
Deflated Bubble Communities
Traditional Suburb
Cosmopolitan Suburb
Affluent Metroburbs
Other
18 2014 STATE OF THE SHOPPING CENTERS
SPEND SHOP DINE
Hispanic Millennials spent roughly
$313 online in the past 12 months,
compared with $500 for San Diego
Millennials as a whole.
Hispanic Millennials spend most of
their shopping dollars on women’s
casual clothes, roughly $122 in the
past 12 months, compared with $114
for San Diego Millennials as a whole.
The general San Diego Millennial
population outspends Hispanic
Millennials in fine jewelry, men’s
casual clothes and men’s business
clothes.
Hispanic Millennials still visit malls to
do their shopping over buying online.
When Hispanic Millennials do shop
online, they tend to buy movie tickets
and used goods.
Top Shopping Centers:
• Las Americas Premium Outlets in
Southeast San Diego
• Westfield Plaza Bonita in National
City
Top Apparel Retailers:
• Victoria’s Secret
• Forever 21
• Wal-Mart
Hispanic Millennials appreciate food–
they enjoy getting creative in their
kitchens and they like to dine out.
Hispanic Millennials have eaten at
quick-service restaurants an average
of five times in the past month and
twice at a sit-down restaurant–on par
with the general San Diego Millennial
population.
Top Sit-Down Restaurants:
• Acapulco
• Sammy’s Woodfire Pizza
• Denny’s
• Round Table Pizza
Top Quick-Service Restaurants:
• Chipotle
• Rubio’s
• El Pollo Loco
• Church’s Chicken
Source: Nielsen Scarborough, R2 2013
H I S PA N I C M I L L E N N I A L S H AV E D I S T I N C T S H O P P I N G H A B I T SH I S PA N I C M I L L E N N I A L S - S A N D I E G O M A R K E T
192014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
TAKE THE ELEVATOR TO THE ESCALATOR, RIDE IT DOWN AND START AGAIN! ALL TOGETHERIN THE MALL, I WAS IN THE MALL.NO PLACE BETTER
WEEZER (BAND)– FROM SONG “RADITUDE”
20 2014 STATE OF THE SHOPPING CENTERS
L O C A L M A R K E T D E E P D I V EUNDERSTANDING MARKET AND RETAIL ACTIVITY TO MAKE SMARTER LOCATION DECISIONSGiven the importance of the Millennial generation to the future of
retail, it is imperative that retailers and shopping center developers pay
attention to this young generation in their location decision-making
process. Making location decisions involves significant investments in
time and resources–and missteps are costly. Understanding community
and consumer dynamics is key for retailers and shopping centers to
embed themselves into a community and establish themselves as a key
activity center. However, when this insight is combined with rich location
analytics, retailers and shopping centers can put themselves in an even
stronger position for success. By putting the consumer at the center,
Nielsen can help retailers and shopping center developers make smarter,
more informed location decisions.
Millennials are strong customers for women’s apparel retailers,
especially Hispanic Millennial women. Looking at a women’s apparel
retailer that caters to Millennial shoppers (Apparel Brand Y), Nielsen can
determine the best locations with the best opportunity for success. In
our example, Apparel Brand Y was looking to grow their brick-and-mortar
presence by adding new retail locations within the San Diego market.
With the use of location analytics, Nielsen provided insight into where
within the San Diego market Apparel Brand Y has the best opportunities
for success, while at the same time screening out potentially low
performing spots.
212014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
WHERE IS WOMEN’S APPAREL RETAIL ACTIVIT Y IN SAN DIEGO?The first step in understanding locational opportunity is knowing
where retail activity is concentrated within a market. And from all of
the potential places to evaluate, which type of locations or geographies
should be evaluated. Large shopping centers? All shopping centers? Or
street intersections?
Apparel Brand Y had successful locations in storefronts found in
walkable, higher density urban and suburban areas popular with
Millennials, in addition to shopping centers. Because Apparel Brand
Y knew their best locations were not located only in shopping centers,
using block group centroids rather than only shopping centers as a
starting point to evaluate locations was the most relevant option. The
block group centroids were weighted by women’s apparel employment
to provide insight into where this type of retail activity is highly
concentrated. The points on the map below identify where women’s
clothing store employees are located and concentrated.
HIGH DENSIT Y AREAS FOR WOMEN’S CLOTHING STORE EMPLOYEES - SAN DIEGO DMA
STEP 1
Women’s Clothing Store Employees within 1 mile of Block Group Centroid
1 Dot = 10 Employees
22 2014 STATE OF THE SHOPPING CENTERS
WHICH LOCATIONS OFFER THE GREATEST OPPORTUNIT Y?After determining where retail activity for women’s apparel is
concentrated in San Diego, potential locations needed to be prioritized.
Relevant types of locations for Apparel Brand Y were evaluated using
a statistical model that captured the elements most associated with
Apparel Brand Y’s sales history. This model took into account the types
of customers that have shopped at Apparel Brand Y, including Millennial
women, as well as other factors important to the Apparel Brand Y location
strategy including competition, demand, commercial activity, level of
urbanicity and location characteristics (e.g., the visibility of the location).
Taking into account the community context put Apparel Brand Y in a
better position to become an activity center within the community—vital
for activating the surrounding community and driving sales.
This statistical model optimized both the best locations within San Diego
and the expected opportunity score at each location represented by an
index (with 100 being average). The final result gave Apparel Brand Y
the ability to rank order the locations based on the index to help drive
their expansion strategy in San Diego. Locations scoring over 125 were
determined to have the greatest opportunity for Apparel Brand Y and the
map below shows the optimized locations with their indices.
STEP 2
OPTIMIZED PROSPECT LOCATIONS FOR APPAREL BRAND Y - SAN DIEGO DMA
Optimized Prospect Location Store brand Y
Prospect Location125 Model Index Score
232014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
A closer look at high-scoring locations showed that they are surrounded
by many Millennial households. As Millennials equate to strong
potential customers for Apparel Brand Y, these prospective locations will
likely drive more Millennial shopping dollars to the retailer.
OPTIMIZED LOCATIONS FOR APPAREL BRAND Y WITH HOT SPOT (HIGH DENSIT Y) AREAS FOR MILLENNIALS - SAN DIEGO DMA
24 2014 STATE OF THE SHOPPING CENTERS
HOW TO TAKE ACTION WITH LOCATION INSIGHTS?Using information about the best prospect locations in the statistical
model (such as the latitude/longitude, information about the
surrounding community and key consumers) Apparel Brand Y was able to
prioritize their search for new locations in San Diego. By having detailed
insights about the locations, and their surrounding neighborhoods
and communities Apparel Brand Y can search for available retail space
around the higher scoring prospect locations that best fit its store type
and strategy, whether it’s in a shopping center nearby, a stand-alone lot
on a major intersection or in a downtown storefront.
STEP 3
252014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
W H AT D O E S I T A L L M E A N ?USE SHOPPING CENTERS TO ACTIVATE COMMUNITIES: Despite
advances in technology, consumers still desire a physical place for
communal gathering and shopping centers stand to fill that need.
Shopping centers will be most successful at building engagement and
loyalty among shoppers by respecting the authenticity and character of
the communities where they locate. Make shoppers feel like shopping
centers are a comfortable engaging gathering place and a focal point of
the community.
BRING “LIFE” TO SHOPPING CENTERS AND STORE LOCATIONS: Lifestyle centers have seen the largest shift in share of shopping centers
since 2008, as most of these centers are new developments. Older
shopping centers can capitalize on the lifestyle trend by renovating
and rebranding to emphasize diverse amenities like dining, recreation
and gathering space in addition to retail. No matter what the concept,
consumers want a shopping experience that they cannot get sitting at
home in front of their computer screens.
GROW THE FRIENDSHIP WITH ONLINE AND MOBILE–THINK OMNI-CHANNEL: The consumer shopping experience has transcended reliance
on a single channel. E-commerce and m-commerce are on the rise.
Retailers must have omni-channel strategies that incorporate online,
mobile and brick-and-mortar for a seamless, interconnected shopping
experience for consumers. Examples include, apps that can be used
in-store to check product reviews, online e-commerce sites that allow
consumers to pick up their purchases at their local store, and online on
mobile coupons that can be redeemed across channels.
FOCUS ON EMERGING CONSUMER SEGMENTS: The young, diverse
and urban represent the future of economic growth and thus retail buying
power. Taking a localized, community-based view of these emerging
consumer segments reveals distinct shopping behaviors and attitudes
that should be utilized in designing shopping centers and determining the
appropriate tenant mix. Loyalty here will pay future dividends.
UTILIZE ANALYTICS TO MAKE SMARTER LOCATION DECISIONS: Understanding community and consumer context is key for success,
however, when combined with rich locational analytics, retailers, shopping
centers and even manufacturers are in an even stronger position for
success. Use analytics to make smarter, more informed decisions about
where to locate within a community and succeed with greater sales by
giving shoppers opportunities to connect and engage.
26 2014 STATE OF THE SHOPPING CENTERS
iReuters. “Target among retailers with pop-up outlets for back-to-school.” 2013.
ii U.S. Census Bureau. Service Sector Statistics Division. February 2014.
iii Forrester Research. January 2013
i v Nielsen. “Shopper Sentiment: How Shoppers Feel About Shopping In-Store, Online and Mobile”, June 2012.
v Peck, Joanne and Suzanne B. Shu. “The Effect of Mere Touch on Perceived Ownership”. The Journal of Consumer Research, Vol. 36, No. 3 (October 2009), pp. 434-447
vi Nielsen. “Mobile Shopping Report”. Q3 2013.
vii Nielsen. “An Era of Growth: The Cross-Platform Report” Q1 2014.
viii Accenture. “Who are the Millennial Shoppers? And what do they really want?” 2013.
ix Nielsen. “Millennials: Breaking the Myths” Report. 2014.
x Micheli, Robin. “7 Bold Commercial Real Estate Predictions”. March 24, 2014. http://www.cnbc.com/id/101508251
xi M. Leanne Lachman and Deborah L. Brett. “Generation Y: Shopping and Entertainment in the Digital Age”. 2013. http://uli.org/wp-content/uploads/ULI-Documents/Generation-Y-Shopping-and-Entertainment-in-the-Digital-Age.pdf
xii Nielsen. “Millennials: Breaking the Myths” Report. 2014.
xiii The Demand Institute. “A Tale of 2000 Cities:How the sharp contrast between successful and struggling communities is reshaping America. By Louise Keely and Kathy Bostjancic.” 2014.
xiv Nielsen. “Finding Opportunity Online with the Mass Affluent” Report. 2014
xv M. Leanne Lachman and Deborah L. Brett. “Generation Y: Shopping and Entertainment in the Digital Age”. 2013. http://uli.org/wp-content/uploads/ULI-Documents/Generation-Y-Shopping-and-Entertainment-in-the-Digital-Age.pdf
xvi Nielsen. “Upscale Tech-Savvy Millennials: Saving and Investment Strategies Around the World” Report. 2014.
xvii Nielsen. “Millennials: Breaking the Myths” Report. 2014.
xviii Miller, Jennifer. “The World’s 50 Most Innovative Companies of 2014”. February 10, 2014. http://www.fastcompany.com/most-innovative-companies/2014/the-legaspi-company#6
272014 STATE OF THE SHOPPING CENTERS Copyright © 2014 The Nielsen Company
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