Guardians of Retail
2018 Expanding Knowledge Keynote Address
Editor’s note: The following is an excerpt of a keynote address presented at NRTA’s 23rd annual Expanding Knowledge Conference by Gayle Aertker, Executive Vice President of Store Development for Burlington Stores.
Our retail industry has had an uncertain and difficult story over the past several years, yet our retail story can have a “happily ever after” ending if we are willing and prepared to do the heavy lifting required to keep it alive. We play an important role in our retailer’s epic story. We are the guardians, serving to protect and secure profitability through “best in class” real estate, legal, financial, facility and lease administration programs.
Successful retailers are embracing the lessons learned, realizing that they must transform quickly and evolve their brand relevance to continue their story. Retail is not dead; total retail growth is projected at a healthy 4.5% in 2018. Therefore, maybe it is simply time to change our mantra to emphasize more than location. Maybe now it’s Location/Transformation/Evolution.
We recognize that online shopping has a strong competitive edge over pure physical retail, providing a robust platform of communication to customers, efficient shopping experiences, front door delivery, and easy price comparison capabilities. However, pure online retail currently represents only 10% of all retail sales and online returns represent 45% of their sales, a large opportunity causing online companies to pursue physical locations as a means to provide another touch point with customers. Physical stores have a strong competitive edge over online shopping, providing experiences like personal service and shopping experiences such as the treasure hunt.
Both online and physical retailers recognize they must integrate the business models of both channels to maintain relevance, as demanded by the customer. “Time and convenience” will continue to accelerate as a top consumer value, and consumer discontentment will continue to push for more evolutionary shopping experiences.
As guardians, we must do some heavy lifting to protect our stores by transforming our teams from functional competency (executing a well-developed department plan) to operational excellence (executing a well-developed corporate business strategy). We can start by resetting the high bar, defining what “best in class” looks like, encouraging disruptive thinking and questioning protocol, continually improving our processes to meet the changing needs of our customers.
Considering the fast pace of change, we must leverage technology to do some of the heaviest data lifting for us, providing transparency of our lease and portfolio information to other business partners to improve speed and effective business decisions. It’s our responsibility to build organizational flexibility needed to meet the evolutionary needs of our retailer by focusing on training and developing talent so that our teams become key contributors and differentiators.
Protecting profitability during times of change and uncertainty is difficult. We all feel the effects of the business disruptions (e.g. retail bankruptcies, store closures, tax law changes, mixed-use development, natural disasters, downsizing/rightsizing and FASB accounting changes in our industry, to name a few). It’s our responsibility to manage disruptions proactively, by ensuring that our retailers are located in vibrant and well co-tenanted shopping centers, diligently enforcing our tenant lease rights and the obligations of our landlords and effectively managing occupancy costs to protect profitability needed to transform and evolve.
In this changing retail environment, we realize that we will need to continually enhance our relationships with other retailers. NRTA provides a valuable platform for us to network, teach and learn how to be “best in class” Guardians of Retail so our own retail success stories may live on happily ever after.