"Stores with in stores" is a concept often spoken but seldom understood. With retail closures on the rise we look at how real estate is adapting to new digitally native brands, how flagships are shifting focus, and how companies like Cushman and Wakefield are helping brands get to market faster than ever. Listen now!
"Stores within stores" is a concept often spoken but seldom understood. With retail closures on the rise we look at how real estate is adapting to new digitally native brands, how flagships are shifting focus, and how companies like Cushman and Wakefield are helping brands get to market faster than ever. Listen now!
Brandon Singer's best advice for retailers going forward: Brick and mortar and online are not competitive they are collaborative. Also, create the best in-store experience possible, millennials are going to want to experience your brand, so build that in for your customers in a brick-and-mortar setting.
Go over to Futurecommerce.fm and give us your feedback! We love to hear from our listeners!
Retail Tech is moving fast and Future Commerce is moving faster.
Brian: [00:01:43] Hello and welcome to Future Commerce, the podcast about cutting edge and next commerce. I'm Brian.
Phillip: [00:01:48] And I'm Phillip.
Brian: [00:01:49] And today, we have another special guest on the show with us, Brandon Singer, Managing Director at Retail Services at Cushman & Wakefield. Thanks for coming on the show, Brandon.
Brandon: [00:01:59] Thanks for having me. How you doing?
Phillip: [00:02:01] Really good.
Brian: [00:02:02] Thanks for coming on.
Brandon: [00:02:04] Of course.
Phillip: [00:02:04] For those who do not know you, Brandon, or who may not be familiar with Cushman & Wakefield. Although I think would be kind of hard to miss. Could you tell us a little bit about yourself and what Cushman & Wakefield does?
Brandon: [00:02:16] Sure. I am a commercial real estate broker and Cushman & Wakefield is a commercial real estate services provider for all types of users and all types of sort of commercial real estate needs, whether that's leasing of office space or industrial space or buying and selling buildings or financing, so on and so forth. I specialize in retail leasing, so I am an expert in representing both tenants, occupiers, as we call them, that are looking for retail space as well as landlords that are looking to fill vacant or coming available retail space. So our business at Cushman & Wakefield is about 50/50 representing both landlords and tenants. And we... My personal business, I'd say about 90% of it is done in New York City, in and around Manhattan, Brooklyn, Queens and in and around the Tri-State area here. But select other projects outside of New York representing both landlords and tenants, as well.
Phillip: [00:03:30] That's pretty cool. And for those who are familiar with Cushman & Wakefield, I wonder if their interests as piqued his mind as what Cushman & Wakefield might be doing on a show that, you know, traditionally touches on things like omnichannel and digital commerce. I mean, obviously, retail in New York City and other places...that's huge. That's gotta be a big business of yours. How are you beginning to engage?
Brandon: [00:03:59] So, you know, it's interesting. So, you know, in the past, sort of I'd say call it two to three years, we've seen a dynamic shift in the type of tenancy, meaning the type of tenants that are out there looking for retail space in New York. It seems as if and I don't know if you the two of you or anyone and I'm assuming people listening to this have walked the streets of Manhattan specifically in the past couple of years, there's been a pretty... You don't have to be an expert or in the industry to know or to notice it. There's been a significant increase in retail vacancy on the streets of Manhattan. And reason being, there's a few reasons, but one of which was sort of the emergence of the Internet and e-commerce making the need for as many stores, for certain brands, really not to the level that they used to have, as well as pricing for real estate in and around certain parts of Manhattan got to all new sort of all time highs. So those two things happening at the same time really created this perfect storm of vacancy specific to the retail space in and around New York City. So what we've seen, though, in the past, as I said, two to three years, is the emergence of an endless amount, it seems...I mean, not endless, but, you know, pretty close to it, of new and interesting concepts that are being thought of in ideated by really experienced, interesting people with great resumes and backgrounds coming from New Age companies from the Amazons and Apples and Facebooks of the world, combined with those from different tech industries as well as, you know, traditional retail that's been around for the past 10, 20, 30 years. So we're seeing this you know, it's almost the way I call it. I call it like a renaissance period where we're in this time right now, where, you know, you keep hearing about amazing ideas that you sit there and you look at it. Why is that not happened yet? And frankly, I'm busier than I've ever been focusing my personal time and meeting founders with interesting ideas that are looking to find and open locations that may take ground floor retail space, but may not be the same definition of what you've had for a "store" in the past. And it's using that space in new and exciting ways to sort of capitalize on a new and exciting time.
Brian: [00:06:38] Wow, that's amazing. That makes sense. I really like how you sort of pose that the issue that space a couple of years back... Well, you know what I mean, if you look at the numbers, America's one of the most...
Brandon: [00:06:54] Over retailed per capita in the world, no question.
Brian: [00:06:59] Yeah. It's almost double the next country's. That plus the Internet means that, you know, it seems like we would start to see a massive downtrend in the real estate market for retail. And what you're saying is actually the opposite is happening where we're seeing new and inventive concepts and spaces being used in new ways that were never used before. Can you go into some of those details of like what that looks like in terms of maybe combining online and off line?
Brandon: [00:07:31] Yeah, absolutely. I think offhand I mean, I don't represent these these folks, but they've done a great job sort of with their concept. The first thing I can think of is Bonobos. So Bonobos is a brand that was actually acquired by by Walmart. But what they've done is figured a way to make their store like a showroom. So you go in, you try something on. You know, you work with the sales associate to figure out, you know, you're fit. You look so on and so forth. And the next day or the day after that shows up at your door, everything you wanted, everything you need. If you don't like it, you bring it back to the story, return it. No problem. If you do like it, you keep it, and you don't go back to the next time you need something to wear. That's, in my opinion, the most perfect example. In addition to that, you have companies such as Warby Parker who are also, you know, in and out in the market and really frankly have opened stores all over the place in most gateway cities around the United States and I'm assuming are working on, if they haven't already, a global expansion plan. You know, that started as an online business. If you remember a couple of years ago, it really wasn't that long ago you were able to go online and sort of put your face via your camera on your computer and try on glasses and see how they look. They mail you a couple pairs. You try to what you like, what you didn't like, you sent back. That was it. What I think has happened, though, is that those sort of specific online retailers and really the list goes on of brands that have a really strong online presence that are trying to figure out brick and mortar realize that in dense urban areas where, you know, there's millions and millions of people in a relatively small amount of space, it makes sense to have somewhere that people can go touch, feel, try on and look at the product and showcase it. And those are two examples of companies that really nailed it. Another one is Casper the Mattress Company. I'm sure you heard of them. You know, they're out there in the market looking for space, for retail space. And that was an online concept. You can order a mattress far cheaper than, you know, the existing companies that were in the past, like Sleepeezee, which was acquired by Mattress Firm, and a few of the other ones. So, you know, look, there are, it seems like, endless sort of interesting ideas and concepts that are really changing the way retail is done. You don't really need as much space. And it's common sense, right? You don't really need as much space for storage and back a house and so on and so forth. And that's really the name of the game in today's day and age.
Brian: [00:10:04] Yeah, it's a completely different way of thinking about how to engage with people in your store. I don't know if you saw... And you're probably well aware of this, but Nike just announced its House of Innovation 000. I'm not sure if that's been a Cushman & Wakefield that was involved in. But every single brand out there right now I feel like that that's in tune with their customers is actually doing really cool stuff in store because 1) I think, you know, like you said, when you're going to dense space, you're giving people a chance to come in and touch and feel and be involved, give them an experience is very different from how we used to think about retail, where it was browsing and an actual purchasing venue. Now it's all about like being able to accomplish things that you can only accomplish in person.
Phillip: [00:11:06] It's entertainment, too, right?
Brandon: [00:11:08] Yeah. Really what it is... And I'll tell you sort of the name of the game, right? The name of the game is the retailers that... When the Internet... I remember when the Internet really started and e-commerce was a thing everyone was saying, well, this is the end of retail. And I think because of that mentality, you know, traditional brick and mortar retail, because of that mentality and that approach, I think what sort of happened was people looked... Decision makers at big retail brands and CEOs and so on and so forth looked at the Internet as competitive, not as collaborative, and what they soon found out was that you really can't compete with the Internet. It's not going anywhere. It's here to stay. It's made things way more efficient and easier for the consumer. So what you need to do is figure out a way to make the Internet collaborative, hence the new commerce omni channel retail strategies. So from now is opposed to, well, you know, I'm retail brand X, and I need to know that certain customers come into my store to buy goods or they're going to go to the Internet, but I'm going to try to sort of dissuade them from going the Internet. I want them to come into the store. Now, you realized that it's all one sort of, you know, different ingredients to make one cake, so to speak. You want to make a sale. So if you can get a customer into a store that brings them in with an Instagramable experience, something they can post online that even draws more traffic to your store or gives them a good feeling about your product, that they go home, log on their computer or even download an app on their phone, scroll through your items, and then all of a sudden, you know, you ship to the person's home and they get it the next day. That's the name of the game. It's not Oh, well, it's a store or versus an online thing. It's a store and online thing. And any retailer that, you know, I think didn't adopt that mentality and that approach, unfortunately, I think is having a very, very tough time or is not really here any longer. And that's the name of the game.
Brian: [00:13:14] Sears. Right?
Brandon: [00:13:14] Right.
Brian: [00:13:17] Yeah. I love this. You mentioned the word new commerce. Is that Cushman & Wakefield word? Could you explain that a little bit?
Brandon: [00:13:25] Yeah sure. It's an initiative we're pushing here. It's an initiative that is basically taking advantage of this whole new age of commerce. Really it is what it sounds like. It's, you know, using data, using omnichannel strategies, industrial... Meaning, you know, if you're an online retailer, and you want to supply the goods that you're gonna be shipping to people, you need a place to store all that stuff. So the list goes on of different sort of interesting approaches to it. Off the top of my head, a deal that I represented a company that is opening their flagship store in NoHo in a couple of weeks by the name of Showfields. And what Showfields is a new take on direct to consumer brands basically being a four level, beautiful, kind of iconic old... It's tough to describe other than to describe it as a really big townhouse, is what I would call it, on the corner of Lafayette Street and Bond Street in Manhattan that will have booths and sort of different kind of stores within the store showcasing direct to consumer brands that want to have a presence and a really cool hip environment with different Instagramable moments and curated speakers and different types of interesting brands that want to really create this collaborative, cool new retail experience. And what they're doing is, frankly, exactly that. It's new commerce. It's creating an urban store within a store where no different than you can go on the Internet. And, you know, one day you can go to whatever the website you want to be dot com and with the click of a button and a few letters you type in another website you want to go to... It's that experience, but in a brick and mortar setting. So you can be in the booth for Company X on Monday at 11 o'clock. And at 11:15, you're at company Y and they're right next to each other and sort of capturing off that same customer, if that makes any sense.
Brian: [00:15:30] It's kind of like I mean, I hate to put it this way, but it's like a new mall with no inventory. Right? Like just all about your experience in the store. So cool. Yeah. I think the other thing is like a new focus on architecture and and the way that stores are set up and how to display goods. Are you seeing anything in the space of like digital displays? Do you get involved at that level? How detailed and deep does as CW go on some of this stuff?
Brandon: [00:16:06] Well with the displays, not really. I mean, we're advisors on real estate, and we help companies negotiate leases, and we help them find locations to negotiate leases on and select, and we're expert in getting involved with, you know, with the real terms of the deal. I mean, we do, as part of negotiation, negotiate when applicable certain language with regard to storefronts and sign it and so on and so forth. But as far as the actual, you know, installation or picking and choosing the actual signage and, you know, facades and stuff that go into a store that comes in separate than what we do.
Phillip: [00:19:25] Can I ask you a couple of questions just because I sense that part of our audience might ask, what's the difference between what you've described their brand and something like... So Chelsea Market... There's like a swap shop, artisan flea's, or something like... I think about Citizen Supply in Atlanta. There are examples of this that I think might be out there at the moment, but they're usually a single owner or small independents. Are you suggesting that there's an opportunity for more clicks to bricks where the bricks aren't necessarily full storefronts, but they're small kiosks? How does that actually take...?
Brandon: [00:20:00] Yeah. That's exactly what the brand... That's Showfields. And I encourage everyone listening to check out showfields.com. And you can see sort of that house look that I'm talking about and what we just discussed. But the way it's described, it's the most interesting store in the world, a revolutionary retail concept that invites you to discover and engage with the brands of tomorrow. So look, Chelsea Market's done a great job with curating their retail at the ground floor. You know, obviously, that's Google's...one of their headquarter buildings here in New York City. So they have sort of a built in audience of a mega office building above there that kind of just comes down in addition to everyone that's walking and meat-packing on the street at Chelsea. So on and so forth. But the other sort of concepts you described, as well, there's an analog you can make here. It's analogous to sort of making a comparison between... You look what a company like many of these co-working companies did. Right? They go in, they rent space from a landlord, and then they go out, and they find a way to figure out favorable deal terms to companies and people, frankly, that may not have been able to lease office space in any given market at any given time. It's a similar type of strategy, you know, or maybe there's just a brand that doesn't want... You know, when you open a store, and you sign a lease with a landlord, it's a significant investment. Right? Aside from the build out and putting together a store that looks and feels like your brand that you want to emphasize. They're security deposits, you have to pay employees. There's staff. There is insurance. There's a whole host of things that go into it, in addition to paying a significant rent, if you're gonna be on a high street and obviously that's something that brands do at a certain point when they're mature enough, call it, to go out there and have their own store and have their own presence on a high street. But up until that point, they may not really feel comfortable signing a 10 or a 15 year lease. I mean, think about it, some of these brands haven't been around for 10 or 15 years. If you ask one of them to sign a 10 or 15 year lease, how can you sign a ten or fifteen lease when they haven't even been alive for ten or fifteen years, right? So companies like Showfields give them the ability to come in and really figure out their retail strategy in a really cool and exciting way.
Brian: [00:22:14] It's like WeWork for retail brands.
Brandon: [00:22:17] That's a comparison to make. Yeah. For sure. Absolutely.
Phillip: [00:22:21] And somebody seems to find that valuable. Right?
Brandon: [00:22:23] Yeah. Yeah.
Phillip: [00:22:25] It seems like a pretty valuable brand. The one that Brian just mentioned.
Brandon: [00:22:30] Yeah.
Phillip: [00:22:31] Someone pointed me to an article that they're now the largest land tenant in New York City.
Brandon: [00:22:36] Yeah they are.
Phillip: [00:22:36] I feel like that we're probably... So we're coming up sort of on an interesting change of how we're orienting our idea of what retail is, where it's not necessarily just a destination with a single outcome, where the idea is experience is at the forefront. And that opportunity to browse and discover is at an all time high. We've not been able to do this in any other time in history. It's the thing that I think is being lost on the analog with the marketplace online where you were sort of inundated. I always talk about the experience that I had. I bought a toilet seat on Amazon. And for the last six months, Amazon believes I have an insatiable desire for nothing but more toilet seats. And that's not really what I want, right? What I would like is, is the ability to have an experience where maybe I come and I meet other people that also enjoy toilet seats. I'm not sure. But being able to interact in person with other people and happen upon interesting brands and products that I didn't even know that I wanted is something that really is best experienced in person. So I really, really like that.
Brandon: [00:24:00] Yeah, I mean, for sure. And you know what we're seeing in a lot of different... To your point about toilet seats and when you Googled that, or on Amazon when you bought a toilet seat... Really what we're seeing in a lot of different concepts, whether it's co-working or it's a community of retail here, it's really building like I just said, communities, right? So another brand that I represent that we've done a few deals with in and around New York, and we're going to be taking nationally in select cities as a company, but they have a FIT House. And what FIT House has done is we have a store location in NoHo, we have one in Tribeca, and there's one opening in Union Square, which are three distinct, but very sort of important trading areas here in New York City and in Manhattan, Upper East Side, Upper West Side, all of which are coming soon. FIT House is a fitness concept that basically takes the boutique fitness experience... So I don't know if you guys work out in the boutique fitness classes...
Phillip: [00:25:02] Yeah.
Brandon: [00:25:02] Whether it's cycling or some sort of Pilates, or whatever it may be, the challenge with that is that if you're a professional living and working in a gateway major city, chances are you have a lot of expenses, whether that's your rent, eating, transportation, so on and so forth, the cost of these classes adds up, right? If you can take one class at any given branded studios and it's 35 or 40 bucks a class, if you're doing that for a meaningful workout and you want to workout three times a week, just do the math, right? Forty dollars times three is one hundred twenty, times four weeks in a month. That's real money. That's five hundred dollars a month of after tax money that you're spending on your workouts. That's crazy. That only happens in places like New York City. So what FIT House is doing is basically taking that type of mentality and that type of approach to fitness, meaning the boutique fitness class, and offering it unlimited for sub $200 a month. So frankly, for more than half off the what? The way they're doing it is they're building a community. And that was my point. They're building a a community of people that are on the same page about their fitness. It's not really toilet seats like you on Amazon. But it's a similar type of approach. It's all about the community of people that, you know, are in that same boat that don't want to spend $500/$600 a month on their fitness in addition to a gym membership. They want to scale that back to call it $185/$190 a month and have that same experience, but also do it with other people that they feel a part of the same community with. And retail is sort of going in that way. Like we said, like the co-working guys that have made, you know, WeWork through a Halloween party here. They're trying to make it that their tenants, the people that go to work every day, feel like they're part of the home. They're going somewhere. They threw a Halloween party. And a big D.J. performed. It was at a Hammerstein Ballroom, I believe. And it's just sort of the name of the game of where we're at today with retail and sort of new and interesting concepts. It's all about that community.
Brian: [00:27:10] Yeah, we totally agree. We had a whole episode on community driven commerce and how that's actually... We shouldn't be talking about markets like we used to talk about market first, right? But what about community first? Finding ways to help provide real value to communities of people that are passionate about something or have a deep need. And, you know, it does kind of translate back to the old way that we used to think about markets. But people that want to come together and do something together, or be a part of something... That's new commerce.
Phillip: [00:27:47] Yeah.
Brandon: [00:27:48] Right. Yeah, absolutely. That is new commerce. One hundred percent.
Brian: [00:27:52] I love that. So you've talked a lot about urban areas. I think you said that you do a lot in the Tri-State area. What about suburban areas and even the rural areas? Rural commerce and suburban commerce... So what are you seeing in terms of trends of retail spaces in those areas?
Brandon: [00:28:13] It's interesting. I mean, I think a lot of different landlords and mall owners are trying to figure out a way to adapt with the times that we're seeing that we just discussed in this sort of whole renaissance period. There was an article that came out earlier this week about how Macerich, which is one of the largest mall owners in the world, has figured out a way to basically for some of those brands that we like, that we discuss, sort of the next generation of retail, or companies that are very popular online that may not have a brick and mortar presence that are maybe intimidated about getting into brick and mortar because of the costs associated with it and as well as sort of the commitment that it takes... Maserich is building stores for new and interesting concepts and sort of incubating them in their malls the same way Simon has done it at Roosevelt Field Mall here in New York on Long Island. Same sort of thing. They call it "edit," and edit is an interesting concept that basically does the same thing. They incubate new and exciting concepts and really help them grow and learn how to have a brick and mortar store and what needs to happen. And hopefully the ideas at that point, if their success there, they'll then mirror that and go take more real estate nationally, globally, and start signing leases that are more long term or more permanent in their nature, as opposed to the "pop up.".
Brian: [00:29:51] That's interesting.
Brandon: [00:29:51] But as important as the pop ups are... Just side note for a minute. We've seen that typically a pop up's great, but most brands, once they have success, the pop up will then get into a long term lease. But with regard to the suburbs and non urban real estate, there're a lot of interesting things going on in the A malls and B plus malls to some degree, but the Bs and the Cs are... It's an interesting time and it's taking a lot of sort of brainstorming from a lot of the big mall owners to figure out what to do.
Brian: [00:30:28] Yeah. We've definitely talked about this a lot, how malls are bringing in all kinds of other different services beyond just retail and using that to attract tenants and have more reasons to be at the mall. And that leads to more lucrative investments from retailers, as well. No, it's great. So we're kind of running out of time here, but just to kind of wrap things up, we always ask what are some short term recommendations you have for retailers in the real estate market? And what about five years from now? What should people be looking at and watching out for and paying attention to?
Brandon: [00:31:08] I mean, I think for anyone listening that has or is thinking about starting a retail concept that is either based online and wants to go brick and mortar or just wants to go brick and mortar or just wants to go online, I think the biggest thing you need to be aware of is, again, what we spoke about earlier, which was the Internet and brick and mortar are not competitive. They're collaboratives. And if you execute a strategy that implements that type of mindset, you will have, in my opinion, a much higher likelihood of success than if you take an approach of sort of keeping the two apart and not having them work together. And especially in the urban setting, you know, millennials and customers that are on the Internet shopping typically would like to go touch, feel, and experience the brand, whether that means they go and just look and sort of see and take a picture and put on Instagram or on their other social media channels, or that means they actually want to go try something on. Whatever it may be. And then go home and order it online or have it show up at their door the next day. It's important to sort of make sure you have a strategy that makes the two collaborative and non-competitive. And that's my biggest takeaway from what I've seen over the past couple of years in this really, really exciting time in retail.
Brian: [00:32:37] Love it. Well, thanks so much for coming on the show, Brandon. It was really great to have you and hear your insights. Phillip, you want to take us out?
Phillip: [00:32:42] Yeah, and I'd echo the thanks, as well.
Brandon: [00:32:45] My pleasure. Thanks for having me, guys. Anytime. You know, if anyone listening has any other questions, I'm always happy to chat and sort of discuss different ideas and strategies for different companies and brands.
Phillip: [00:32:58] Where could we point people to to learn more about new commerce and Cushman & Wakefield and/or about yourself?
Brandon: [00:33:04] Cushwake.com or cushwakeretail.com So that's how you can get in touch, and we're always happy to help and hear and listen and advise and consult. And you never know what can be the next awesome retail concept that's out there.
Phillip: [00:33:19] Well, thanks for listening. And now we want you to lend your voice to this conversation. So head on over to FutureCommerce.fm and scroll to the bottom of the episode page. Hit us up on the discuss comment box. We want to hear how you are combating your retail challenges with regard to real estate? What is your strategy? Is collaboration and is community part of your expansion? Or if it's not, how can you make that key to your strategy here in 2019 and beyond? We'd love to hear back from you. So without any further ado, retail tech moves fast.
Brian: [00:33:51] But Future Commerce is moving faster.
Phillip: [00:33:53] Thanks, everybody.
Brandon: [00:33:54] Thank you, guys. Really appreciate it.
Brian: [00:33:56] Thanks, Brandon.
Brandon: [00:33:56] I'll talk to you guys soon. Take care.
Brian: [00:33:58] Appreciate it.