MY WAY |
Viva Las Vegas!This might be the only time this year you match the "big" bucks you made last year |
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The headline above is an exaggeration of course, but before going into my latest ramblings I first had to get your attention. This is going to be, possibly, the most eventful ICSC show we’ve had in years, not because the show will be great or horrible, but because it "might" be a non-event.
What do I mean by that??? It means nothing good or bad will occur. Caution will prevail and to a large extent, "no decision" by the attendees will become the "norm." Less deals will be started, less leases signed, less development, less brokerage, less financing. Of course, some deals will be started in Vegas as will new development and financing but a lot less than last year’s show. But lots of networking will occur as everyone tries to figure out where their next buck is coming from. Yes, there will be mucho retailers, developers, brokers and financial companies showing up in large numbers (in all probability, not as many as last year, but overall attendance will still be among the top numbers any ICSC show has ever attracted). But we’re in uncertain times partly because we’re a "mature" industry. (God, that makes me feel old. When I started 31 years ago, not only were we not mature, we were practically adolescents with no adult supervision or guidance. We ran with scissors and played with matches but we were young and didn’t know any better. Now the "adults" who supervise us are bean counters, and they’re no fun to play with.) When times get tough, "mature" industries tend to make thee kinds of decisions: none, minimal and ridiculous. Retailers in particular are guilty of this. When business is good on Monday, they want to open 22 new stores. When business is bad on Wednesday, they want to close 37. Real long-term planning isn’t their strength. Especially when you’re reporting to Wall Street and the only concern is ROI, it’s better to be safe than sorry. No decision means they can’t blame you for making a bad decision, since none was made. Now the predicament we’re in wasn’t caused by the bean counters (then again, they won’t be much help getting us out of trouble either). But it’s a helpless feeling when all we can do is complain about the economy and pray the government can solve the problem. (You know we’re in real trouble if we "need" the government). It was more fun, and probably -- no, definitely -- more profitable when the industry was full of entrepreneurs who gambled it all, very often on the equivalent of a throw of the dice. Unfortunately, most of ‘em have either retired, died or become chairmen of their respective companies. They are no longer involved in the day to day operations, often out of touch with both what the public wants and what will work in retailing and real estate today. These original "creator-types" are the exact kind of individuals we need, now more than ever before, to jump start retailing and real estate. "Come Back to the Five and Dime, Jimmy Dean, Jimmy Dean."
Now don’t misinterpret what I’m saying. I do NOT believe the slowdown will be anywhere near the disaster of the late ‘80’s and early ‘90’s. We’re in much better shape now than we were then. HOWEVER, because of the consolidation of retailers and developers, there’s little excitement or originality, even in the "good times," to make the industry grow at any decent clip. With a slowdown, it get’s worse, but I do believe we’ll have a slowdown, not a recession, in the coming months. And that’s good. For the next six to 12 months we’ll just have to work harder, market better and become more "creative" (whatever that means).
In all probability, some of the founders of the various companies who pioneered our industry, whether in development or retailing, will come out of semi- retirement. The "white haired," recession-experienced executives that the bean counters (or "suits" or "top management," pick the term you like) have not been paying much attention to for the last six years, while the economy was flying high on that great drug called the Internet, will either once again come into positions of power or leave to start their own companies. (Didn’t Colonel Sanders of KFC fame start the company at 65?) The old-timers will make a buck, prove they’re not washed up just yet and help put us back on the right track again (Truth, justice and the American Way). I’m not saying a young person can’t start a retail chain or become a major developer, but experience has merit and this is not a time for amateurs. Even if the slowdown is short-lived, retailing and real estate are changing and we don’t seem to have many leaders that can keep up with all these changes or, more importantly, even understand what these changes mean.
On a different but related topic, there’s a story inside this issue of The DealMakers on the current state of the industry and what developers think are the current problems, solutions and causes. One developer claimed the biggest problem is we (as a nation) are over- retailed and it’s all the retailers fault for opening too many stores. That’s like the john complaining about the hooker wanting money. It takes two to tango. For every retailer opening a new store, there were developers, brokers and financial institutions begging ‘em to do it with them. It’s our industry’s fault if we’re over-retailed. BUT I personally don’t think the problem is too much retailing, it is too much crumminess and sameness in retailing. (Boring, boring, boring) Most retailers look alike, think alike and carry the same merchandise at the same price points. When there’s a TJ Maxx next to a Ross store and they are carrying 70% identical clothing, that isn’t too much retailing, it’s too much boredom. The buyers for these companies should be ashamed of themselves. Even the "better" department stores such as Neimans and Nordstroms are beginning to look like identical twins. We need different "retailing," not copycats. Of course, we tried "different" retailing with entertainment and lifestyle centers and you saw what that accomplished. But I think the problem with the entertainment and lifestyle centers was they are "niche concepts" and the niche was over-built, which seems to be typical for our industry.
Moving on... Ann was talking to a developer about a broker they both know and asked why the broker never returned any of her calls. The developer explained that the broker suffered from "retailitis." Ann asked what that is and was informed the broker in his former life was a retailer, so he developed the habit of never returning calls. I thought that was cute but you would think that even a broker would have enough common sense to understand he’s no longer in a position of power and if he does want to make money, returning calls would benefit him. But I notice that’s a common problem when a real estate rep for a retailer switches sides and becomes either a broker or landlord. They, at least temporarily, live under the illusion that their retailer "friends" will return calls and they foolishly think because they were once confidants with these retailers they will be trusted and therefore deals will be made in their centers. Foolish, foolish boys. They still haven’t learned that it’s the second name on the name tag that counts, not the first.
There also appears to be a misconception in our industry that if you previously represented a retailer, you’re now better qualified to be a broker/developer. Why?? Because they know how a retailer thinks? BULL, it doesn’t take much to understand good real estate. That’s easy, and a good lease negotiator is a good lease negotiator. Now I’m not saying people shouldn’t or can’t switch sides but a "good’ real estate person is a good real estate person no matter who they’re representing.
Parting thoughts... Whether we go back to "booming" times tomorrow or if we have a slowdown for the next year, this Vegas show is the best opportunity of the year for you to network, learn and hopefully start some deals... Good Luck.
P.S. Don’t forget to drop by our booth at 667 Sixth Avenue on Monday from 4:30 p.m. on for the annual RD Management/TKO Beer Bash... lots of networking and even more fun.