1 DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

October18,2017

Takeaways from the ICSC New York Next Generation Breakfast Program Source:Twitter

TheFGRTteamattendedtheICSCNewYorkNextGenerationBreakfastProgramonOctober17,whereapaneloffiverealestatebusinessleadersspokeabouttheemergenceandimpactofdisruptiveretailconcepts.Toptakewaysinclude:

1) Today’sconsumerexpectsthestoretobeaplaceofengagementandcommunity.

2) Thepop-upshopformatisparticularlypopularamongdirect-to-consumerbrandsandbrandsthatoffer“retailasmedia”concepts.

3) Thecustomershoppingjourneyshouldbenatural,andstorepositioningisimportant.

TheFGRTteamattendedtheICSCNewYorkNextGenerationBreakfastProgramonOctober17,whereapaneloffiverealestatebusinessleadersspokeabouttheemergenceandimpactofdisruptiveretailconcepts.Thespeakersdiscussedconsumerengagement,theomnichannelexperience,GenZshoppersandleaseterms,amongothertopics.

ThespeakersattheeventwereRyanEngel,DirectorofBusinessDevelopment&RealEstate,Peloton;BrandonFox,DirectorofRealEstate,Honeygrow;GregoryKnoop,ChiefDevelopmentOfficer,KidZaniaUSA;ElizabethLayne,ChiefMarketingOfficer,AppearHere;andAndrewNeelon,RealEstate&StrategyManager,Bonobos.CynthiaKernan,VicePresidentofLeasingforWestfield,moderatedthepanel.Here,wesharekeytakeawaysfromtheevent.

2 DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

October18,2017

1. Today’sConsumersExpecttheStoretoBeaPlaceofEngagementandCommunityAndrewNeelon,RealEstate&StrategyManageratBonobos,saidthattoday’sconsumersexpectretailtobefarmoreexperientialthantheydidjustafewyearsago.Retailstoresusedtobeabletoserveasjustdistributioncenters,butconsumersnowexpectmoreastheybouncebetweenchannelsbeforecompletingapurchase.Retailersneedtoenableaseamlesstransaction,sowhatshoppersseeonlineiswhattheyseeinstores,Neelonsaid.InBonobosstores,associatesuseiPadsbothtoengagecustomersandmaketheonline-offlineexperienceseamless.

ElizabethLayne,ChiefMarketingOfficeratAppearHere,addedthatnearly79%ofGenZersandmillennialswillpayforanexperience,suchasgoingtoRefinery29tohaveanInstagramphototaken.RyanEngel,DirectorofBusinessDevelopment&RealEstateatPeloton,saidthatthecompanyintendedtobeapure-playretailerinitially,butthatchangedwhenPelotonbeganreceivingagreatmanylettersfromcustomerswhowereasking,“WherecanItrythatbike?”Pelotonlauncheditsfirstpop-upshopatTheMallatShortHillsinNewJerseyinSeptember2013.Thecompanydiscoveredthatcustomerswerereturningtothestoretwotothreetimesaftertheirinitialpurchasetoengageandconnectwithotherswhohadpurchasedthebrand’sbikes.Theinitialpop-upatShortHillssoldmorethan400bikesinfourmonths—morethanonebikeaday.Whatstartedasaretailexperimentisnowpartofthecompany’splan,andPelotonwillendthisyearwith33stores.Engelhighlightedthatinteraction,educationandengagementallhappenin-store.

2. ThePop-UpShopFormatIsParticularlyPopularAmongDirect-to-ConsumerBrandsandBrandsthatOffer“RetailasMedia”Concepts

AppearHereisbilledas“Airbnbforshort-termretailspaces.”ItsChiefMarketingOfficer,ElizabethLayne,saidthatinterestinanddemandforshort-termleasespaceisgrowing.Lastyear,thecompanybookedabout4,000pop-upshopsinthreecities—NewYork,ParisandLondon—withanaverageleaselengthofonemonth.Thecompanyiscurrentlyworkingwithlandlordstosignastandardagreement,withonlinesigningandbookingtosimplifytheprocess.AppearHererecentlysignedanagreementwithSimonPropertyGroupforaprojectcalled“TheEdit,”whichisapermanent,carved-out,plug-and-playretailspaceforpop-upsinSimonmalls,wherethegroupcanrotateinnovativeproducts,typicallyonaquarterlybasis.

Laynehighlightedthatdirect-to-consumerbrandsarethefastest-growingcategorywithinthepop-upspace,withbrandssuchasGlossier,CasperandAwaytestingphysicalretailintheformofpop-upstodeterminetheviabilityofaphysicalpresence.Asecondgrowingpop-upcategoryis“retailasmedia.”Layneexplainedthattheconceptisacreativewayforbrandstousepop-upstomarketthemselvesandpromoteevents.Forexample,WarnerBrothersrecentlylaunchedapop-upcalledGetAnimatedInvasioninNewYork’sSoHoneighborhoodtopromoteitspresenceatNewYorkComicCon.Additionally,BeatsbyDretookoveraspacetopromotealisteninglab,influencereventsandnewrecordadvertisementsforKanyeWestandDemiLovato.

3. TheCustomerShoppingJourneyShouldBeNatural,andStorePositioningIsImportant

CynthiaKernan,VicePresidentofLeasingforWestfield,saidthattheshoppinglandscapeischangingtoalignwithhowconsumerswanttoshop.Forexample,manyluxuryretailersnowwantamorediversemixofco-tenantsinmallsinsteadofbeinggroupedtogetherwithonlyotherluxuryretailers.Thiscreatesamorenaturalcustomershoppingexperience,Kernansaid.Customersmaywanttogetacoffeewhileshopping,

3 DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

October18,2017

thenpickupflowersatamarketandthenrunintotheApplestoreaftershoppingforaluxuryitem,shesaid.

Kernanaskedeachofthepanelistsaboutstorepositioning,andwhichretailersweretheirfavoriteco-tenants.GregoryKnoop,ChiefDevelopmentOfficerofKidZaniaUSA,saidthathewelcomesstoresatallpricepointsthatcanattractparentswhiletheirchildrenareexperiencingKidZania.HedescribedKidZaniaasa“fiscalaccelerator”foramall.Thecompany’sspacesaverage80,000–100,000squarefeet,andchildrentypicallyspend2.5–4hoursatKidZania,wheretheylearnbyrole-playingoneofthe100differentoccupationsthespacefocuseson.Knoopemphasizedthateverychildisaccompaniedbyaguardianon-site,soKidZaniawelcomesadjacentstoresthatkeepparentsoccupiedandhavingfun.Theseincludefoodconcepts,fitnessconceptsandimmersiveexperiences.

Neelon,fromBonobos,saidthatstorepositioningisalwaysimportantandisdependentonthemarketanddemographic.HesaidthatBonobosenjoyshavinginnovativeco-tenantssuchasTeslaandWarbyParker.EngelsaidthatPelotonsees“innovationas[its]product,”so,intermsofbrandpositioning,tech-drivenbrandssuchasApple,foodconceptssuchasTrueFoodKitchen,athleisurebrandssuchasLululemonAthletica,andfamilyclothingretailerssuchasVineyardVinesareallcomplementary.Engelsaidthatasabrandgetslarger,adjacenciesarenotasimportantbecausethebrandcanstandonitsown.BrandonFox,DirectorofRealEstateatHoneygrow—arestaurantchainthatoffersfullycustomizablestir-frysaswellassaladsandcold-pressedjuices—saidthatthecompanylikestobelocatednearFlyWheelSportsandLAFitnesslocationsthathaveaccesstoplentyofparking.

4 DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

October18,2017

DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.com

ErinSchmidtResearchAssociate

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