- Real Estate
- Food & Drink
May 27, 2018
Even as retail changes, I always leave Las Vegas betting that the odds are in Sioux Falls’ favor.
The mood at this year’s RECON convention of the International Council of Shopping Centers was upbeat. While the crowd was down a bit — most pointed to a Jewish holiday falling during the convention — the retailers that were there eagerly talked about expansion.
In many cases, that includes opening in Sioux Falls. Sometimes it’s as soon as they can find a location. Other times it’s in a two- or five-year growth plan. Sometimes it’s not happening at all until a franchisee gets on board to develop the market.
But it’s still a competitive world. RECON is filled with booths from retailers, developers and the services that support them. There’s also a significant representation of states and cities, all marketing their opportunities.
“The first time attending this convention is so overwhelming,” commercial broker Ron Nelson wrote in a retrospective on the event. “Imagine 30,000-plus type-A personalities all trying to accomplish their objective. If you don’t have a plan, you will get run over by those who do!”
He was talking about how it’s necessary to approach this event, but I thought his last comment could apply to the industry as a whole.
“I would say there’s a feeling we’ve all stepped back from the cliff, the apocalypse that maybe everybody talked about last year fueled by a lot of headlines about store closings,” JLL’s David Zoba said when I talked to him at the end of the conference.
“People were a little more relaxed, and the world is not coming to an end. The feeling was there will be winners and there will be losers as always, and the winning retailers will be those that adapt to this fast-changing retail landscape.”
He’s the board chairman for the country’s largest third-party retail property manager. But he also helped guide real estate strategy for Gap Inc., helping “right size” that brand and optimize ones like Old Navy and Athleta.
“The convention was a little more positive,” he said. “I heard some positive things about Banana Republic showing signs of life, Abercrombie & Fitch showing signs of life; Macy’s has had good results. Some of those brands have been beaten down the past four or five years, and they’re by no means back, but they’re showing signs of life.”
Retail is going through a changing time as we all know. But there is so much opportunity out there that markets such as Sioux Falls can still capitalize on.
One reason I enjoy going to RECON is to learn about retail concepts that are still aspirational for a market like ours. The national versions of these businesses likely won’t reach us for five, or maybe 10 years, if ever. They first need to build out in major markets and then hone in on an approach that works for smaller ones.
But in the meantime, there’s nothing stopping local entrepreneurs from drawing on these same things and bringing us original concepts that accomplish similar offerings. I liken it to Pomegranate Market bringing organic and locally sourced food to Sioux Falls likely 15 or more years before Whole Foods Market will land here.
So with that in mind, these are some of the emerging retail concepts that I think could perform well in our market.
Food halls are the food courts of the future, many in retail agree.
Think of a bunch of food trucks, but inside, in a venue designed with common seating.
I talked with Stephen Goglia, CEO of New York-based Craveable Hospitality Group, which brings food halls to shopping centers and is opening one at Rosedale Center in Minnesota.
Craveable will be the operator for one dozen kiosks, offering specialties from chicken and waffles to street tacos, sushi, thin-crust pizza and a variety of beverages.
“People want quality, and they want it quickly,” he said. “They want a quality product, but they want convenience. The dining experience is important but not the central focus point.”
While it’s a concept designed to be replicable, I think it will be a long time before food halls reach a classic Midwest property like The Empire Mall. I see us lining up for pizza slices and steak sandwiches there for years to come, and the mall’s owner will perfect the food hall model in countless other properties before attempting it here.
But I definitely think our growing local culinary scene could support a small food hall. I love the idea of repurposing part of a building on the Sioux Steel site into one or adding it to development along the rail yard.
Jones421 is a great early example of how small food businesses can cluster together – essentially a mini food hall without actually calling it one – so hopefully it will create momentum for this sort of concept that can be built upon.
In Kansas City, developers are working with a James Beard award-winning chef to curate a food hall described as “a lifestyle entertainment destination” that also will include a live concert venue, rotating art installation and recreation games including table tennis, billiards, shuffleboard and bocce.
We’ve already got a lot of those elements coming together in downtown Sioux Falls, with the Levitt Shell, SculptureWalk and riverfront. A food hall could bring even more activity to the area.
This is by far my favorite use for vacated department stores.
KidZania, which was founded in Mexico City, is turning 80,000-square-foot spaces into miniature “cities,” where kids are invited to role play more than 100 occupations. Developed with Fortune 500 industry partners, KidZania immerses kids in real-life simulations and rewards them with currency that can be spent, invested or given to causes within the KidZania world.
I got to hear from Gregory Knopp, chief development officer.
“We’re very, very much the fabric of the community,” he said. “We don’t have a singular formula for success other than we bring people to malls.”
The average KidZania visit is four hours. And, thanks to an electronic security band for each child, kids explore freely while parents often spend time in the mall.
“We sell ourselves as that fiscal engine critical for the new environment of what a mall has become,” Knopp said.
Not that they really have to sell themselves much. Knopp estimates he gets multiple calls weekly from developers and property managers interested in a KidZania.
I asked him about the population base necessary for his concept at this point, and it’s big – about 3 million people in the trade area. They’re working on a version half the size that would fit a trade area of 1 million.
Sioux Falls is still only about half that size, although I plugged us as the ideal small market were they ever to pilot one.
In the meantime, this is another concept that could be localized with the help of our business community. Think of the workforce development implications if kids are introduced to occupations such as law enforcement, construction and medicine.
This is what can be so impressive about retail. With its innovation, it can take a former Sears building and turn it into a concept that doesn’t just drive commerce but has the potential to improve society.
Imagine if we created a KidZania-type concept and used it to draw families to an area where we’d like more activity.
That’s the kind of modern thinking that malls – and communities – everywhere need to use. Retail is by no means dead, but capitalizing on its new opportunities requires a solid, strategic plan and outstanding execution. In that, it’s really not too different from any other industry.
Retail still presents a lot of opportunity for places like Sioux Falls. Here’s a look at some emerging concepts that could be adapted here.