David Simon
This post is from another one of our new Guest Contributors, Chris Furlong of Arlington, VA. Chris works in commercial real estate in Washington, DC.
In the second half of the recent Moving from Recovery to Expansion roundtable discussion held at Georgetown University, David Simon of Simon Property Group (NYSE: SPG) discussed his views on the success of his firm, the future of shopping malls, and the challenges faced by the retail sector. When asked about the success of Simon, Davids thoughts echoed those of many famous leaders. First and foremost, he noted the burning desire to be the best at what you do. While perhaps self-evident, this desire is perhaps the most central to success in any field. Along with this desire to succeed, David noted the discipline, close attention to detail, and consistent performance measurement that keep Simon ahead of their competition.
According to David, the stiffest competition to Simons product now comes from the Internet. Nearly every audience members hand rose when asked if they had purchased an item online in the past year. To combat the retail conglomeration provided by the Amazons and Googles of the world, David offered a glimpse of smarter malls that will bring similar deals to the consumer. Coupons advertised to consumers as they walk through the atriums of malls, and displays detailing sale items outside of stores were a couple of the ideas he presented. Perhaps collective buying strategies employed by e-commerce giants Groupon and Living Social have a place in the future of the retail sector as well. As the online platform expands, he emphasized, conventional retail malls must innovate to match their competition.
David did make a distinction between the quality of retail centers when explaining the challenges faced by the industry. The high-end malls will likely have less trouble confronting the shifts in consumer sentiment given the demographics of their clientele. Employed consumers with retirement accounts and an ability to spend will likely maintain the stability of Simons regional malls. Only when the higher income consumer shifts their spending habits to the online platform will the elite malls suffer. Meanwhile, David did note that lower-end malls may soon become obsolete as the value-conscious shopper looks to Walmart and the Internet for lower prices. At the same time, outlets that combine the prices of discount retailers and the product quality of stable malls will continue to thrive because of this same price gauging consumer. The effects of this retail evolution in the coming years may be most evident on strip centers that offer less variety, lower end products, and often fewer deals.
What are your thoughts on the future of bricks-and-mortar retail at the high end and low end?
