As a result of changing consumer behaviors and spending patterns, many retailers are focused on right-sizing their store footprints, especially in shopping malls. In fact, results from Retail TouchPoints’ latest Store Design & Experience Survey revealed that 58% of respondents plan to remodel and/or renovate a minimum of 11% of their store footprint through 2024.
For their part, more mall operators are looking to diversify their tenant mix and incorporate additional brands that resonate with younger audiences. As a result, emerging brands, especially those operating primarily online, have a unique opportunity to break into brick-and-mortar by leveraging prime real estate. Leap is helping these brands rise to the occasion by leveraging its strategic relationships with operators.
In November 2022 alone, for example, Leap opened multiple stores at Simon properties in California and Florida: True Classic Tees in Los Angeles’ Del Amo Fashion Center and ThirdLove, Sugarfina and Goodlife in Florida’s Town Center at Boca Raton.
“We consider [brands] our customers and landlords or operators our real estate partners,” explained Rebecca Fitts, Assistant VP of Real Estate at Leap, in an interview with Retail TouchPoints. “There’s a distinguished relationship there.” Through its proprietary platform, Leap helps brands launch and operate “insights-driven retail stores.” The company provides end-to-end support, from store design and development to store operations, technology and performance data and insights. Brand leaders and operators can access Leap’s network of stores and select those that best meet their needs. The Leap team then signs and manages the lease and designs a path for execution.
Leap currently powers 60 brands across nearly 100 stores in markets including New York City; Los Angeles; Chicago; Southern Florida; Dallas; Austin, Texas; Scottsdale, Ariz.; San Francisco; Boston; Columbus, Ohio; Greenwich, Conn.; Philadelphia; and Washington, D.C. Brands can sign up for one- to two-year leases in these markets to test how their brand, and in-store experiences, resonate.
‘Merchandising’ the Mall Experience
Through its work with brands, Leap learned that many were hesitant to open stores due to the seasonal nature of their products. For example, a swimsuit brand may only have a maximum of six months to sell on the East Coast of the U.S., which means the remaining six will impact the overall profitability of the store. This reality inspired Leap to launch a new seasonal offering that allows brands to lease space for five or six months at a time out of Leap’s two-year lease with an operator.
“On the Leap side, we were very interested in doing longer-term leases, like three to five or seven years, especially if it was a great space,” Fitts explained. “We want that ‘box’ to be part of our portfolio, but we always want it to be filled with a great brand. This concept is really like peanut butter and jelly, where we can fulfill the needs of a bathing suit brand like Frankies Bikinis, who can sign up for a six-month contract within that box. And then maybe in the winter, a coat brand can come in for six months.”
Leap’s new seasonal offering ties to a bigger retail industry trend: mall operators want to think more like curators or “merchandisers” to draw in new customers and increase dwell times. For their part, brands get access to premium real estate while keeping overall costs down.
“We’re talking with big and small landlords alike about merchandising,” Fitts noted. “While I think some of them are opposed to the idea of pop-ups, this really isn’t that. It’s ultimately about capturing your customer and giving them something that they want, when they want it.”
4 Tips for Store Expansion
Fitts offered the following advice to help brands successfully venture into brick-and-mortar:
1. Think beyond the four-wall P&L: Merchants are trained to think about performance in a siloed sense, which too often means thinking solely about the P&L within the four walls of the store. Instead, Fitts advised brands to look at things more holistically and, specifically, think about their physical spaces through an omnichannel lens. “Widen it to make your physical store as productive as possible. It’s an expansive venture, but it’s probably less expensive than acquiring customers online at this point,” she said.
2. Be aware of new market dynamics and consumer migration: Retail real estate in metro areas suffered during the pandemic, especially in neighborhoods with a lot of offices. That is why the Leap team is laser-focused on using data to understand market shifts and specifically, where people are moving, living and working.
“It’s all about trying to do due diligence to spot some of those patterns,” Fitts said. “For example, if companies are asking people to come back to the office in, say, Midtown Manhattan, maybe you should go look at that area. Or maybe Tesla is opening a new manufacturing space in Austin. What could that mean for your business? It’s a bit of a real estate focus, but you hear that information and want to do something with it immediately.”
3. Consider new real estate opportunities in mixed-use spaces: Apartments, fitness centers, shops, restaurants and other businesses are coming together to create more robust, community-driven real estate spaces. Fitts noted that using these spaces could be wise and valuable “calculated risks” that serve a business better than a traditional shopping center or retail corridor.
4. Think about the entire spectrum of the customer experience: Because Leap helps brands with the end-to-end experience behind their spaces, Fitts reaffirmed the importance of the small details — like store windows. “If you’re an online brand, you’re changing your UX a little bit all the time,” she said. “You want to do the same thing in the physical world. Even something as simple as holiday windows make a big impact. We need to hear your brand’s voice in some of those details.”