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The Mall of Today vs The Mall of Tomorrow


Obscured in the AskJeeves/Gifts.com announcement was what this means to more traditional forms of retail.

In my view, the announcement was more about Barry Diller's plans to own and manage critical infrastructure needed to give bricks and mortar retailers a way to make money from Internet users. When I say the Internet, I'm not limiting things to the World Wide Web. Email is, again, only part of the story.

The Internet has become an ongoing story about how people and businesses choose to leverage cheap, ubiquitous connections to make things happen. For example, over 180 million people use their Internet-enabled cell phones to find new ways to explore and connect. Businesses are using the Internet to link up to their most valuable partners and find ways to both improve and reinvent business processes. 

I feel like a broken record. But there's so much more that needs to be done.

If you compare the Gifts.com traffic to the website traffic of the biggest mall in America, owned by the Ghermezian Organization, (after their Triple Five subsidiary took control from the Simon Property Group), there's an interesting story brewing. The first is the growth of Gifts.com from essentially zero. The second is the overall decay in traffic for the Mall of America, and indeed, many other so-called fortress malls. The decay doesn't just represent consumers - it's also about the travel planners, local businesses, and media organizations whose relationship with their local malls is changing, almost imperceptibly.

AskJeeves as Froogle-Killer

GiftsdotcomAlmost lost in the buzz of IAC's announcement that they were going to purchase AskJeeves for US$1.9 billion, comes the simultaneous announcement that they were going to launch their second attempt at shopping, Gifts.com.

One of the opportunities they get is helping to direct traffic, About.com-style, to AskJeeves. AskJeeves is the technical leader in helping consumers drill down to results. What they've not been able to do is educate consumers how to search - the average search query is 2.5 words long. It may be helpful to think of Gifts.com as a search term configuration tool.

On the other hand, one of the big opportunities that all of these sites seem to be missing is an understanding of how people buy luxury goods. To help make that case, I've put together a review of the new Gifts.com site, including screenshots, similar to an earlier review of the A9 launch.

I think Barry Diller is betting close to $2 billion that Gifts.com will allow them to leapfrog the much less focused, much less retail friendly Froogle - and pre-empt MSN's nascent AdCenter. This is the perfect time to do it. By confining the beta to markets like France and Singapore for the next six months, MSN may lose some momentum heading into the hugely important 2005 holiday season. As a result of today's purchase, no other infrastructure will likely be as effective as the AskJeeves/Gifts.com combo at directing retail-specific traffic during the holiday season.

Link: Gifts.com Review

Introducing Simon v5.0

Simon_2Simon Property Group announced their embrace of the mixed-use format at the recent Smith Barney REIT CEO Conference in Florida. The concept - dubbed Version 5.0 - transforms the notion of a "mall" by incorporating residential, hotel, office and other types of real estate. Shortly thereafter, Simon announced the new St. Johns Town Center in Jacksonville, which will include a Homewoods Suite hotel and three multifamily residential projects.

Simon is no stranger to mixed use projects, given their involvement with the Forum Shops at Caesar's Palace and other locations. What is new, however, is their commitment to mixed use as a major platform for growth, which they call "asset intensification". The combinations of different property types creates new opportunities to re-invent what the shopping experience to the different local audiences: for example, how might an apartment or condominium complex market St. Johns retailers to their own tenants as part of a move-in package? There are many other examples of the possibilities.

Link: Retail Traffic article on Simon 5.0

The Decline and Fall of the Saville Row Empire

BespokeLuxury good manufacturers serious about building value need to think about educating the consumer.

Thomas Mahon, arguably one of the world's leading bespoke tailors, eloquently argues that without education, industry leader Anderson & Sheppard's departure from Saville Row will probably not be the last. His blog is also a good place to learn about mens suits.

Education is not only essential to train the best store associates, but it's the best place to attack the counterfeiting problem (something I've written about here and here).

The Perils of Canal Street, Online

Canalhandbags_1East Coast entrepreneur Brian Albert has launched StreetPeddler.com, which promises to bring the watches, toys, sunglasses and handbags of Canal Street - an infamous spot for buying knockoff merchandise, according to Citysearch - to online audiences around the globe.

The picture to the left - which is prominently featured on the home page of StreetPeddler.com - reminds me of all the quite illegal versions of Takashi Murakami's work for Louis Vuitton. Sure, Takashi is going to keep satisfying the discriminating buyer with new designs like his Monogram Cerises collaboration with Marc Jacobs, but in the meantime, this is a practice that causes American industries alone to lose somewhere between 200 and 250 billion dollars each year.

In a New York Times interview, Brian makes a point of saying, "You can buy imitation things on the streets of New York, but obviously that's illegal and we don't do it." However, his site contains the following disclaimer for handbags:

"...We do not represent our handbags to be authentic, original, or genuine to any registered designer brand labels or their copyrighted products, nor do we represent that they are exact copies; as such they do not violate any copyright laws. We only state that they are comparable in appearance to the designer brand handbags."

The site then goes on to mention specific brands: Adidas, Anarchy , Angel Anne Klein, Armani, Arnette, Aztec, Barracuda , Baume & Mercier, Birkin, Bulova, Burberry, Black Fly, Bolle, Breliteng, Brighton, Briko, Bucci, Bvgalri, Calvin Klein, Carla Mancini, Carrera, Cartier, Cebe, Chanel, Chloe, Christian Dior, Coach, Concord, Coyote, Diesel, Divine, DKNY, Dolce & Gabbana, Dooney & Bourke, Dragon, Eddie Bauer, ESQ, Fendi, Fila, Fossil, Francesco Biasia, Frank Muller, Gargoyle, Givenchi, Goat, Graffiti, Gucci, Guess, Hamilton, Harley Davidson, Hobie, Hugo Boss, Ice Tech, Isabella Fiore, J.P. Tods, Kate Spade, Kenneth Cole, Killer Loop, Lacoste, Liz Claiborne, Louis Vuitton, Longines, Maui Jim, Miu-Miu, Marc Jacobs, Mont Blanc, Moschimo, Mossimo, Movado, Native, Nautica, Nike, Oakley, Perry Ellis, Persol, Piaget, Polo, Porsche, Prada, Ralph Lauren, Rado, Ray-Ban, Reebok, Revo, Rolex, Omega, Roxy, Salvatore Ferragamo, Seiko, Serengetti, Skagen, Spy, Sutji, SWI, Tacchini, Tag Heur, Timberland, Tommy Girl, Tommy Hillfiger, Van Cleef and Arpels, Versace, Vuarnet, Wegner, Wiley X, Wittnaur, Yves St Lauren, and X-Loop.


Ladies and gentlemen, if you represent those brands, this represents yet another site besides eBay that you will need to monitor vigilantly.

If Mr. Albert were serious about addressing the counterfeiting problem, his site could adopt a stronger stance on the problem of counterfeiting and do a better job of educating the public on how to spot a fraud. It's not hard.

Link: New York Times review of StreetPeddler.com (registration required)

The World's Most Expensive Retail Rents

Not only is the cost of doing business at the so-called "Golden Crossroads" of Fifth Avenue and 57th Street highest in the country by a wide margin, but a Retail Traffic magazine article highlighted recent research by Cushman & Wakefield which compared Fifth Avenue rents to its peers around the world. The report, entitled Main Streets Across The World 2004, tracked retail rents in the world's top 229 shopping locations across 45 countries around the world:

1. NYC - Fifth Avenue ($950 per square foot)
2. Paris - Avenue des Champs Elysées ($569)
3. Hong Kong - Causeway Bay ($569)
4. London - Oxford Street ($517)
5. Dublin - Grafton Street ($381)
6. Munich - Kaufingerstrasse ($332)
7. Moscow - Tverskaya ($325)
8. Sydney - Pitt Street Mall ($321)
9. Tokyo - Ginza ($311)
10. Seoul - Myeongdong ($301)

As expected, the highest regional rent increases are coming out of Asia. What is more surprising, however, is the strong showing of places like Grafton Street in Dublin and Florida Street in Buenos Aires.

Link: Cushman and Wakefield Report (Adobe Acrobat required)

NREI Top 25 Brokers

Just ahead of the Smith Barney REIT CEO Conference in Florida, National Real Estate Investor magazine published their annual list of the top 25 brokers.

The top ten entrants are listed below, with the total amount of investment sales and leasing transactions in 2004 in parenthesis:

1. Insignia/ESG Inc. - New York, NY ($40.3 billion)
2. CB Richard Ellis - Los Angeles, CA ($38 billion)
3. Cushman and Wakefield - New York, NY ($37.8 billion)
4. Colliers International - Boston, MA ($27.8 billion)
5. NAI - Hightstown, NJ ($25 billion)
6. Grubb & Ellis - Northbrook, IL ($16.9 billion)
7. The Staubach Co. - Addison, TX ($13.6 billion)
8. GVA - Evanston, IL ($12 billion)
9. TCN Worldwide - Plano, TX ($10.6 billion)
10. Coldwell Banker Commercial - Parsippany, NJ ($10 billion)

Buy or Sell: Whither Neiman Marcus?

NeimanmarcusWhile luxury is alive and well, nevertheless Neiman Marcus Group late yesterday announced it has retained Goldman Sachs to explore strategic opportunities - possibly a sale.

If so, this is a 180 degree turn from previous statements by chief executive Burton M. Tansky, who earlier said that the company is "always looking for opportunities" when asked about the chain's growth prospects. The Neiman Marcus Group had announced plans to open seven new stores over the next three years with a combined total of 790,000 square feet.

Neiman Marcus later announced the closing of its location at the Town and Country Mall in Houston and the transition plan for 160 associates at that property, which has limped along for years. This reflects the fate of many second-tier malls, who suffer in the proximity of so-called fortress malls such as the Houston Galleria.

Analysts don't believe that Neiman's board would fold the company into a department store chain because of the experience of rival Saks Fifth Avenue. Saks has struggled since they were acquired by Birmingham, Ala.-based Profitts Inc. in 1998. While industry watchers have speculated that the Smith family might be looking to make a financial play using the stock's current high value, VP of investor relations Stacie Shirley rebuffed that notion (registration required), indicating the Boston family only owns a 12.7 percent stake.

Neiman's specialty retail segment, including department and outlet stores, represents 81% of Neiman's total business. The direct to consumer is 16% and brand development represents the remaining 3%. Higher luxury sales may be impacted by the ascendance of local media in marketing luxury goods, high operating costs, greater consumer demands, and the looming challenge of the China Price.  Certainly Neiman Marcus is in a position to turn all of these potential negatives into strong positives, both domestically and overseas.

It's as Einstein once said: In the middle of difficulty lies opportunity.

What Qix Means to Wireless Profits

QixVirgin Mobile launched Qix, Zi Corporation's cell phone navigator software. Qix tries to anticipate what you're looking for as soon as you start using your keypad. In the example to the right, touching '3' then '2' brings up 'Dad', 'eBay', '326-3524', and any other similar phonebook contact, browser bookmark, installed application, short code, etc. The default is to let you continue entering numbers, as you normally would. This approach reminds me of T9's predictive text technology, which makes it easier to enter text messages on most mobile phones.

Qix has the same name as an old video game that used the classic Etch-A-Sketch interface but was surprisingly addictive. With any luck, using Qix will be just as addictive for Virgin Mobile users. 

It needs to be. For MVNOs like Virgin to make their hurdle rate, they need a mobile platform with lots of paid applications. Most cell phone navigational tools make it easy to buy apps. Yet somehow after the first few uses it's far too easy to forget those apps are even there.

At MocoNews.net, Virgin Mobile Sales & Marketing Director Graeme Hutchinson commented, "One of the biggest challenges we face is to entice customers to start using the plethora of features and services on their phones, and to use them frequently."  He went on to compare Qix to search engines like Google or Yahoo.

I think the Google/Yahoo analogy is wrong. Google thinks about programing as if they were datafeeds, rather than focus on gateway management issues. Yahoo is going to be a great studio in the grand tradition of Paramount or MGM, and is going to be a huge supplier of content.

Graeme and mobile carriers should look at better examples like TV Guide - the cable network, not the magazine. The onscreen guide was the key to profitability for early cable networks, and arguably became the most popular "channel" for male viewers. Without the guide, we might never have discovered gems like Nickleodeon or the USA Network. For third-tier cable networks like Great American Country, being given a channel number like 132 was effectively like exile. In a way, onscreen guides were the long tail for cable companies.

Harnessing Buzz Power

BuzzgametmMarketplaces who wonder how to best promote all of their offerings should check out BuzzGame, the new offering from Yahoo! The object of the game is to predict how popular various technologies will be in the future. Popularity, or buzz, is measured by Yahoo! Search frequency over time.

Convention and visitor bureaus could apply the same techniques to local restaurants and tourist attractions. Malls and shopping districts could let frequent shoppers determine the hottest fashions and styles.

Yahoo! was not the first to do this. The first was the Hollywood Stock Exchange, which let visitors buy and sell interests in their favorite movies, stars, and musicians in a virtual stock market.

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