Kercheval on RECon: ‘You’ll Be Surprised at Retail’s Strength’
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NEW YORK CITY-It’s back! RECon, the International Council of Shopping Centers’ sprawling annual get-together. As more than 35,000 attendees prepare to descend on the Las Vegas Convention Center for this year’s edition, ICSC president and CEO Michael Kercheval sat down recently with GlobeSt.com to paint a picture of the retail landscape. There are major game-changing shifts taking place, in both the social and legislative aspects of the industry, he says, and these will be reflected at the conference. But the major takeaway, he believes, will be one of surprise.
GlobeSt.com: What will be the headline, the major takeaway, when the dust settles after this year’s RECon?
MICHAEL KERCHEVAL: The strength of the industry. During the recession, people were still buying groceries and they were still eating, of course. But they became far more economical and shifted down to more value areas, and the Costcos and Dollar Stores started doing very well. On the high end, frankly, a new concept emerged...inconspicuous consumption. People were still shopping at Tiffany’s but they were asking for brown paper bags.
GlobeSt.com: And today?
KERCHEVAL: Conspicuous consumption isn’t totally back but there’s less anxiety or guilt about that little blue Tiffany’s bag. We’re still coming out of the recession in terms of finding a footing for the industry. You still see the Dollar Stores and the like doing quite well. There have been a lot of questions about the strategies of retailers such as JCPenney and Sears. At the same time, there have been a lot of positive discussions about Macy’s, which seems to be on track. Maybe the department stores are starting to find their footing.
GlobeSt.com: In the midst of all the economic changes, there’s also been a huge shift at the hands of the Internet.
KERCHEVAL: This past holiday season, Internet sales grew faster than store sales, but both showed growth. We saw a shift from shopping online to shopping in the brick-and-mortar store and making purchases online. Showrooming has gone mainstream, and we discovered it’s not a four-letter word.
GlobeSt.com: But is it a sustainable model?
KERCHEVAL: Most of our brick-and-mortar retailers will say it’s not only sustainable, it’s the future. So-called omni-channel retailing is the key to success. Certainly we’ve seen brick-and-mortar stores create an online presence, but we’ve also seen online stores rushing to open a brick-and-mortar presence.
And landlords are looking at it differently also. As brick-and-mortar centers serve more as retail and distribution outlets, shopping centers are looking at what that means in terms of access, trucks, the type of shopper and even how to figure what rents should be in the future. The shopping center role is transcending what it was 20 or 30 years ago.
GlobeSt.com: Let’s stay on the Internet for a second. What’s the status of the Marketplace Fairness Act?
KERCHEVAL: Its passage should be a no-brainer. It was passed by the US Senate a year ago and now it’s sitting in the House. It requires out-of-state retailers to collect sales tax in that customer’s state. Right now if I live in New York, and I buy something online from someone who doesn’t have a store there, I’m supposed to figure out the sales tax and pay it when I pay my state sales-and-use tax. Most people don’t do that, which means the state is losing billions of dollars and it gives online retailers an apparent advantage over brick-and-mortar retailers. This legislation legalizes the enforcement mechanism, and we’ve mounted a major campaign among our members to support its passage.
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