Monthly Archives: December 2009

A very Merry Christmas and Happy Holidays to all our readers. Here’s hoping that 2010 brings all kinds of joy and prosperity! Things are looking up!

Lessons Learned: The 3 Silliest Assignments I Ever Had

My friends tell me I am one of the funniest people they know.  I can find humor in the most awful or embarrassing circumstances and make people laugh.  Those of you who know me may think this is contrary to my way of thinking, which I would call “the worst case scenario.”  Still, many of my jobs have brought laughter to my family when I tell them what I am working on.  My husband wrote me a case study that I keep in front of me on my desk at all times.  It is called THE BEE MUSEUM, and it is an assignment for a nonprofit client that wants to test the market and financial feasibility for, you guessed it, a BEE MUSEUM.  This nonprofit is in a tiny market, but they project a million visitors per year, each spending a $20 per capita.  This is how many of my jobs go, in a nutshell.

We are hired principally to test new ideas, things that have never been done before.  So there have been some wild-ass ideas in my practice.  But as a very wise man once told me, “you never tell a client what they can’t do; you tell them what they can do.”  So for these very silly assignments, we develop projections based on realistic programs.  They may not be what the client wants (most of the time) and they may generate significantly less attendance and revenue, but they reflect the realities of the market.  So here they are, in no particular order, the three silliest projects I have ever worked on and the lessons learned.

Lesson Number 1:  Test before you build and then trust the results!

Native American casinos often wish to develop a cultural component along with the casino amenities.  Many of these start out as museums detailing the story of the tribe.  In one such instance, we were hired when the huge museum next to the casino was already under construction.  It had occurred to them that it might be good to get a realistic viewpoint on their attendance potential.  Of course, they were projecting one million visitors, who would come on the same trip as the gambling excursion.  This was in a day-market locale.  After studying the market, we told them, no the most you could get is 350,000 annual visitors and this would be from the 50-mile market, not from the casino visitors.  They are there to be BAD and they do not want to be educated or uplifted on the same trip they are losing (or winning, but not as often) their rent money.  Low and behold, they stabilized at about 350,000 before they had budget cuts and attendance lagged.  They were never pleased with us, even though we were correct.

Lesson Number 2:  Arrogance will get you nowhere in the retail and attraction businesses.  Remember the local culture and keep your culture out of it!

A very well-known entertainment company was planning a foreign theme park in a country where wine is consumed with lunch and dinner.  This is not alcoholic behavior; this is the culture and custom of the country.  Focus groups confirmed that it was the custom of potential visitors to have wine with meals.  What did this company do?  They prohibited alcohol from the park because it was against THEIR CULTURE.  Can you see where this is going?  Shouldn’t they have known better?  Wasn’t this obvious without expensive focus groups?  Needless to say, after a few years of low attendance and flagging EBDITA, they reversed their ridiculous stance and allowed alcohol in the park. 

Lesson Number 3:  Get inside your potential customer’s head, and don’t stop at a few interviews.  You could lose hundreds of millions.

This is another strange story about the failure of a whole division of Bullocks, when there was a Bullocks.  These stores are all Macy’s now.  But at this time, Bullocks wanted to expand to Northern California.  In order to do that, they had to open multiple locations, indicating a huge investment at the time.  Federated had the best research department in the business.  So we did all the area research, some consumer research, and several stores called “Bullocks Northern California” opened in the San Francisco Bay Area.  And they all FAILED!  How could this happen?  Are any of you aware of the jaw-tightening dislike that Northern Californians have for Southern Californians?  Well, I knew because I went to Berkeley and heard it every day I was there, being from Beverly Hills, which was a particularly huge transgression.  Anyway, no god-fearing Northern Californian would be caught dead in a Southern Californian retailer, EVEN THOUGH THE MERCHANDISE WAS THE SAME AS MACY’S, the closest competitor at the time. 

Shopping Center Business – Retailers Who Are Moving Ahead

Not everyone’s closing up shop — these retailers and restaurants have made strides in 2009, and are planning expansions in 2010, and beyond.

By Jill Bensley and Erica Barton

As the holidays approach, the retail industry is showing signs of new life. Buoyed by 3.5 percent third-quarter growth of the gross domestic product, the retail sector may have seen the worst.

Always important to the rebound are plans for store expansion. In fact, 2009 shows more than 250 individual retailers who had plans to expand by more than a total 10,000 units. A summary by merchandise class is given below:

Walgreens has the second largest number of stores planned in 2009, second only to McDonalds.

Announced plans for 2010 include more than 49 different retailers with plans for more than 3,500 new locations. While not all of the aforementioned expansions are in the United States, the sheer volume signals better times for the retail sector.

The Top 50 in 2009

A list of the top 50 expanding companies by number of units is shown in Chart 1. As can be seen, the most expansive include McDonalds at 1,000 new units; Walgreens at 554 units; Dollar General at 500; Subway at 484; Zara at 450 (through 2011) ; GameStop at 400;  Family Dollar at 385; Dollar Tree at 235; 7-Eleven at 200; and O’Reilly Automotive at 150. Obviously, the lower end of the retail spectrum is gaining the most in this recession…  (Click Here to read more.)

Introduction – Raison d’Etre

Image by Wouter Pinkhof

Does the world need another blog?  According to recent statistics from blog-tracking site Technorati, the blogosphere has doubled every six months for the last three years. That’s 175,000 new blogs per day worldwide. Technorati added its 50 millionth blog on July 31, 2006.

After several painful sessions of browbeating from my son and several friends, I suppose the answer is “if everyone else is doing it, so should you.  So get off your butt and do it!”  Those of you who know me understand that I never put anything in writing that I wouldn’t want the world to see.  Therefore, this is a painful process.  But I have been convinced that I have a ton of information in my head that is useful to many of my friends and clients.  So without disclosing any particulars, I will present, each week, my thoughts on my topics of expertise, namely figuring out how to concept and test the market/financial feasibility for places which may include:

Retail

Entertainment

Sports

Leisure / Hospitality

Gaming

Culture (Theaters/Museums)

In the last few years, mixed-use projects have included all six of these elements.  Figuring out how they interact from a market and financial point of view is what we do and what keeps me engaged.  (I bore easily).

For those of you who don’t know me, I have been in the business for over 25 years and as a friend once said to me, “you must be pretty good by now.”  Well, I don’t know about that, but I do know a whole lot about the subjects noted above.

Why Even Bother With Area/Consumer Research

When I worked at Federated Department Stores (which at the time had all the best department stores in its portfolio, including Bloomindales), we had two units for research and evaluation.  One was dubbed “area research” and included all demographics, competitive research and projected sales.  The other “consumer research” did focus groups and intercept interviews of our customers.    Our projections turned out + or – 5% because our models were that accurate.  I learned a great deal from working there, which I brought into my practice.  Namely, that if you think you know the answer, and it is YOUR PROJECT, you are probably wrong.  And that you need to get an independent evaluation or you will make a $100 million mistake.  Some projects are smaller and some are larger, but you get the picture.

In my next posting, I will talk about area research and how it is done.  Subsequent postings will discuss consumer research and some of the interesting stories we have surrounding this type of analysis.  Stay tuned……….all of these things are GOOD TO KNOW, and thus the name of my blog!

10 Ways to Avoid Chapter 11 in the Attractions Business

A whole long while ago, I wrote an article with my mentor and favorite octogenarian, Buzz Price, about the many failures of certain themed restaurants and attractions.  I looked it over and was very surprised to see that it still has relevance today for development of new attractions, something that will be happening soon enough.  Thus, here are 10 pitfalls to avoid when planning an attraction.

  1. When planning, balance revenue generation in major categories: attractions, food service and merchandise.
  2. Spend time computing capacity.  Indoor attractions are hard to justify because of constrained capacity.
  3. Attractions are driven by opportune locations, preferably in the path of major attendance generators.  Stadium crowds at sporting events may not provide the required flow.
  4. High front-end R&D costs incurred in anticipation of a fast rollout are a plague.
  5. Study the market and understand the nuances of its preferences.  Pick your niches carefully and stick to them throughout planning and operation.  Don’t try to change consumer behavior.  The devil is in the details.
  6. Keeps your eyes wide open and try to be objective about your pet project.  You may think you have invented the next internet, but your market may not.  On the other hand, be passionate about the project and its greatest cheerleader.  Keep a balance between your passion and market-driven objectivity.
  7. Narrowly concepted attractions won’t find a broad-based market.  Along those lines, clear and concise branding is key.  Make sure your brand measure is clear to your customer.
  8. Assure that you have a critical mass of attractions to generate visitor interest for the required length of stay.  Create enough capacity for your maximum design day on-site crowd.
  9. Use realistic assumptions when looking to the future.  Respect comparative and competitive performance.  If you do better than projected, you can fix the problem (in most, but not all cases).
  10. The attraction must start up fully formed.  Phase I needs to be a complete show. Undercapitalized projects have a high failure rate.  Create realistic models for development cost, revenue and expense.

Where’s The Market?

Where’s The Market?
Experts give their opinion on where the market is, and when it will be back.
By Jill Bensley and Erica Barton

It’s been a while since we’ve heard any good news from the retail sector in the United States. You don’t have to be a genius to know that same-store sales have been declining at an increasing pace, and 2009 is a banner year for bad karma.

Figure 1 shows the percentage change of comparable store retail sales in current dollars from 1986 through 2008, according to ICSC. Throughout the late 1980s and early 1990s, annual change kept pace with inflation and in some years outpaced inflation by several percentage points, peaking in 1999, at 6.7 percent. Then came the 9/11 terrorist attacks and the rate of increase reverted to a slower pace for the next 6 years…(to read more, go to:  Shopping Center Business)

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