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Feature Article, August 2005
Virtual Reality
Epicenter Collection, a new retail concept that combines online and traditional shopping, plans to fill vacant department store locations at malls nationwide.
Katie Foxworth
Remember when online shopping threatened the existence of brick-and-mortar retailers? The big question was, would the big, hulking dinosaurs known as shopping malls fade into oblivion? Would 21st century consumers have no need for traditional shopping if everything they desired were just a mouse click away?
Luckily consumers still embrace tangible shopping centers and the threat has come to pass. Online shopping is a convenience, but it is not a replacement. However, the mall of our parents' generation is undeniably in need of help. Lifestyle centers and entertainment-based outdoor centers have filled much of that need. But what about the demise of the department store and department store consolidation? What happens when a department store — ostensibly the anchor for the entire mall — goes dark? That's where Epicenter Collection, a new retail concept from Sheldon Gordon of Greenwich, Connecticut-based Gordon Group Holdings, LLC, comes in. The innovative retailer will house a variety of online and catalog merchants under one roof — all selling their wares in individual stores and kiosks with the convenience of instant purchasing technology. Through a hand-held device called the BUYpod, consumers can conveniently click a button for their purchases, but they still get to see, touch and try out what they're buying. In addition, consumers can shop across stores with the BUYpod, making the Collection greater than the sum of its parts.
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Epicenter provides an excellent reuse for vacant department store locations at high-end malls.
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“What Epicenter does, through its introduction of the BUYpod, is it provides for the first time an online shopping experience in the real world of shopping,” says Tony Lee, CEO of the newly formed Epicenter Holdings, Inc., also based in Greenwich, Connecticut. In 2006, Epicenter Collection will open its first store at Polaris Fashion Place in Columbus, Ohio, filling a 200,000-square-foot void left by a departed Lord & Taylor. By repurposing department store or anchor locations, Epicenter is able to provide an alternate use for the large, empty department stores.
“These structures are very different than the stand-alone structures that you see along the highway,” Lee explains. “If Toys ‘R' Us or Kmart is acquired by Sears, they can be repurposed into almost any other use. But the department stores are attached to shopping centers and are so restricted relative to their uses.”
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Epicenter Collection combines online shopping with a retail presence.
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Sheldon Gordon, chairman of Gordon Group Holdings and originator of the Epicenter concept, said he began thinking about the idea for Epicenter about 4 years ago when there was a convergence of two major problems in the industry: department stores were closing and, at the same time, e-tailing was beginning to come into its own. “There was a threat that the shopping center industry was going to be severely impacted,” Gordon says. “The combination of that plus the fact that I thought there would be a lot of empty stores around and not really any way of filling them, I just figured this idea. It was really me responding to what I thought was a need.”
New Variety
Gordon expects Epicenter to make a significant difference in the trouble spots of the retail industry. For one, it will be able to take over vacant department store spaces and, therefore, reinvigorate struggling malls by driving much needed traffic for the developers and owners.
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Epicenter Collection will be ultra modern and driven by innovative technology.
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Secondly, according to Lee, Epicenter will bring to the shopping center industry a whole new range of merchants and merchandise that have never been seen in retail before. Many merchants are online or catalog-only retailers, and some have small retail boutiques but no mall locations. Epicenter provides consumers with variety they've never seen, and it provides e-tailers with a feasible, low-risk means of entering the bricks-and-mortar retail business. “The reason why so few new retailing concepts go into malls is because it's very expensive and the lease liabilities are very long,” Lee says. “So for catalogers and e-tailers who are trading successfully in the direct channel and want to expand their business, they'd be largely scared off by the costs and complexities of opening up regular retail stores.”
So Epicenter takes care of the cost and risk for them, in effect creating a store within a store. Epicenter provides the infrastructure that merchants require to begin retailing, as well as the mechanical requirements, lighting, interior walls, flooring, HVAC, etc. All the merchants have to provide are the fittings, furniture, merchandising displays and signage to make the store identifiable as their own. Store sizes will range from kiosks to 6,000 square feet. According to Lee, the actual cost of setting up a store in an Epicenter is one-fifth the cost (or less) of setting up a regular store in a shopping center. (A new store can cost between $150 and $500 per square foot to build.)
Sometimes it's hard to remember that some of today's well known retailers, such as Williams-Sonoma, Sharper Image, Coldwater Creek, J.Jill and Victoria's Secret, got their start as catalog-only retailers. Now, as Lee puts it, there is a “second wave” of new retailers evolving from the online world because they need to find ways to grow their business. And stores are the most productive means to that end. Why? Because stores still account for 90 percent of retail spending.
New Convenience
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The hand-held BUYpod shopping device is the first technology of its kind used in retail stores.
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Online shopping is convenient, no doubt about it. Point, click, you're done. No standing in long checkout lines, no circling the mall for a parking space. Epicenter's new proprietary technology, called the BUYpod, can't help you out with that parking predicament, but it can erase lines at checkout. After scanning a customer's driver's license, the handheld BUYpod can then be touch-activated to select and purchase goods right on the shopping floor. “If you look at the statistics, you'll see that there's a rapid rise among consumers of researching their products online and then going to a shopping center or retail location to actually buy it,” Lee says. “So what they're really saying is, ‘I don't like shopping 100 percent in either medium. I don't like shopping on the Web because even though it's got the upside of getting full information on a product, I actually can't buy it because I can't see and touch it. And I don't like shopping in the store because even though I can see and touch it and take it with me, I can't get any information on it when I'm there.'”
Not to mention the long lines at retail stores and the shipping costs online.
Epicenter, once again, has stepped in to solve this problem and make all parties happy. Through its BUYpod and Mobile Shopping Assistant (MSA) technology, Epicenter is able to provide the convenience and wealth of information of online shopping and the see-touch-feel tangibility of stores and malls.
This, says Lee, is the third way Epicenter will revolutionize retailing and the way we shop. “The shopping center industry has, for years, been thinking of ways to bring this magic word — ‘convergence' — into the malls,” Lee says. “On the one hand, every tenant in the mall has an online business, which is growing. But the shopping center industry is not participating in that online business. What Epicenter does is it provides for the first time an online shopping experience in the real world of shopping.”
WHAT'S NEXT
Epicenter Holdings plans to open 100 Epicenter Collections stores over the next 5 to 10 years, both in the United States and abroad. Its first store will open next year at Polaris Fashion Place in Columbus, Ohio, a city famous for its test marketing popularity. The city is also visited by more than 6 million consumers each year. Polaris Fashion Place is owned by Glimcher Realty Trust, so Epicenter's decision to debut there was no coincidence since Sheldon Gordon and Herb Glimcher have been friends and business associates for more than 40 years.
“We're looking at a ton of markets right now,” says Tony Lee, CEO of Epicenter Holdings. “We have so much interest in this concept [which was unveiled at the ICSC Spring Convention in May] that planning it properly and planning an organized rollout has been top priority. We're looking for very large markets with terrific super-regional malls that have available locations.”
For the time being, Epicenter plans to repurpose existing department store locations and not build newly constructed stores. However, Gordon does not rule out the possibility of new construction. He hopes that Epicenter will soon prove its attraction to the point where developers and owners ask to build locations specifically for Epicenter.
“We're the future department store,” Gordon says. “We're going to bring tenants into malls that never would have come into a mall otherwise.”
— Katie Foxworth |
BACK TO THE FUTURE
When Paco Underhill, bestselling author of The Call of the Mall and Why We Buy, heard about the new Epicenter concept, it reminded him of the original department stores in the 1850s.
“[Underhill] showed us a picture of Wanamaker's in 1854, and it's the most astonishing thing,” Lee recalls. “It is literally an emporium of product assortments and stuff in booths from so many different vendors and places. Obviously, it's not high-tech, but it brings to the shopping center a range of merchandise that are in categories that have literally disappeared — gifting, home dress. Shopping malls [today] have become 90 percent simply places to buy fashion.”
However, Lee says, Epicenter is not a modern-day antique store with various merchants set up at individual booths. These are stores. Stores within a larger store.
“The merchants who will be in our stores are very insistent on building stores that are unique to them — highly identifiable with their own brand, their own look, their own feel, their own color, their own signage,” Lee says. “The Epicenter is really just a canvas or a backdrop to the individual stores. But the group and the range of merchandise there is so broad, it's really never been seen inside a shopping environment for maybe 150 years.”
— Katie Foxworth |
BENEFITS OF EPICENTER COLLECTION
Business Benefits (for online retailers):
• Minimal investment compared to traditional retail locations
• Substantial cost savings and quick ROI
• Less inventory, staff and space than freestanding stores
• Unique store look and access to new-buyer pool in prime retail locations
• Product awareness and testing in new retail channels
• Epicenter-supported services, including store layout and design, staff recruitment and training
• Seamless transfer of catalog and online brand identities
Consumer Benefits:
• Increased customer satisfaction
• Seamless shopping across brands and products
• Simple, no-line checkout through personal shopping devices and touch-screen kiosks
• Full product-line accessibility
• In-person and technology-driven shopping assistance
• Easy display and out-of-stock ordering
• Take-home or shipping purchasing options
• Online purchasing at Epicenter.net |
©2005 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.
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