Why Nextel Wants To Be Your Next Tenant
The wireless carrier has opened hundreds of stores in a short period of time — here's how you can get on its radar screen.
Randall Shearin

Nextel has entered the shopping center industry with a bang. The wireless carrier has opened and acquired more than 800 retail locations in malls and strip centers around the country over the last 3 years.

Shopping Center Business recently met with Mark Adams, vice president of retail sales; Brett Beveridge, vice president of national retail; and Steve Gunning, national director of leasing, for Nextel, at the magazine's offices in Atlanta recently to find out how the company is handling its expansion plans.

The open layout of Nextel's retail stores allows ease of use by customers.

The Let's Talk employees were already familiar with selling the Nextel products and the field management was also in tune with Nextel. A distribution facility in Texas was central to all the stores. Information technology was also in place, and transitioned smoothly to Nextel's headquarters in Reston, Virginia.

Prior to acquiring the Let's Talk stores, Nextel had a few sales offices with a small retail presence in them, but there was no point-of-sale system or a retail distribution system in place. Most were one per market, stand-alone locations that were located in industrial parks.

In 2002, Nextel began to ramp up its retail operations. That year, Nextel opened close to 200 new stores. It also opened approximately 200 stores in 2003 and 2004. Currently, the company has approximately 800 stores. Same-store sales, as well, have increased every year, so Nextel is also gaining market share where it's active. The company will open approximately 100 stores in 2005. These numbers are net numbers, not including any store closings or relocations.

Inside a Nextel retail location.

“When you start with 200 locations, you have a lot of the U.S. that you can attack,” says Beveridge. “In 2002, our focus was to acquire and secure the best locations in malls in markets where we provided service.”

“We used to say we were opening a lot of stores in a few markets,” says Gunning. “Now we say that we are opening a few stores in a lot of markets.”

In existing markets, like Baltimore-Washington, the company is continually optimizing its real estate. Nextel currently has approximately 40 stores in the market, but it has been adding two to four locations per year where the market has grown or changed, or in parts where its service area has increased.

In 2003 and 2004, the company began opening stores in strip shopping centers and pads. In 2005, since it has expanded to a lot of where it needs to be in existing markets, Nextel has to be much more selective with where it locates stores.

“We want to make sure we are still getting Grade A real estate to fill in the few remaining spots we have in our existing markets,” says Beveridge. “We also want to balance the distribution we have with all of our channels of distribution, including authorized representatives and national retailers.”

Nextel's retail format allows it to change its displays easily.

“Part of the reason that we grew so fast was that we were doing well hitting our target customer through the few stores we did have, but we didn't have the penetration that was necessary for further distribution,” says Adams.

Strip centers, it feels, provide Nextel with the right size space and proper real estate to handle those functions economically. Nextel typically locates in high visibility locations, like pads and end-caps. It will also take in-line locations where visibility and traffic counts are high.

The average Nextel shopping center location is between 1,500 and 2,000 square feet. Nextel looks for a site that has enough people in close proximity and a dense daytime population. In the area, annual household income varies depending on the dynamics of the market area. Nextel also likes store frontage of at least 20 feet.

Adams' mission every year is to figure out how many stores Nextel will open the next year and where they will open. Nextel works with a number of brokers around the country that help locate stores for the company. Beveridge, Gunning and the company's leasing managers sit down after meeting with the brokers and figure out where they have holes in the company's distribution. Other decision makers are involved.

The company's network of brokers spends a lot of time with Nextel. They attend Nextel's review sessions with its deal managers so that they hear exactly what they are supposed to be focused on when looking for a site. Nextel works with top performing brokers in all markets where it is active; the brokers must not have other wireless provider clients.

Nextel spends a large amount every year on advertising, so it is constantly attracting customers to its retail stores. For this reason, shopping center owners like Nextel because it becomes a draw to the center.

“We're a great tenant to have because there are so many marketing dollars driving additional customers, whether that's to a mall or to a strip center,” says Adams.

Nextel has more than 16 million customers and offers them — through its retail locations — service and repair, upgrades to new equipment and sales of wireless data solutions. Nextel has a history of focusing on the business customer, especially those businesses active in the construction, field service, transportation and manufacturing fields.

The Nextel product is different than most wireless offerings. The company pioneered the push-to-talk, service, called Direct Connect that enables teams of people working together to communicate on a circuit, similar to a company-wide walkie-talkie. Many customers who have a Nextel phone for work also get them for their families because of the Direct Connect service that links all users on a dedicated circuit. As a result of its proprietary technology, customers seek Nextel out.

“Customers are drawn to Nextel for its technological advancement and for the value it can bring to businesses and families alike,” says Beveridge.

Another draw to Nextel stores is its tie with NASCAR. The company's title sponsorship of the NASCAR Nextel Cup Series is allowing it to reach NASCAR's 75 million fans — the most brand loyal of all sports. The sponsorship allows Nextel access to NASCAR's cars and drivers, and it regularly brings both to its stores. Think about how that will drive traffic to your center. The company's black on yellow logo doesn't hurt either.

“At some centers, when we've brought a car or driver, we draw hundreds and hundreds of people,” says Adams. “With our NASCAR affiliation, we've been a valuable resource to a shopping center.”

Adams handles all retail operations for Nextel. This includes other retailers who sell Nextel products through their own channels. It also includes Nextel Retail Stores, company-owned facilities. Once Adams and his group help create the overall retail strategy for the company, Beveridge and his group are in charge of finding the locations and opening up the stores. Gunning, who leads leasing, has a team of leasing managers who support this initiative. Beveridge and his team maintain contact with developers and brokers, seeking new sites for Nextel. Once identified, a location must go through the company's real estate committee, who must approve the location. Once a location is approved and the lease is signed, the location is then handed off to the expansion group, headed by Nextel Retail Stores' director of expansion, Tiffin Teboda. That group is in charge of outfitting the store for opening, and working with the Nextel facilities group, who builds out the space.

Nextel's millions of square feet of office space around the country are handled through the company's facilities division.

The actual Nextel stores are divided into several compartmentalized areas, each handling a different aspect of the company's products. This setup also enables Nextel to quickly change just a single part of the store when new products are introduced. For instance, it may have an area for the newest phones; another for its NASCAR promotions; and another designed for business customers seeking wireless data solutions.

“The areas can be changed around very easily so that we can remerchandise based on what products Nextel wants to showcase at the time,” says Beveridge.

The stores have a clean look with lots of open space and ease of movement. This allows them to be easily duplicated while allowing for a lot of increased flexibility for the future.