Phillips Edison chief Jeff Edison’s top concern was his tenants — “neighbors” to Jeff — when COVID-19 shut down nail salons, fitness centers, and other non-essential businesses in his centers. He and his executive team rushed to their aid, helping them file for government programs and renegotiating leases. As the pandemic progressed, his concern turned into admiration for the plucky small business owners in his centers.
Regardless of your sector of the retail real estate world, what do you see as the proper operative relationship of physical and digital retail?
Retailers and shopping center developers have always been called upon to adjust as the habits and desires of consumers are modified and influenced by societal changes or historic events. Mass retail started up in downtowns in the early 20th Century when few people had automobiles. When cars became standard equipment and people moved to the suburbs, so did retail, and the enclosed mall was born. Then came a buildout of power centers and lifestyle centers, even though arguably we had enough retail before they appeared. Now, we enter the next historic era in retail, and it’s the early days of our new era. Online sales, BOPIS, curbside delivery — it’s the retail industry giving consumers what they want, like we’ve always tried to do.
Mall owners like Simon have discussed filling emptied anchor space with fulfillment centers. Are last-mile-fulfillment operations likely to find homes in any grocery-anchored centers?
Walmart, Kroger, and Publix became some of the top e-commerce players during the opening months of the COVID-19 pandemic. The irony is, however, that it’s unlikely you’ll see fulfillment operations springing up in our neighborhood centers, and it’s not just because we don’t have spaces for warehouses. It’s because the supermarkets, off-price retailers, nail salons, coffee shops, and fitness centers that fill most of our properties receive frequent, personal visits from people in their communities. That’s one of the reasons that we call our tenants “Neighbors.”
Real-estate-wise, what are some things retailers in your centers have to contemplate following the groundswell of online sales activity?
The greatest thing the pandemic taught us is that every one of our neighbors has a different story. We were very impressed at the level of creativity displayed by them to keep revenue flowing. One great example was a doughnut shop that set up a stand outside of the store to sell product but added a margarita machine to boost sales. Another restaurant created their own pick-up window with plexiglass on their front door. Many others have embraced omnichannel opportunities through BOPIS and curbside delivery.
How can PECO help them in this effort? What have you begun to do differently already because of the pandemic?
Phillips Edison has introduced our Front Row to Go curbside pick-up program in every one of our centers because we don’t think it’s a pandemic adjustment. Consumers have shown us they like curbside pick-up for convenience and safety. We are also attempting to add as many drive-throughs as we can, despite regulatory hurdles by municipalities sometimes limiting that service.
We set up a COVID-19 support center that helped neighbors apply for PPP loans and other financial assistance, and provided content to aid them on DashComm, our communications platform. This has been an incredibly valuable communication link between our neighbors and our management team. We are using it to share everything from CDC guidelines to what pandemic protocols are in place in specific counties to webinars on business development. It answers our neighbors’ questions and provides resources to support their businesses.
Outdoor neighborhood centers such as yours, overall, fared well during the pandemic. Have you learned anything that you will now adopt permanently?
PECO is constantly striving to be locally smart and property focused. COVID-19 brought the value of this mindset to the forefront, reinforcing the fact that we are not a company that owns 300-plus properties, we are a neighbor to 5000-plus businesses in 300-plus communities. The pandemic pushed us to be more creative and collaborate more closely with our neighbors, finding new ways to work together and ultimately be a better landlord. Going forward, we will continue to seek new opportunities to support our neighbors, not only as they continue to navigate the pandemic, but also as they use what they’re learning to broaden and enhance their omnichannel strategies.
Jeff Edison is Chairman and CEO of Phillips Edison & Company.