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The 3 Things We’re Scared We’re Wrong About in Retail (RTS #40)

The 3 Things We're Scared We're Wrong About in Retail
Episode #: 136
The 3 Things We're Scared We're Wrong About in Retail (RTS #40)

Guest: Anne Mezzenga
Topics: Physical stores, retail rates

Transcript:

Chris Ressa 0:01
This is retail retold the story of how that story ended up in your neighborhood. I’m your host, Chris ReSSA. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management.

Before jumping into the podcast, we have a quick new segment called Data drops, brought to you by PACER AI. Today’s data drop is about experiential retail. Dick’s Sporting Goods has recently launched house of sports and experiential retail and sports concept. The idea was to break the mold and create a powerful addition to the brand’s wider fleet. Since its launch visits to the house of sports location in Rochester, New York, have outpaced other nearby Dick’s Sporting Goods locations. weekly visits to the new concept are on average 93 and a half percent higher than the average weekly visits at three nearby Dick’s Sporting Goods locations. The house a sports location also boasts a median visit duration 13.3% longer than the national average. Additionally, it’s true trade area is 10.7% larger than that of the next largest local Dick’s Sporting Goods location. I think this is interesting. And I think it’s probably foreshadowing to what we’re going to see happen in certain retail concepts. One when retailers innovate especially retailers that innovate the brand loyalty, the brand recognition as someone like Dick’s Sporting Goods, the intrigue alone attracts new customers. I think something interesting here is that this clearly has been sustained. And I think they will continue to see this be a location that does that when you have a brand that has such a loyal following. And you create an experience for people to try on new products to congregate to have fun to get exceptional service. Well, I think that’s going to lead to more consumers frequenting the store and probably staying longer. I think the foreshadowing here is that there’s certainly going to be certain retailers that are able to create an experiential retail concept in a certain amount of their stores. What is still uncertain is if retailers like this will do this for majority of their stores that might not be necessary or ROI positive. But certainly adding an experiential element to some stores is clearly having a positive effect. Stay tuned for more data drops you’re

welcome to retail retold everyone. Today I am joined by Ann Mazinga and is the co founder of Omni talk. She brings a wealth of knowledge from the retail industry. I’m excited for her to be here. Welcome to the show. And

Anne Mezzenga 3:14
Hi Chris. Thanks for having me. longtime listener first time guest today. Excited to be here.

Ressa 3:22
Excellent. Well, and why don’t we start off by you telling us a little bit more about who you are and what you do.

Mezzenga 3:30
So I’m an was nga one of the cofounders of AMI talk with my partner Chris Walton, Chris and I met I got I think it was it’s like seven years ago now. When we were we were running the Target store of the future project. So target came to Chris and I asking us, you know, how do you conceive of the Target store in the next three to five years? So we spent several years really building out a team to answer that question, researching new technologies, new partnerships for you know, kind of what would bring people to a physical store. And after that project ended in 2017, we really enjoyed working together, we wanted to continue to conduct this research into retail technology. Especially from a retailer’s perspective, we kind of saw this gap with Omni talk of, you know, you have all these pundits and journalists talking about cool new technologies and coming out but nobody was able to kind of put the lens on it of you know how as a retailer by evaluating these technologies and determining kind of what the next move is, so we have our weekly podcast on Thursdays the Fast Five where we talk about the five things you need to know about retail that week, and then we do a lot of other insights and research with other companies in the space. So that’s Omni tack.

Ressa 4:44
Excellent. What a cool background. I work on the Store of the Future for target I think that’s the

Mezzenga 4:50
best job we’ve ever had. I think next to this one right now working together is pretty great too. But But yeah, if you asked Chris and I were the best job we’ve ever had, it’s it’s easily that one was amazing, great team.

Ressa 5:01
And your world is continues to get interesting sitting behind you is this like, asked you it’s like this amazing space? Why don’t you tell everyone with the spaces behind you?

Mezzenga 5:13
Yeah. So a couple of years ago, we really set out to create a space that was kind of a incubator slash co working space, and lab space for people specifically in the retail industry. So, you know, there’s all these co working spaces popping up. And we really felt like, you know, we need a place to one have networking happening for people who work in and around the retail industry. And so we created third house, and it’s an 8000 square foot space, you know, part office space. We have our podcast studio here. But then we also set up warehousing and lab space in a high traffic retail corridor so that people can do everything from you know, focus groups from AB packaging, testing to, you know, actual retail happening in the store here too.

Ressa 5:58
Amazing. And, lastly, your family is gym owners.

Mezzenga 6:06
Yeah, we’ve got a we’ve got a few things going on. I think

Ressa 6:09
you’re all here. You’re all in and around the retail space. You’ve got brick and mortar locations, you’re incubating retailers, you’re doing research in the retail industry. You’ve got every part covered.

Mezzenga 6:21
Yeah, we do. Yeah, my husband and I also own a couple of boutique fitness centers in the Minneapolis area, which actually, I think has been a really great kind of piece of insight for me as we start to see retailers moving more towards you know, subscription programs and memberships. And just like understanding the world and how people’s desires can continuously change, especially throughout the last, you know, couple of years with COVID. And as people are starting to come back, so yeah, it’s it’s, it’s been fun. It’s uh, and you know, it’s great to just run next door and get a quick workout in and take myself away from the computer for a few hours.

Ressa 6:58
Are you there? Okay, so what a great story. I want to learn a little bit more about you. So I’ve got three fun personal questions. Okay, ready?

Mezzenga 7:11
I’m ready. Let’s do it.

Ressa 7:13
All right. We call this clear the air. All right. Question one. Yes. Go with the easy one. When is the last time you did something for the first time?

Mezzenga 7:23
Well, I just learned how to surf for the first time in August. I’m almost 40. I turned 40 In a few days, and I can’t believe I’ve waited so long to learn how to surf. And it was one of the most fun things. My son and I took a lesson together on a family vacation in August. And now I’m obsessed with it. Like I want to actually do surfing theme centered vacations, which everybody my family thinks I’m insane. But it’s a blast. It’s so amazing. Have you done it?

Ressa 7:51
I’ve never surfed but I’m, I’m I’m not quite 40 yet, either. And now you’ve gotten the wanting to yeah, check it off. blanketly wear

Mezzenga 8:01
a wetsuit though. It’s it does a lot of damage to the body. At this age. I feel like you gotta be you gotta be prepared. But man, the feeling of like getting up on a wave is I don’t know, it’s like, magical.

Ressa 8:13
Where were you surfing?

Mezzenga 8:15
I was in San Clemente in California. We took a family trip there also a wonderful space and a big, you know, surfing town and community and it was incredible. So wonderful.

Ressa 8:27
That sounds great. Did your husband go?

Mezzenga 8:30
Yeah, everybody tried surfing and I it was I was the lone ranger. I just like left everybody at the beach and I’m gonna go surf for like three hours. I’ll see you later.

Ressa 8:40
Wow. Unfortunately, not a ton of surfing going on in Minneapolis.

Mezzenga 8:44
No, no, I’m in the wrong. I’m really I’m a California girl at heart I think and so I just have to figure out ways to keep luring everybody I know back there I keep that’s like every vacation pitch that I’ve been giving for 2022 is like, how about California? Tried California? Have you served before? So everybody

Ressa 9:03
over it? Okay, question two. Yes. What is one skill you don’t possess but wish you did?

Mezzenga 9:12
Oh, man, Excel. I wish I was an Excel wizard. I hate Excel with a passion. I think it’s the like creative and me never had to like, go through like super like pivot tables and crazy like Excel wizardry. And every year on the first of the year, I’m like, I’m going to take an Excel like grad class right now and just become a wizard and it never happens. That’s what I’m pressed for. My business partner. He is a wizard. And all of his merchandising years has learned how to do all of those things. So

Ressa 9:43
So did I know he grew up through Target through being a merchant? What What was your roles as you were before that store the future what were you

Mezzenga 9:53
so my background I actually my degrees in broadcast journalism. So I was in news I was a reporter for a short A short stint. And I was like, This is not my jam. I. So I went into advertising and so I kind of came up through Target in their internal creative agency and spent time at some advertising agencies. Before that, so my background is really in like designing and creating the experiences and the strategies around those experiences and then Chris’s perspective and why we kind of were a perfect match for leading that sort of the future project was, you know, he came from the merchandising aspect like mine was how does the store look and feel? And Chris’s background was like, how do we actually make this store profitable and run? And like, what are the operations we need to put in place? What are the things that need to be on the shelves in order to make this like vision come to life?

Ressa 10:45
Sure. Okay, that makes sense. Last question. What is one thing most people agree with, but you do not.

Mezzenga 10:54
Oh, gravy. Can I say gravy?

Ressa 10:57
Gravy? Yes,

Mezzenga 10:59
I love minority. I hate gravy. Like just saying the word makes me gag a little bit. And I would say that the majority of the US population is is pro gravy. And I am. I am not Thanksgiving is my least favorite holiday. So

Ressa 11:15
oh my goodness. I know. So what do you what do you what do you have at Thanksgiving?

Mezzenga 11:20
I don’t I like bring my own food. I think your own food or like I’m I’m a big fan of what we do in our family called gracias giving where we do like tacos and other like Mexican food instead of Turkey. Like I can’t handle it. I know. It’s sacrilege, I understand the severity of what I’m saying. to an audience. No, yes.

Ressa 11:44
No, I grew up Italian. And on some holidays that are not traditional Italian holidays, we still do like a lot of Italian food. So I’ve had Thanksgivings, where instead of Turkey, we had lasagna and, and like sausage and peppers and things like that. But lately, I had this I was on this mission. So I got married in 2015. And before that, it was it was crazy. Because my wife’s also from the New York area. And every holiday was torture, because we’d go from from house to house from family, family everyone wanted and it was like, Oh my goodness. So everyone had their own unique traditions and whatnot. Yeah. And I decided that this is I’m not doing this. And everyone’s like, well, what are you going to do? And so when we got married about a house, wait until we had a child once we did, I said, listen, here’s the deal. You want to see your grandkids? No problem, but you’re coming to me, I’m stealing all the holidays. You have all these traditions of Christmas and like you’ve been doing it for 30 years. It’s really important you sorry, I’m not sorry. You want to have see your grandkids you have to come to me. And so I’ve taken over many of the holidays. I’ve ruined everyone’s else’s traditions made my own but they all come to me now on the holidays, at least the main important ones like Christmas and Thanksgiving, nice. Coup D’Etat of all the holidays.

Mezzenga 13:15
I love it and using the grandchildren as leverage is a brilliant idea. I mean, they’re not going to say no to that. They wouldn’t even sacrifice their 30 year holiday traditions for seeing their grandchildren. I might need to steal that from you. I love that idea.

Ressa 13:30
Yeah, so now I don’t have to leave my house. So it’s great. Okay, gravy. Great. All right. So we have a really what I would consider an interesting topic today. I asked you to think about which is the three things you’re scared to or wrong about in retail. So I’ve got three, you’ve got three. Yeah. Let’s go. Which I like lists. Yeah. Better. I don’t know if there is any order, but let’s pretend there’s an order. What’s the what’s your third? What’s number three? It’s not that the most scary? What’s number three, though? Oh, man.

Mezzenga 14:09
Um, I would say. I don’t know if I can say the third like and final one. I would say that the labor shortage issues are things that I think I particularly underestimated. I think in my head, I was I was saying we look at the retail landscape and just what what we’re hearing a lot of retailers talk about, I think there was this expectation from a lot of us that, you know, come September when, you know, the the assistance was starting to wane that we’d get all these people back into the workforce and that this labor shortage that a lot of people from, you know, grocers to hospitality to restaurant folks are facing would kind of start to start to dissipate and I feel like this has really become now a larger issue for a lot of people. I’m forcing retailers, especially to start looking at, okay, now, where do I need the people at my stores? And where am I going to really have to double down on invest in technology to help, you know, keep my stores running, especially as we’re entering into the holiday season. So that’s one thing where I think labor is just something where no one really prepared for, or was hoping would get better. And I don’t know that it’s going to,

Ressa 15:24
okay, I got it. So you’re, you’re, you’re just scared that it’s not going to get better anytime soon. And you thought it would be getting better by now

Mezzenga 15:34
for sure. I think in my head, I was like, oh, people are just going to take the summer off. And, you know, good for them, they should take the summer off. And now, but when it comes when the kids go back to school this fall, like people are gonna get back in and I’m just hearing from a lot of people that, you know, they people retired and they you know, during COVID Are people have reprioritize, like, How much money do I need to make? Or what do I need to be happy? And it’s like, you thought that you just have this, this rush towards back, you know, getting back into the workforce, and we’re just not seeing it yet. So

Ressa 16:07
I’ll get I love the answer. I’m gonna get mine, which is I’m scared. I’m wrong about retail rents. Okay, so retail properties are pricings really soaring right now, especially for open air properties that we have. And I will tell you in when we’re looking at to buy properties, where underrating deals and, you know, I think in certain instances were aggressive and certain instances were conservative. And, you know, we’ve lost some bids. And clearly, some people think retail rents are going to soar. Okay, they are, then I could clearly pay the price that that people were asking. So if you think about it, you know, there’s there’s an argument to be made, which is, if a lot of properties are going to change, let’s say malls are converted. There’s virtually no new retail construction going on in America, right? There’s no new Walmart or Target Super Centers being shopping centers being built. And retailers continue to open stores that’s shrinking, all those things are shrinking supply, retail sales are going through the roof, when supplies constrained. And there’s demand, you would think rents are going up. But you have all this headline news that would tell you like, How could retail rents go up? I’m a little scared that I’m wrong. And I might be missing a boat and retail rents are about to soar.

Mezzenga 17:30
Wow. Yeah. That’s, I mean, that’s a spectacular thing to think about. Because I agree. I mean, I think that the message you’re hearing from retailers is this expectation, like I should be able to the malls are empty, I should be able to go in and negotiate whatever kind of rents situation I want. And it’s really interesting to hear, especially your perspective being so you know, involved in this in this area of retail and real estate, you know, that that’s actually not the case, that all this leverage that these retailers think that they have is not actually going to be there when all said and done.

Ressa 18:03
Yeah. So I, in the long run, I hope, I hope we do have growth in in rental rates. And I’m scared that, you know, we always thought that they were going to rise, I think the supply and demand. If especially if Like, legitimately we just eliminate supply off the planet by closing malls or demoing walls. Yeah. If you just eliminate supply, it just means that price will rise. So if for those who want to be in certain places, and so I thought it was going to rise, especially with inflation, I thought it was going to rise, but I’m a little concerned that I might have missed the boat, and then it’s actually going to soar and rents are going to skyrocket.

Mezzenga 18:48
Well, Chris, I wonder how Yeah, I wonder how that’s gonna shake shake out too. When you start to think about the changing footprint of some of those retail stores to like, if they move to smaller, what will the demand look like when they want you know, maybe smaller store like Front of House space and they want more industrial, they’re running, you know, they have an industrial warehouse space that they invested in, like, how is that going to impact the market to we will say okay, do you want me to go to my next one, number two for you. Number two, I underestimated the power of instant delivery. And I think that after coming out of this, this last conference we were at last week at a grocery shop. If you haven’t been paying attention to what your strategy is for instant delivery or you know what your stance is going to be, I think that’s something that you absolutely need to be paying attention to. I think that consumers are probably going to demand this in a way that I could not have anticipated.

Ressa 19:52
Got it? Well, the i as it comes to instant delivery. I think one of the things I To me, I think this will come down to a couple of things. Yeah. And this is why I’m a little less scared on this one, which is, eventually, brands and retailers need to be profitable, I think, I think that’ll be a demand from investors. And so at some point, and if they’re going to try and compete with Walmart, Target and Amazon, on on speed, they’re going to lose. And that’s going to be a costly loss. It’s going to take a lot of money to lose. And so I like what like timberland did, which is, to me, they almost said, not doing this race. I’m not going to win this race. And so what a timberland do, they said, actually, if you take longer delivery, will plant a tree in your name. And so they obviously going to their customer who’s like, at, you know, outdoorsy, socially conscious, and saying, like, I’m not going to compete for this next day, same day, right, next hour, same hour, because from a price you get for most retailers, with the exception of like, you know, Amazon, Target, Walmart, Costco, and a few others. It’s this is a landscape, that majority in terms of numbers of retailers, that can’t compete it, and if they try, it’s going to be a costly endeavor.

Mezzenga 21:21
Yeah, no, you’re totally right. And I think you said something on a podcast we were I was listening to her maybe clubhouse discussion with Carly a while back that was fascinating to me, is bringing up you know, as as these these instant delivery providers are starting to move into the suburbs, like what does that look like to because to your point about profitability, I agree with you 100%. Like, there’s no way to do this profitably, right now. It’s, they’re losing money. So it’s figuring out for these retailers. One, how do you expand this beyond urban cores? And then to how do you figure out you know how to make money off of that. Now, one argument might be that they can leverage this growing theme and trend of retail media networks and being able to sell that space in the app at the point of, you know, making a decision, do I want Coke or Pepsi right now in this moment, and really having the successful conversion rates that they’re seeing in these apps to help you know, pay for some of that, that last minute delivery? But yeah, there’s still there’s still quite a bit to work out. I just think that we’re gonna see a lot more action in that space more quickly than I could have imagined.

Ressa 22:30
Understood. Okay, so for me, I’ve been on a on an island, and I’ve been saying,

Mezzenga 22:43
Is it about gravy? I feel your pain.

Ressa 22:47
I like I like, and in my family a lot. A lot of people call like the Italian red sauce, Greek. Yes, yes.

Mezzenga 22:54
I’m talking about the others. I’m quite okay with the Italian gravy being Italian myself. I appreciate that. Yeah.

Ressa 23:03
No, so I’ve been on an island, I have been saying that. We don’t have too many physical stores. We have way too many digital stores. Okay. And that’s my position. And I don’t hear anyone talking about that. And I’ve been like, on an island about that. And I’m sticking to it. But there’s a little part of me that’s like, I’m the only person really saying this. I’m scared I might be wrong. But I it’s a little bit of fear. Most of it. I’m pretty convicted that we’re not even close to too many physical stores, we have way too many digital stores. And I’ll give you a little context around that. Take the number whatever it is, let’s say 80% of retail sales go to stores today. And 20% is online. Well, pre pandemic, we had like approximately 1.8 million digital stores way more than us way more than physical stores. They were taking, you know, less than 20% of the sales and the majority 80% of retail sales were going to a much lesser store count. And to me that math will play out especially on the store side physical store, most of them are profitable. And on the digital side, most of them are not right. And if you take the total retail sales in America, and I don’t have the numbers in front of me, but I’ve looked at this, the total retail sales in America in physical stores. And you divide that by the total retail GLA in America. It’s it’s an astounding dollars per square foot in the store. So what does that really tell you? It should mean that every store works. It doesn’t. It’s because that’s an average. And so some stores are really good and some stores are really bad. We might have too many just not good stores and some retailers that aren’t good, but that doesn’t mean that you retails broken. And you know, there’s this push to go. Okay, the way to make it is to open up online stores. And I think we have way too many digital stores and I am scared a little bit that I’m wrong about that.

Mezzenga 25:13
Oh, I think I think you’re bringing up a good point, though, Chris. I mean, the issue here, too, is that a lot of these like bricks and mortar retailers, they haven’t evolved at all, they haven’t done anything differently. And so I think that, you know, it’s gonna come from both sides like the the the concept of the retail store as we know it right now. We it’s gone through an evolution over the course of the last couple of years with the pandemic, it’s accelerated. But I think that there’s still so much work that retailers are going to have to do to determine, what does my store footprint need to be? I mean, it’s this, this seismic shift that we’ve seen from pre purchase, which used to be I need to go in and I need to walk the store, and I need to try things on to post purchase now, where the real value of the store is, how can I do returns quickly there? How can I exchange something quickly? What am I going, you know, is it tailoring that I’m going to the store to get and you don’t need the square footage that you needed before? And what does that look like? Again, you know, to our earlier conversation of like, how much of the store’s Front of House versus back of house how much of the store that footprint is experience versus product. So it’s like there’s so much of that, that I think we we just we can’t sit on the stores as they used to sit in the malls and in the strip centers, it’s going to be this evolution of how are you bringing these this omni channel experience to your customer? And I think a lot of that will result in a changing footprint of of the stores.

Ressa 26:41
Totally makes a lot of sense. Okay. Last one, what is your the number one thing you’re scared you might be wrong about or we the industry might be wrong about?

Mezzenga 26:52
Okay, I thought another thing that I there was some IRI data that I just read last week that said that, according to their research, Gen Z will choose values over price when making their decision. Which I mean, one, I don’t know where Gen Z is getting all this money. Because when I was that age, I was like, I mean, yeah, you gotta get the like, target t shirt, you can’t go to, you know, I can’t be going to Barney’s and getting your T shirts like this is not going to work if you’re 17. But somehow they’re making this happen. I would I would question you know, these some of the Buy Now pay later programs and things that are facilitating these installment financing payments, and perhaps they’re able to make things like that work and make these decisions of, you know, values or quality over price. But according to this Ira data last week, they said that the Gen Z will actually choose price, or sorry, values over price, they will invest more money if it came from somewhere workplace that was, you know, where it was made sustainably, or a company that has better values than, you know, an h&m or somebody that’s just putting out fast fashion quickly. And that shocked me. So I still don’t know what to do with that, Chris?

Ressa 28:09
Yeah, I think well, one. I have no data behind what I’m about to say this is just what I’m about to say. Which is I don’t know how much money of that is. There’s Sure. Right? If you’re 17, and you’re buying, and you’re buying a Chanel bag. That’s not your money, I think, right? That’s mom and dad’s money. And so I would argue that we should be counting that as mom and dad’s money and not Gen Z money. You know, now, if you spent if you started working at 14, and you worked at Panera, and you saved all your money and Chanel bag went on sale, and you spent it all on that. Okay, I would count that. Right. But I just it doesn’t feel like what’s happening. Number one.

Mezzenga 29:00
No. I would agree. Yeah. So mystery.

Ressa 29:04
And that’s, that’s number one. Number two is it’s astounding to me that we don’t talk about price enough. I say this all the time. Looking for the next one. But like in like 2017 or 2018 CareerBuilder did a survey that said let’s 78% of Americans live paycheck to paycheck.

So retailers can’t deliver goods and make money unless they charge shipping. And 78% of consumers can’t spend another dollar on shipping. So how does this work? Right? Right. How does this work? If that’s the case, if that many people can’t afford a $500 car, you know, emergency, they can’t pay an extra $20 a week on shipping or you know, if they Buying from multiple retailers, you know, $20 from every retailer and the retailers can’t afford to ship it for free. Right. So to me, we don’t talk about price enough. And I am I’m scared. I’m wrong, too. But I’m with you, at some point, price has to matter for this generation.

Mezzenga 30:17
Right? Exactly, exactly. No, I think we’ll, we will see that I think you know, the Buy Now pay later stuff is interesting, too, when you bring up the point that you just did, where it is enabling some families to kind of stretch those payments out, you know, now that Amazon is doing vinyl pay later, and Apple and Walmart and Target and these major retailers are implementing these programs that does allow a family to say, Okay, I’m gonna get my groceries, but I don’t have to pay for them all, you know, wait for that paycheck to cash and then spread it out. But I think that we are also looking at this next generation who’s coming up, you know, getting comfortable with these platforms. And you know, will they will that work? It could work? Or will it end up in a situation where they potentially have, you know, are getting into credit card debt, but not via credit cards? It’s via something else? Yeah.

Ressa 31:07
The argument that they’re making, because I’ve done a lot of homework on this, the companies are making around that is, okay, well, it’s less interest. It’s more flexible payments, there’s no late fees. Right. You’re better off getting into consumer debt with me than with the credit card.

Mezzenga 31:23
Right. Yeah. Which is true. If that’s how it sounds. Yeah.

Ressa 31:28
I think the Buy Now pay later to me, is here to stay. Because if you have I just when you have companies like Goldman Sachs and Pay Pal spending billions of dollars, and you know, all the square paid 29 billion, yeah, for which one was an affirm, I think, a fraud afterpay Yeah, yeah, this is these guys are not this is not, you know, this is not nickel and dime, egg and cheese kind of stuff. This is real big boy dollars,

Mezzenga 32:05
right? No, increases. I mean, it for every for like the the intent to buy now pay later is a great idea. I mean, it’s increasing purchases on especially online purchases, it’s, you know, getting people into a product that maybe, you know, they couldn’t afford all up front right away, but in installments, they can get into better, better products. And so I think that as a concept, you’re right, it’s, it’s here to stay for sure. I think it’s just, you know, how does this continue to evolve? And, you know, how does how does Gen Z support their, their sustainable and value driven purchases? With, you know, where are they going to get the money to pay for all these things? And how does that affect our economy as the next you know, largest spending group?

Ressa 32:53
Totally. Okay, that’s so your third one was that you were wrong. Price mattered. And people Gen Z is only buying on values.

Mezzenga 33:05
Yes. Right. Major, major faults there. What about you, Chris?

Ressa 33:10
I, I this false This is a little real estate, he but falls into retail, which is I’m scared I’m wrong about the construction costs and materials pricing. I thought we’d be seeing costs dip. By now, you heard all these things, especially as borders open up and whatnot. And you know, there’s a part of me that’s wondering if we had like a resetting of pricing. And it’s inflated and this matters to everybody, right? Because if you’re a retailer, you have capex plans. If your landlord you’re building things, and it’s a concern, and it doesn’t the, I need to some one of my, the, our General Counsel and an executive management. He said this yesterday, yesterday, which is me to accelerate the horizon. This is one of the areas I need to accelerate the horizon. See, because it doesn’t feel like we’re accelerating the horizon at all here. It feels like it’s just continuing to be pushed out. And so I thought, you know, late this year, early 22, you might have a resetting of prices, and we’d be back to normal construction costs. And I am concerned, I am wrong about that, which affects a lot of industries, not just real estate, and retail affects a lot of industries. So we’ll see what the impacts are on that.

Mezzenga 34:34
Yeah, I think that’s a great point, too, that, you know, the delays in in building the retail locations, and then the delays and supply chain that we’re seeing to getting getting products to shops like this could be this could have a bigger impact than we realize. I think that’s a great one, Chris.

Ressa 34:51
All right. Well, and these were great. So to recap yours were Are you scared, but you’re scared? You’re wrong about the labor shortage? Yes, you are. Scared you were wrong. What was number two?

Mezzenga 35:08
Number two is speed of delivery. Yeah. Yes and scared.

Ressa 35:13
You’re wrong about price matter.

Mezzenga 35:17
Minor DC.

Ressa 35:19
For me, it was scared about retail rents, and they’re actually going to soar. Number two that skip the island I’m sitting on which I’m saying there’s too many digital stores and skaters run about construction costs. brings us to the last part of the show. And yeah, three fun questions for you. Are you ready? Okay,

Mezzenga 35:37
I’m ready. All right.

Ressa 35:39
Question one. What extinct retailer Do you wish would come back from the dead?

Mezzenga 35:44
I going to say this with a caveat but Toys R Us, but well done. For me, there is no reason that Toys R Us cannot be like an incredible experience. The toy store is still a very experiential thing. You know, the most important things about a physical retail experience, you know, creating memories. And this the pure delight and enjoyment of being in a physical space like those two things are at their core should be towards Eros. And I think that you know, we’ve seen multiple attempts to do this, but it’s it’s really not been done well yet. In my opinion.

Ressa 36:20
Maybe me and you should Oh preparatory store and Okay,

Mezzenga 36:23
um, let’s let’s go. I’ve got nothing going on here, Chris. So I think that we should just pack it all up and we’ll open the toy store somewhere.

Ressa 36:34
Okay, question two. Yes. What is the last item over $20 You bought in a store?

Mezzenga 36:41
A pair of boots. I’m in Minneapolis Chris and you know, it’s basically winter already here. So you have to be prepared for winter and and I just bought a new pair of boots for the winter

Ressa 36:52
kind of boots.

Mezzenga 36:54
They are Sorel boots. Oh, yeah. They’re good. You know, yeah, we had to get it’s it’s we’re about to enter the the terror stage of Minneapolis. So we just got to have everything ready and didn’t want to have supply chain issues with boots which are very necessary item here.

Ressa 37:12
And what what’s what’s temperature like now?

Mezzenga 37:15
Now it’s beautiful right now it’s like supposed to be at today and sunny and beautiful fall crisp weather. But, you know, that could change tomorrow. I would not be surprised if they’re like we have a we have a front coming in tomorrow. And there’s going to be 12 inches of snow on the ground. So anything can happen.

Ressa 37:32
Yes. Okay. Question three? Yes. And if you and I were shopping at Target, which you might be the first one and ask this question to who was in charge of designing Target and Target store. But if you and I were shopping at Target and I lost you what aisle would I find you in?

Mezzenga 37:57
Well, lately I would say I probably am outside at curbside pickup waiting for my order. But if I was in a store, you probably find me in the who what where clearance section, which is one of my favorite brands like I would if I was back at Target I would like be rallying for who what where? Like store just a whole store just taking that and running with it. I love that brand. So much. Interesting. Do you know who aware Chris? Or do I break it down?

Ressa 38:27
Break it down? For me I am familiar but break it down for the audience.

Mezzenga 38:31
It’s who what where is the one of the lines that target started in partnership with two designers several years ago now. But it’s like everything that they make is I feel like the really well done really great design. It’s women’s apparel, mostly like work, I would say women’s work apparel, but with a really fun like design twist. I think it’s like, for me, I believe it’s like the highest level of design that that target puts into an apparel line that they come out with seasonally, so, yes.

Ressa 39:02
And so you believe this could be standalone stores?

Mezzenga 39:05
I do like I think it could be I mean, it’s i For me, it’s like Zara, it’s like it could be it could be you know, to go toe to toe with a Zara. I love it so much. So that’s probably where you’d find me is like going through the clearance racks trying to trying to pick up some pieces for myself that I don’t need. So

Ressa 39:24
Excellent. Well, and this is incredible. One of my favorite interviews. I really appreciate you coming on. Thank you so much.

Mezzenga 39:33
Yeah, of course. Thanks for having me. It’s been a blast.

Ressa 39:37
Thank you for listening to retail retold. You want to share a story about a retail real estate deal that you were a part of on our show. Please reach out to us at retail revolt at DLC mgmt.com. This show highlights the stories behind the deals, all perspectives. So it doesn’t matter if you are a retailer, broker entrepreneur architects or an attorney Also don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode

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