Because buying power has increased for Asian, Hispanic, and other ethnic shoppers, developers are making changes to the retail market. To target a greater number of ethnic shoppers, mixed-use construction is on the rise. In response, retailers from around the country are eager to join local mom and pop type stores that cater to this group of consumers.
For a long time, merchandise mix and marketing strategies have been tailored by retailers in targeting various groups of shoppers. Historically, demographics have consisted primarily of gender and age but now, other factors like ethnicity are playing a key role. With the number of ethnic shoppers growing, retailers recognize the need to make changes for attracting loyal customers.
According to the United States Census Bureau, fewer than 50 percent of Americans will be classified as “non-white” Hispanics by 2060. Therefore, this is among the main factors driving this trend. However, other factors like demographics to include the aging population, new shopping preferences, and others, are giving developers opportunities never seen before.
Successful Shopping Malls and Centers
In Los Angeles, both Legaspi & Co and Primestor Development, Inc. are taking full advantage of the growing opportunities by developing or redeveloping highly successful shopping centers that specifically target the Hispanic group of shoppers from all over the country.
Although Hispanic shoppers are traditionally targeted in Texas, Southern California, and Arizona, other cities throughout the US are starting to emerge to include Oklahoma City, Atlanta, Las Vegas, and Charlotte, among others.
According to Arturo Sneider, CEO and founder of Primestore, both properties and communities have changed so much that a traditional developer is not even aware of what they have and those who do are trying to make transformations. He explains that during the transitional phase, a property could easily lose viability.
He predicts that a greater number of retailers around the country will get involved with ethnic space and ultimately do well. He added that currently, his company works primarily with national brand tenants. As explained, credit worthiness of the tenants and sales per square footage is followed by capital. For that reason, institutional capital is just as interested in his product type as any other.
Changes in how retail shops are targeting ethnic groups are also discussed by Reza Etedall, CEO and founder of Reza Investment Group. This company represents large developers along with institutional investors who sell large assets. A prime example of how things are changing is seen with Reza’s Crenshaw Mall. Opened in 2004 in an area with a lot of Hispanic and African American shoppers, people scoffed saying putting capital into more ethnically focused areas was a mistake.
However, when the mall was sold for a second time in 2007, the level of institutional interest in the property was incredible. Ultimately, the Crenshaw Mall was sold for $137 million. Now, the company is marketing a property in Huntington Park California called Plaza De La Fiesta. In that area, there are one million people who reside within a five-mile radius, making the location perfect for foot traffic.
Merchandising efforts are also changing. A large number of communities, mainly those with run down shopping center and malls, recognize the importance of responding to changing demographics. They also understand the value of distinguishing those centers and malls from others in the market. One of the most effective ways to accomplish this is by changing the tenant mix so retailers cater to a very specific group or community.
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