retail real estate

FMs quarterback retail transformation

Highlights from PRSM's 2017 Trends Report
Thursday, October 27, 2016

Facilities managers in today’s retail sector have moved away from a traditional focus on operations and maintenance of physical space toward an expanded menu of strategic services for the shopping environment. The newly released 2017 Trends Report from the Professional Retail Store Maintenance Association (PRSM) highlights the roles retail facilities managers increasingly play in human resources, marketing, technological integration, regulatory compliance and strategic business planning.

“The retail industry has been and continues to experience rapid evolutionary changes,” observes Leigh Pearson, Director of Facility, Environmental & Procurement Services with Staples Canada and Chair of the PRSM Board of Directors. “These changes provide a great platform for today’s facilities management professionals to help move retail towards an even brighter, more exciting future.”

The report identifies five critical skills:

  • Financial literacy to inform capital spending decisions;
  • Employment of technology to drive efficiencies;
  • Energy management knowledge:
  • Communications skills to engage everyone from the frontline to the C-suite
  • Long-range vision to see beyond current problems to tomorrow’s solutions.

Once primarily tactical, demanding supervision of skilled trades, facilities managers have taken on more strategic functions which may entail working with data and financial analysts, design, construction and leasing teams, IT and cybersecurity experts. This also calls for coordination with Human Resources to hire, train and retain necessary expertise.

With big data replacing spreadsheets, the growing take-up of energy management, building management and maintenance management systems and arrival of the Internet of Things (IoT), the report portends: “FMs of the future will not need to know how the technology works. However, they will have to understand how technology can be integrated and used to create the most efficient, safe retail operation possible.”

The rise of smaller urban spaces, pop-up kiosks and store-within-a-store formats in place of formerly prevalent cookie-cutter designs brings the challenge of managing and procuring for a diversity of uses. “FMs are also being called upon to manage space that has been leased inside their stores, often to complementary retailers, but sometimes to non-retail companies for office space. This type of arrangement transforms the retail FM into a landlord with a new set of responsibilities, risks and legal requirements,” the Trends Report states.

Suppliers will likewise need to understand the changing needs of their retail clients. While cost and service are always important, retail facilities managers expect expertise and an understanding of their market demands. The Trends Report commends suppliers with the following qualities:

  • Business Acumen to demonstrate value to the retail FM and offer customized proposals, tailored to fit the retailer’s financial objectives;
  • Technological Acumen including an understanding of computerized maintenance management systems (CMMS), energy management systems (EMS) and building management systems (BMS) and, more importantly, an understanding of how technology can help customers;
  • Co-opetition or the willingness to provide advice on products and services they don’t sell, knowing it will build trust, enhance relationships and pay off in the long run;
  • Swipe & Deploy Skills to identify new practices in other areas of retail, or even other industries, that might have potential in retail FM – understanding that innovation prevents extinction.

Consumer and political activism can drive new regulatory requirements as governments introduce new rules and/or update existing ones, and retailers can be pressed to stay ahead of the compliance curve. Given the current trend toward more regulations and stiffer fines, they are advised to consider the broader reputational and brand risks at play.

The Trends Report points to four particular concerns in the retail environment: health and sanitation; risks related to construction projects; elevator/escalator risks; and fire and life safety. Facilities managers must also ensure that contractors and suppliers comply. Plans and documentation are central to due diligence.

All these pressures are unfolding within a business environment that challenges retailers to stay competitive and is driving some of them to reinvent themselves. The Trends Report recounts facilities managers’ struggles and creative adaptation in an era of rising mall vacancies and emerging digital competition for market share.

A dramatic change in tenancy such as conversions to office space will bring new kinds of operational demands, while the arrival of tenants accustomed to their own stand-alone premises could inspire some culture clashes. However, change can be highly lucrative.

“Redeveloping anchor space comes at a cost to landlords, but holds the promise of hefty returns as department stores paying as little as $2 a square foot in rent are replaced by new anchors paying $15 to $20 a square foot,” the Trends Report states. “If the space is carved into smaller parcels for specialty retailers, rent can approach $100 a square foot.”

The complete text of the 2017 Trends Report can be found on Professional Retail Store Maintenance Association website.

Leave a Reply

Your email address will not be published. Required fields are marked *