How Remote Work has Changed Shopping Habits and Expectations of Local Retail with Adam Ifshin

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like The Product Boss. Today, we'll be breaking down how remote work has changed shopping habits and expectations of local retail. To drop these value bombs, I have brought Adam Ifshin into EO Fire Studios. Adam is the founder and CEO of DLC, one of the nation's premier owners and operators of retail real estate. Known as a thought leader in the industry, Adam Mentors emerging entrepreneurs through a business plan program at Williams College.

0:42And today, Fire Nation, we'll talk about that transformation of neighborhood shopping. We'll talk about remote work and the impact this has had. We'll talk about open air retail and so much more. And a big thank you for sponsoring today's episode goes to Adam and our sponsors. Online Marketing Made Easy podcast, hosted by Amy Porterfield, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals with a focus on online business, including digital courses, list building content, and more. Online Marketing Made Easy breaks down big ideas and strategies into actionable step-by-step processes.

1:16A recent episode that will help you get more results with a whole lot less stress is on four ways to avoid burnout. Listen to Online Marketing Made Easy wherever you get your podcasts. Ever thought about giving a TEDx talk? It's one of the most powerful ways to share your message with the world. And four-time TEDx speaker Taylor Conroy from Thought Leader can help you get there. Visit thought-leader.com slash fire to join Taylor's free training, where he teaches you how to land a TEDx talk and spread your message to millions. Adam, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.

1:55First of all, I'm thrilled to be JLD with all of your listeners. It's a real honor. And I've been an entrepreneur for a long time, but it's nice to get an opportunity to chat about sort of how I view the entrepreneurial world and how it impacts not only our business, but other people's businesses. I would say the one thing that I've been talking about ever since I started as an entrepreneur now over 35 years ago, that a lot of people I think overlook is all of the things that people tell you all the time about what makes successful entrepreneurs, grit, work ethics, smarts, everything. All of those things are setting you up to get lucky.

2:41You put yourself in a position for luck to come to you. I tell all my people when they're talking to entrepreneurs about doing business with us, I said, if someone tells you that their entrepreneurial business works exactly the way they drew it up in their business plan, say it was a pleasure to meet you and run the other way like you or Usain Bolt. Luck is important, very important in success, in part because if you can't recognize that luck plays a role in entrepreneurial success, you cannot have the humility required to be a great leader. Fire Nation, we are starting off with a bang because you can tell that Adam can talk the talk.

3:27And we're also going to be showing how he can walk the walk because we are talking today about how remote work has changed shopping habits and expectations of local retail. And Adam, I wanted to start off with the basics because I like everybody to be 100 % on the same page. What exactly is retail real estate? For most people, they have a pretty good sense of what it means to them. But classically defined, retail real estate is any place where a retailer in a physical presence location seeks to and makes sales with their customers. So that could be that flagship new store that Tiffany just remodeled at 57th and 5th Avenue.

4:13It can be that classic department store in the mall of your choice in the town that you grew up in or the town that you live in now. It can be that open-air shopping center where you go because you can get the basics you need for your family to thrive at the most reasonable price. It can be any of those. It can be the standalone drive-through that you pick up your Starbucks in. It can be the Walgreens or CVS on the corner where you go to get your prescription filled. It can take a lot of different forms, a lot of different forms, and it's a huge, broad space. In the United States alone, close to 10 % of the population goes to work every single day in a piece of retail real estate.

5:06Wow. 9.8 % of Americans go to work when they go to work in a piece of retail real estate. And close to 30 % of the GDP of America gets done through those stores, those locations. Fire Nation, we talked about luck in your entrepreneurial journey. Now I want to talk about what we can learn from the obstacles and challenges of others. Because you, Adam, you faced a couple obstacles. You faced a couple challenges. You overcame these while building DLC. So tell us that founding story. I always knew I wanted to be an entrepreneur. I started my first business in my college dorm room when I was 19 years old as a contractor.

5:54Was successful right away. Decided I didn't want to be a contractor. As I was getting ready to graduate from college, I sold that business. Went to work briefly for my dad and his three partners in the residential development business. Didn't like it. Thought the risk didn't match up with the reward. And then out of the ashes of that business failing, I started DLC because I wanted to build my own business and I wanted to build a business around creating durable cash flows and unlocking value in real estate. I did not know when I started DLC that it would be focused exclusively on retail real estate.

6:41That's something that happened along the way in my journey because I started the business in the depths of the savings and loan crisis of 1991. And at the time, I had no money, no assets, and no employees. and as I set out to try and figure out how to make a living to support my then fiance who was about to become my wife and ultimately our young family, I knew that I needed to find a type of real estate that was likely to be financeable when there was very little financing available. And at the time, open air retail real estate was probably that place and it took a long time. A lot of hard work, a little bit of that luck I talked about, and ultimately I was able to raise capital to go out and start buying distressed shopping centers largely from lenders who had foreclosed on them here in the Northeast.

7:40And that's where I started. Fire Nation, we all have these founder stories of some sort, but it's like, what are you going to be able to tell other individuals when you get to tell that story to others? Are you going to be talking about the obstacles and the challenges and how you overcome them or how they overcame you? And one thing that I think is really interesting, specific on this topic, is the transformation, Adam, of neighborhood shopping. It's kind of been like this metamorphosis of sorts because this transformation of neighborhood shopping from what maybe I knew growing up in the 80s and the 90s to what's kids growing up now, it's different.

8:23It's changed. It's not necessarily better or worse. It's just different. So talk about this metamorphosis. So I'm a huge believer. I was a classically trained economist and economic demographer, wrote a thesis in economic demography. And I'm a big believer in a post-war economist by the name of Joseph Schumpeter's view that in capitalism, there is what he termed creative destruction, which is that there is a life cycle and that no business is forever. Markets change. They are disruptive by their nature. There are cyclical disruptions. There are structural disruptions. There are systemic disruptions.

9:04And as a result of that, I think the classic example is when I started my business in 1991, the best credit rating of any retailer in America was the Sears Roebuck company, which is now gone. It was just at the real emergence of Walmart. Kmart was a bigger retailer when I started my business than Walmart was. Think about that. And we have seen obviously tremendous change over time. But my belief, I think this applies to any entrepreneurial business. And I think it's really important that your listeners catch this, is that the reality is that there's going to be creative destruction in every industry.

9:57Every industry faces its Amazon or Walmart moment. And great entrepreneurs are resilient and nimble and agile through those. Hopefully they see those things coming and they can play offense, but really, really good, durable, long-time entrepreneurs understand that sometimes they're not going to see all of that. And they have to be good enough to play defense just as much as they have to be great at playing offense. Fire Nation, I love this concept because the reality is change is coming from every direction. And it always has and it always will. As people who are able to keep their finger on the pulse, who are able to understand that change is going to occur, you're not trying to stay stuck in what maybe worked last month or even last year, but what's working right now, what's looking like it's going to work in the future.

10:54And you, again, are able to adjust, to pivot, to be agile, to make things happen on the pace that things are changing in this world, which it's not always going to be 100 % win rate. I mean, you're going to make mistakes when you make those changes. Learn from them, adjust, pivot, and then keep moving forward. Keep taking that action. And we have a lot to talk about around this topic when we get back from thanking our sponsors. If you're a sales leader, then you know that expectations are at an all-time high these days. You've got cold calls to make, relationships to maintain, and deals to close.

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14:39And this has changed the shopping habits of consumers and also the expectations of local retail. I mean, I can talk about a personal story. My wife used to talk about how during her lunch break working in downtown San Diego at a bank, she would always go shopping. She was not that happy in her job. She kind of considered it retail therapy. She'd walk out the bank. She'd go and she would buy stuff right there at the local stores that she loved shopping at. And there's the Kate Erickson of 2023 that works for the bank, but is not having to work at the bank downtown. They're working remotely from maybe some small town somewhere totally else.

15:16So talk about this change and the impact it's having overall. First of all, this change is real. And like any highly disruptive, unexpected change, it is creating unlikely winners and losers. And it is having a massive effect in the shift in how people, particularly retailers, interact and interface with their consumers, their customers. so your wife's example is is is an exceptional one and we see it everywhere um the story the way i'll explain it to you is um about 10 15 years ago um i used to go i snowshoe at elevation for working out because i don't ski and my family likes to ski so i was climbing up a mountain in snowshoes with a friend of mine who happens to be a legendary legendary real estate investor and ceo household name.

16:16And he turns to me halfway up the hill as we're huffing and puffing. He goes, you ought to sell all of that suburban real estate you have. It's not going anywhere. It's going to be worth less. And you should buy some urban real estate. That's where the growth is going to be. And for the decade after he said it to me, he was a hundred percent right. And in the last four years, he's 100 % wrong. It's extraordinary. COVID exposed two things that have led to remote work that have nothing to do with COVID. Right? There are two soul-crushing things about going to an office every day. One is commuting.

17:01And the other is how much harder it is to be a parent with a long commute. and in a world where we have 2 % and 3 % unemployment, labor is in charge, and we have remote work. So what has that done to consumer habits? There's no more retail therapy during the day in the city, or at least there's 30 % or 40 % of what there used to be, because those are kind of the numbers of how many people are going to an office every day, maybe 50 % in a market that's heavily back. But in San Francisco, your cell phone usage in downtown is 29 % of what it was pre-COVID. So we assume that 29 % of the people who used to go to work there every day are going to work there every day.

17:45That's not good for retail in San Francisco. But it's really good for retail in all the surrounding communities where those same people are now saying, hey, I cannot be locked in front of my computer in my apartment or home 12 hours a day. I got to get some fresh air. I want to go meet someone for a coffee. I need to go shop for a few things. I'm going to squeeze in here picking up a child or dropping off a child. And at the same time, I want to be able to, you know, I got to run a few errands. Maybe that's Target. Maybe that's something fancier like a Nordstrom. But increasingly, right, people want to do those things close to home because they're close to home more.

18:26And that's really driven by people not wanting to commute and people wanting to figure out a better way to be a parent. Fire Nation, I love this topic because it's so important to recognize the trends that are happening in this world. And I don't remember the exact stat, and maybe, Adam, you know it a little bit better than me, but it was something along the lines of every five minutes over a 20-minute commute exponentially decreases your overall happiness score. The score that you would give yourself is super impacted when your commute gets significantly over 20 minutes. And each portion of that you add on, it just continues to drag that down.

19:05And you talked about the unlikely winners and the unlikely losers. I think that's a really interesting topic. I want to focus on an unlikely winner, and that's open air retail. Right now, you consider it one of the hottest investments in commercial real estates. Talk to us about open air retail. Open air retail is really thriving. And it's thriving because of the fact that people are obviously more likely to live and work near it than they were pre-COVID for sure. I mean, for example, we've got close to 85 assets and our traffic is materially up at 80, like 97 % of them over 2019. Like meaning materially up means more than 10 or 12 % up.

19:51And it's fairly self-explanatory, but what exactly is open air retail? Open-air retail is that classic – it could be a large shopping center with people like Walmart or Target, Home Depot, Lowe's, Costco, all of the big category killers like TJ Maxx and HomeGoods and Ross Dress for Less and Burlington. Or it can be a smaller, more convenience-oriented trip that, say, is your local favorite grocer. It could be your Sprouts, your Whole Foods, your Stop and Shop, your HEB if you're in Texas, and some other local and national tenants. And it can be even as simple as a small five - or ten-store strip that may have your Chipotle in at one end, your Starbucks, perhaps your Great Clips to get your hair cut.

20:42But it's a pretty wide definition, but what we're talking about is we're not talking about an outlet center. We're not talking about a regional mall. We're not talking about a big lifestyle center. These are places largely where people go to get those things that are the backbone consumables of their household. These are the places where you're going to go buy your kids' clothing, the food you put on the table, the cleaning supplies you use to clean your home or your apartment. This is where America comes to shop to live the basics of their life. And what I like to call it and what I've sort of credited for calling it is the retail stores in these locations, these stores, have become the Swiss army knife of retailing.

21:33And what do I mean by that? What I mean by that is they are incredibly versatile for the retailer. They are the lowest and most efficient way for them to acquire customers. So customer acquisition costs of having a physical retail store are a fraction of, say, trying to acquire a customer online. They also play a huge role now in omni-channel e-commerce as the tip of the spear for last mile distribution. The most successful brands in omni-channel retailing fulfill out of their stores. Target, Home Depot, Walmart. They are all increasingly fulfilling out of their stores. So the store serves this multifaceted role for these retailers.

22:23And why do they do that? Why Why does it work? Because it provides convenience and speed to the consumer. Who doesn't want convenience and speed, Fire Nation? Because when it comes down to it, what is your most valuable asset? It's your time. It's being able to spend your time how you want to, not how you have to. Now, of course, as a podcast host, Adam and I don't really mind super long commutes when you're using them to listen to our podcasts. But we do understand why you would want to minimize yours for sure. And Adam, I want to take a step back and have you give us the one key takeaway from our entire conversation that you really want to make sure Fire Nation gets from our conversation today.

23:09I think the thing that I think is super important for your entrepreneurial driven focused audience is that we talked about the real estate. We talked about why it's so successful. We have a whole piece on this online, which I'll talk about. I'll give you the info about before we're done. But the most important thing I would hope that your listening audience takes away is even though I'm a real estate guy, right, that my success in real estate has very little to do with the assets. It has everything to do with people. I am a people first entrepreneur and that's why I've been successful. And to all of those entrepreneurs who are out there who are struggling to go from one person on their team to two people on their team to four people on their team, I would encourage them to spend as much time as they can, no matter what their industry is, no matter what their business is, no matter what their vision is in building that team and being close and communicative with their people.

24:15Because that's the best way they can create the highest probability of success. Fire Nation, so much value has been dropped today on this topic. And you know this, you're the average of the five people you spend the most time with. And hello, you've been hanging out with AI and JLD today. So keep up that heat. And for links to everything that we've talked about here today, go to eofire.com. Just type Adam in the search bar. The show notes page will pop right up. And Adam, I want to thank you, brother, for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you and we'll catch you on the flip side.

24:54Thanks so much for having me, J.L. Day. It's been a pleasure. Hey, Fire Nation, a huge thank you to our sponsors and Adam for sponsoring today's episode. And Fire Nation, successful entrepreneurs are great at three things, productivity, discipline, focus. That is why I created the Mastery Journal so that you can master productivity, discipline, and focus in 100 days. And we're talking step by step. Visit themasteryjournal.com. And I'll catch you there or on the flip side. Online Marketing Made Easy podcast hosted by Amy Porterfield is brought to you by the HubSpot Podcast Network, the audio destination for business professionals with a focus on online business, including digital courses, list building content, and more.

25:34Online Marketing Made Easy breaks down big ideas and strategies into actionable step-by-step processes. A recent episode that will help you get more results with a whole lot less stress is on four ways to avoid burnouts. Listen to Online Marketing Made Easy wherever you get your podcasts. Ever thought about giving a TEDx talk? It's one of the most powerful ways to share your message with the world. And four-time TEDx speaker Taylor Conroy from Thought Leader can help you get there. Visit thought-leader.com slash fire to join Taylor's free trading, where he teaches you how to land a TEDx talk and spread your message to millions.