Illustrator Dennis Balogh

Daniel Hurwitz

How has the recent downturn changed retailing?

As an owner and manager of 640 shopping centers in North and South America and the Caribbean, Developers Diversified Realty Corp. (DDR) watches consumer sentiment walk through its shopping centers every day. The past two years have been an eye-opener for consumers and retailers, says Daniel B. Hurwitz, president and CEO. “We have seen the consumer make a significant — and we believe permanent — shift from aspirational shopping and spending to more rational buying,” he says. “The consumer continues to seek value and convenience with a heightened awareness of price.”

Developers Diversified research suggests the new focus on practicality is consistent across generations. “Baby boomers, who lost a significant portion of their net worth over the past two years, and Generations X and Y, who are now entering their most productive earning years, indicated their shift to value is permanent,” says Hurwitz, 46.

The trend bodes well for Developers Diversified, says the CEO, who points to the company’s tenant mix of popular-priced retailers, including Wal-Mart Stores Inc. (WMT), Kohl’s Corp. (KSS) and The TJX Companies Inc. (TJX). “This recession has reminded us that best-in-class portfolios will be rewarded, so over the past year we increased our focus on our prime assets and took deliberate actions to divest lower-quality properties,” Hurwitz says.

As consumer preferences evolve, retailers are building their online presence to attract and retain customers. “Consumers are using the Internet to research products and offers to make their shopping trips more productive,” Hurwitz observes. But, he says, the primary growth engine for retailers remains traditional brick-and-mortar stores. “Retailers that master a cohesive online and in-store experience will emerge as winners.” — Sharon Kahn