How Retail Aims to Survive the Recession: Q&A With Faith Hope Consolo

For more than 20 years, Faith Hope Consolo has been on the front lines of retail in Manhattan. As chair of the retail leasing and sales division at Prudential Douglas Elliman in New York, she specializes in finding spaces for luxury tenants and has worked with such names as Armani, Cartier and Versace.

These days, of course, luxury-retail sales have taken a huge hit in the recession, and many of those high-profile tenants are now vacating space along the wealthy corridors of New York and other cities across the country. Consolo recently spoke with me about how the market has changed and where it is headed.

BNET: How can luxury retail rebound?
Faith Hope Consolo: The way they're going to do this is that the real luxe groups, your Gucci, your Richemont, your LVMH, now all have less-than-luxe lines. Yves Saint Laurent is doing a "diffusion" line. That's the European word for lower priced. They're doing a temporary store down in SoHo to test it this spring that will be for men's and women's apparel. You still have the chic of the Yves Saint Laurent name but at an affordable price. That's going to be the way luxury lures the consumer back into the store, initially trading down to trade back up. You bring them back into your net, and then you trade them up. They become your customer again, and when things get better, you have them. That's the flytrap. They are not the only one doing that.

The other part of this is the offering of very promotional deals. Bergdorf, Barneys, Saks, for every dollar you shop, you get a dollar in points back. You're going to get things on sale. Executives at major chains have said to me, "Faith, we're going to promote the hell out of spring just to move this merchandise." That's what luxury is doing.

BNET: Do you see any concepts that can fill the void where other chains are closing?
FHC: Nine West has a new concept, a multi-brand shoe store that spans from affordable to designer, called Shooz. Another void-filler are the lesser-known cosmetic brands that are venturing out with their own stores. All of those big beauty stores, like Parfumerie, Douglas and Sephora, have stopped expanding, so the brands have to come out with their own stores. A lot of the luxe restaurants with four- and five-star chefs have slowed down, so you have some new fashionable fast-food concepts. There's a Dutch one coming here called Danku. There is now fashionable fast food filling that high-end segment.

BNET: Is there anything retail landlords can do to better their situation?
FHC: They're going to have to partner with the retailers to help them in the build-out of their stores, and in the first two years of a lease coming into place. We've never seen this before, and we're seeing it all over now. This is becoming more of the norm now than the exception, and the retailers are smart enough to ask for it. The landlord, to get the right retailer, is doing it.

BNET: Can you remember a time when things were this tough in the industry?
FHC: 1989. It was two years after I started. There was very little motion in the retail market at all. Staying motionless is a disaster. You've got to keep going forward. Everyone is saying, "Oh my God, the rents are going to drop!" You know what? If you're still moving forward and still doing deals -â€" even at 30 percent less -â€" you're still filling the space, the landlord is getting the income stream, and it's better than standing still. What you must not do is stand still. That's out of the question.

BNET: How has the economy changed the way you've done business?
FHC: I've been a retail broker for 20 years now. It's not just about the deal, the lease or the commission. It's more about the solution. We're moving a lot of our focus into our consultancy and advisory position. We become part of the team, whether it's representing the landlord or the retailer. Sometimes it's for a lesser fee, but it's for a longer term. There are some troubled projects where we go in, and we're like plastic surgeons. We retain the good parts of the project, we tell them other parts to change and come out with a whole new face.