Tag Archives: DC

“Retail Experience” Innovations at LivingSocial

15 Feb

On Monday, LivingSocial announced the grand opening of a “first-of-its-kind live events venue” in downtown Washington D.C., where the rapidly growing daily deals business will offer customers unique experiences to its customers, and a testing ground for its merchant partners.  The “retail experience” space is an innovative move for the company, who is looking to expand its image beyond that of a “coupon company.”

   (image courtesy of Washington Post)

The company’s new venture is notable for many reasons, and I am particularly anxious to see how it pans out, as I’ve long been bullish on the daily deals business model and do not think it is sustainable in its own right.

Even though the company has expanded its user base to more than 60 million members, and offers deals in 647 markets worldwide, LivingSocial and its closest competitor Groupon have yet to turn significant, sustainable profits; figures from Amazon’s 10-K report imply that DC-based LivingSocial suffered a net loss of $558 million in 2011, on revenues of $245 million (Amazon has a 31% stake in the company). Those 60+ million consumers are proving to be very expensive to acquire as repeat customers.

Is a retail experience venue like that of LivingSocial a one-off innovative initiative, or a game-changing model?

Most of the criticisms charged against daily deals businesses have been around the lack of long-term gains conferred to their merchant partners. Mom and pop shops often find it challenging to keep up with the demand created by a one-off deal, and they receive only a fraction of the proceeds from those deals (usually 25% or less of the face value of the goods and services the coupon offers). Additionally, cost-conscious consumers have little reason to be loyal to one daily discounter over another; as long as they can get half-off pedicures and sushi rolls, it doesn’t matter what company sells them the voucher.

What is interesting about the retail experience, however, is that it allows merchant vendors to more proactively manage their expenses and the customer experience. Rather than providing consumers access to a brand at a discount, the retail experience space gives brands access to consumers (albeit still at a discount, for the most part).  This subtle distinction, where vendors have more control over the customer experience, means that local companies are better positioned to lock patrons in as loyal customers. Who do you think will revisit a restaurant more often – a consumer who buys a 50% discounted meal, or one who pays to experience a new tasting menu with a restaurant’s chef?

LivingSocial’s press announcement for the retail experience space at 918 F Street didn’t explicitly state whether the new venture would be repeated throughout the hundreds of other markets where the company is present, but one can imagine that if the model proves successful, they will roll it out company-wide – that is, if LivingSocial’s competitors don’t copy it first.

Advertisements

Temporary Urbanism – Innovative Uses of City Spaces

2 Dec

“Cities only learn to be innovative by trying and failing – you’re not trying hard enough if you don’t fail” – DC Office of Planning Director Harriet Tregoning

Park(ing) Day

I’ve always been fascinated with cities, and spend a lot of time thinking about how smarter urban planningcan foster innovation and drive significant social and environmental change. When I saw a lecture called “Temporary Urbanism” on the schedule for Digital Capital  week, I immediately signed up.

The engaging lecture at Washington’s National Buliding Museum this past Saturday discussed how cities can effectively activate empty storefronts, abandoned lots or even cultural institutions in order to create engaging neighborhoods, boost the local economy and push sustainability efforts – all noble goals for major urban areas.

DC Office of Planning Director Harriet Tregoning, RTKL architect and 24 Hour City participant Kashuo Bennett, and Christine Ewing, Regional Fine Arts Officer at the U.S. General Services Administration shared their ideas and insights around the subject, and discussed examples in which vacant spaces have been effectively utilized to build better cities. Here are a few highlights, many of which could easily be adopted in urban areas around the world:

Park(ing) Day is an internationally celebrated event “that invites citizens everywhere to transform metered parking spots into temporary parks for the public good.” The event is particularly fascinating given the traffic, pollution and danger to pedestrians that cars create in urban environments. Tregoning suggested that more than 80% of the estimated $8,000 it costs to keep a car in the city each year – including gas, insurance, parking, etc. – leaves the local economy; extrapolating those statistics, she postulates that more than $125 million could be added back into the local economy if just 15,000 people got rid of their cars.

In comparison to the markets in other cities across the U.S., DC real estate is relatively strong: retail vacancies are 4.5% versus the national average of 9.3%, and office vacancies are 11.1% versus national average of 16%. Still, that translates to a lot of empty space. If a small percentage of those vacancies were filled with pop-up stores or art spaces, there would be significant tangible value created for the local economy, as well as intangible value in the form of more vibrant and interesting neighborhoods. Temporarium is a great example. Open for 24-consecutive days between February 18 and March 13, 2011, the pop-up storefront in DC’s Mt. Pleasant neighborhood housed 34 local artisans and crafters. It grossed more than $31,000 in sales from 1,030 customers, 70% of whom reside in immediate area – the District’s Ward 1.

Another interesting local example of the creative use of vacant space is Truckeroo, a monthly festival held June through October in a DC parking lot showcasing food trucks and live music from the area. The event has drawn thousands of patrons to a space that would otherwise lie vacant.

DC’s Truckeroo

There are countless other examples of innovative ways that people in cities around the world have effectively leveraged existing outdoor, retail and office space, and I’m excited about the growing interest in doing so in our very own backyard. Given the countless artists and entrepreneurs in DC – not to mention the 180 missions and embassies in DC, many of whom I’m sure would love to introduce their culture, art, businesses, etc. – I have to imagine there is a healthy demand to occupy such spaces.

What about the supply? One of the biggest obstacles of introducing such interesting manifestations of “temporary urbanism” is the bureaucratic matrix of permits, insurance and lease agreements. Maybe it’s a matter of asking for forgiveness, rather than permission? DC Councilmember Tommy Wells weighed in on the subject, noting that the city’s unofficial stance is to often turn a blind eye to such community-enriching efforts, many of which are not technically legal; for example, camping on federal parks is illegal, yet when it comes to policing #occupyDC, the city leaders look the other way.

The takeaway from the discussion was that building more vibrant urban destinations can be an exercise from the bottom-up: build better blocks, which lead to more interesting neighborhoods, which are the hallmark of desirable cities.

For more information on DC’s Digital Capital week, including a schedule of events, click here.