Welcome to the retail focus podcast. A weekly collection of news interviews and information from the world of retail. Welcome to this edition of the retail focus podcast. I'm Trent cling coming up on today's episode will be joined by paul Brenner, the president of Audio out of home and chief strategy officer for Vibe Economics Paul has joined the show in the past but it's been almost a couple of years. So he will rejoin the show to talk a little bit about audio out of home or in store audio.
What changes have taken place both at vibe Economics and in terms of in store audio over the last few years and he'll discuss his thoughts on major retailers in store audio platforms. In news. We'll talk about hy vee who made the news a few different times late in the month. And in our looking ahead segment, we'll talk about new capital entering the retail, commercial real estate front and how that might affect retailers in the future. Well, it is a new year.
So if you're joining us for the first time, welcome. But if you like the show, you can always give us a rating. Those ratings help others to find us and check us out on any podcast listening platform. Additionally, you can check us out on social media at retail podcast on both twitter and instagram. I've been deficient in getting some of the pictures off of my phone over to Layton working behind the scenes to upload those.
So hopefully you'll see a few more instagram uploads over the next couple of weeks as I kind of cleanse my phone for the new year, so to speak. Well, well let's begin the show with that news from Hy vee as a leaked employee video and report from the des Moines Register indicates their desire to spread throughout the country beginning with four states.
And in so doing this regional grocer will be entering a very crowded southeastern US grocery market along with Publix who is steadily made inroads from their home in florida further north alongside Mainstay Kroger in that region of the country and many others one could have assumed some sort of southern expansion was on its way for hy vee after they did open a distribution center,
a new one in Nashville recently that makes now three distribution centers for the regional grocer that has 285 locations. So it could be argued they needed a new distribution center regardless.
But certainly the video, it was leaked to media outlets and other information from the company late in december now confirms things the video and the subsequent report, as I mentioned first came out in the day Moines Register des Moines of course, home base for the company and the Register a great resource for all things high V as they seek to expand. So the 285 locations.
Hy vee has currently, that's behind the likes of publics who is been expanding by leaps and bounds northward over the last several years. But it is ahead of Wegman's who is just breaking in on the precipice of triple digits in terms of the large regional chains with a loyal following that are seeking or have sought in the recent past To expand their footprint now for hy vee over the past 10 years, they've experimented with a number of square footages and concepts.
Some of them smaller, some of the larger, they've kind of vacillated back and forth between larger square footprints over 100,000 square feet and then the smaller ones. But it does appear as though going forward. They're more set on the larger concepts. These Concepts usually have grown restaurants, apparel, various other home goods in addition to their usual grocery mix and in addition to being flexible with square footage trying out new things there. They attempted a new health-market concept.
This was launched back in 2018 in the West des Moines area, but that's actually proved somewhat unfruitful earlier this year. They noted plans to change the branding of this health market, which was a lower square footage location to a wine and spirits concept for them. So they're trying out new things, they're not afraid to backtrack if something doesn't work.
And I think what's remarkable about Hy vee is while they will go all in on testing out a concept, you see a lot less of the sunk cost trap there than you see for other retailers, maybe something to keep in mind as they expand and expansion to this point has been very measured for hy vee and it's been more about building out their existing markets, new stores and places like the twin cities, for example.
Currently their footprint is as far south as Kansas and Missouri and as far west as south Dakota with their base in Iowa, they of course serve Minnesota several locations in Illinois and Wisconsin and so forth. They served eight states in all. However, at least for the time being according to the report in the register, They're looking to expand to 12 states with new stores potentially in indiana Kentucky Tennessee and Alabama, all presumably served by that new Nashville distribution center.
They're eyeing at least 21 new stores in these markets over the next four years and markets specified in the report included Nashville Knoxville, Memphis Huntsville, Louisville and Indianapolis. And earlier last year I visited Knoxville back in May in fact, and we kind of posted on social media noted during the show itself, just how congested the grocery market is becoming there.
And it's interesting that high Vcs Knoxville as a target because if you dig into Knoxville, you already have local mainstay food city which is based just north east of there. You have Kroger and you have Engels based out of nearby Asheville north Carolina.
It's just a couple hour drive and angles of course with major market share but they are a regional grocer that has also recently looked to expand but more or less within the regional footprint, then you have more recently publix making a play into the market with a few different stores there that's not including walmart and walmart neighborhood market,
both of whom have a presence there and target that also doesn't include specialty grocers such as save a lot on the low end of things and the fresh market and whole foods on the higher end, all of whom have a presence there in the metro area. That isn't the size of something like say Nashville or Indianapolis. Generally speaking, you gotta believe hy vee is entering these markets with an eye on not only stealing market share but also maybe pushing others out of business.
There's such a high concentration of grocers in some of these markets Knoxville certainly included Among them in Knoxville, one of the most grocery dense markets I've visited over the last couple of years. And you also have to ask the question about how exactly the expansions will advance.
Ceo Randy editor was recorded on the video is saying building out 50 stores in these additional southern markets Will generate an additional $6 billion 50 stores probably the benchmark for them seize growth opportunities for the next 25 years in the region and we've mentioned typically for hy vee expansion is slow and measured and expansion into new markets has been somewhat,
I would say halting in other places and a great example of this if you want to look at a case study is Springfield Missouri. This is a market that hy vee entered for the first time in 2011. They opened a store on a very, very busy thoroughfare at that time between 2011 and now Kroger's Dylan's banner actually moved out of the market and there's been kind of a thinning of some of that non walmart competition.
They're, they're only now setting up to open their second store in the metro though is high V. So you look 10 years in between stores, a metro area nearing half a million people. And you just kind of wonder if maybe this wasn't a circumstance with distribution centers running thin. Maybe that new Dc and Nashville will help to support the expansion in southern Missouri or in that Springfield market in a way that previous to DCs couldn't.
But you kind of wonder as far as these markets that are mentioned, if you only open one or two high vis in Nashville, that's spreading it pretty thin in that particular market, especially since high B has been so bullish on things like Omni channel on things like grocery delivery in des Moines, they even have a fulfillment center that's separate from any of their stores for grocery delivery and for grocery pickup.
So I think that's very interesting in terms of how high Vis historically has expanded. Maybe this new distribution center will help them expand a little bit more quickly again, you're looking at 21 stores over the next four years, its benchmark for around 6 to 8 of these southern markets. And it's also worthy, I think to note which markets hy vee isn't planning on expansion into one could argue that the list certainly included in the register article wasn't comprehensive.
Maybe they'll double back on some of these markets. But you look at ST louis as an example that wasn't explicitly mentioned as a market, but it's a market that would be in theoretically the wheelhouse of that Nashville distribution center, it's served by local chains, Dear bergs, chinooks and a handful of ruler foods stores, which is a Kroger banner as well as the usual national suspects of the Walmarts and targets of the world.
But ST louis certainly seems more open than, say a Knoxville and having visited both of those cities in the last year, I can tell you Knoxville has far higher grocery density. Another thing too is hi vis on the northern side of things, they seem to be staying away from northern indiana.
So markets like Fort Wayne as an example that are served primarily by Kroger and Meyer, they haven't made an entry there even Springfield Illinois, which is currently right in their service wheelhouse that's kind of been leapfrogged in these plans and you wonder if at some point in time they're going to venture back north or going to backfill in the northern states or if they're going to leave those be for the time being so that they can focus on these Southern markets.
So a lot going on here in terms of this expansion for hy vee. And really this is a story worth keeping an eye on over the next 2 to 4 years if it'll turn out like their health market concept and they'll backtrack on it, close the stores or maybe sell some of them off or if they'll be able to keep expanding and go head to head against an operator like Publix who is very much a regional grocer like Hi Vis that has a huge following among their customer base.
Very well known for fresh food in their stores. Very well known for ready to eat food in their stores. Hi vis in public. This is kind of like the battleground where the southern and the northern meet there along that Tennessee line. Now as an aside hi vis, increased security efforts were also noted in various media outlets. This week. Hy vee is beginning a program to internally trained armed security guards, many of them with law enforcement backgrounds.
The company says to take station in their stores. Now, not all stores will feature the armed security. In fact, Springfield Missouri that one store that they have opened.
Their currently that's noted as an omission from this particular program, but the differentiator between this program and other stores security plans or the typical store security plan that we're used to seeing is that these guards will be trained by hy vee internally rather than being brought in from a third party such as Allied Universal, which is used in walmart.
And several other retailers currently, hi Vis guards are third party employees or off duty law enforcement officers, one of the two and some media outlets are going so far as to report that this is a response to that organized crime that you see so much about in the news. Of course, many people arguing that it's not as big of a deal as some have made it out to be or even looting when you look a little deeper.
It just appears as though the new internally trained guards will basically be serving in the same capacity as their third party. Guards are currently the training program. In fact, Hi V says has been developed alongside law enforcement partners. Much was made about the guards being armed with guns and tasers. However, again not a substantial difference from their current platform.
According to Christina Geiman, who's a high V spokesperson, she spoke about this platform this week, the guards are going to have the same tools as their current guards have. So whatever the current guards have in a certain market, they're internally trained guards will have those same tools. So this appears to include tasers in certain circumstances. Handguns, body cameras and so forth.
This is again more about prevention than it is about responding to actual incidents as in store security is in most marketplaces and because ivy is private, we can't say for sure whether shrink due to theft or looting has substantially increased over the last few years. But it seems though, based on what everyone is saying from the company, based on what everyone is saying about this news story based on even the video that came out that hy vee produced about this.
The main difference here is the company wanting a bit more in house control over its in store security than is currently the case and it's also about branding about having a consistent presence. That's something high V has been very big on as they grow. Not in security necessarily, but just as their stores are concerned in general, in terms of branding, in terms of presence, they want that consistency across their entire store chain. Might not be something they had really in the 90s.
If you were familiar with the high v source, I certainly was growing up in the midwest, but that's something that they have been consistently focused on and leadership has been consistently focused on. It seems this is more an extension of that than any actual metering up of their security presence in their individual stores. And so in that sense, I feel as though this initiative has almost been mis categorized In some media outlets that's out there.
Well that'll do it for us here in our first new segment of 2022 coming up after this break, we'll be joined by Paul Brenner, the president of audio out of home and chief strategy officer at Vibe economics. He's engaging, he's going to talk about Audio out of home of course, but more importantly, Audio in store.
Some of the decisions that go into planning audio in store and some of the new things that by Economics and others are planning on rolling out really the next frontier of in store audio over the next several years, hop on any large retailer earnings call these days and you'll hear a reference to a steadily growing category for them.
Nontraditional revenue and there's one category in particular or subcategory really that has potential to not only drive non traditional revenue streams for retailers but also drive those traditional retail sales and enhance the in store experience.
We're talking about audio here and it's been nearly two years since we last spoke with paul Brenner, the president of Audio out of Home and chief strategy officer at Vibe Economics, he's joining us again this week to discuss developments in in store audio during that span, paul, Welcome back to the show Brent, thank you so much for bringing me back a second time. We're very excited to be here enjoying a ton the first time.
And I was wondering first for those that might not have listened to that previous interview, could you refresh us about what Biba nomics does kind of on the day to day. And so the perspective that you bring in regards to the in store audio. Yeah, the biggest thing that we wanted to change in this aspect of the grocery c store experience was really update a legacy experience.
You know, it was bad audio that you couldn't really hear or the song choices were not very good and also the modernization of it had been left behind. So our day to day is really passionate about the retail experience, you know, bringing a shopper entertainment aspect, do what they can hear and then just really making audio and the in store experience a part of the emerging retail media strategy.
So we work a lot on the in store experience for the shopper and we work really hard at convincing advertisers to put some money back into this media. And of course, one of your largest retailers that you work with Kroger. So when you are walking through Kroger aisles and you hear Manchester Orchestra play on the loudspeaker?
Well, you know who to think, but I was wondering since we last talked to you, what are some of the main changes we've seen with audio out of home just in general over the past couple of years? Yeah, I think it's along the same lines of what I said our day to day is, you know, we've gotten better and better at the kinds of music to play when to play it to reach the right audience. We've got a lot smarter about matching the audience on a per banner basis.
While Kroger might be a huge company, you know, they have a lot of banners, I believe, even where you are, there's a Different banner, you know, than there is in, say in L. A. or Chicago. And so we're always trying to improve the kinds of music. We're paying attention to the shopper feedback through social media. We're listening to the operators of the brands to give us feedback, always making it better. So that's been a behind the scenes change.
But what that means is we've achieved, you know, 77% of our shoppers say they listen to the music that we play. And that's quite a change from last year. I mean, that's a big goal. The other side of it from a revenue perspective, we've seen a very big change in the buying habits, particularly CPG were up to probably 34 x. The number of categories that are buying with us.
We're seeing them shift traditional buying habits out of just what was a default shopper marketing bucket to audio programmatic, out of home brand dollars. That's been a major shift over the last two years. And the big one for us was when we launched with the trade desk a couple of months ago and really brought that programmatic aspect to life and that trend, although it's been the last few months has been the biggest jump in interest in audio out of home for us now.
In terms of that trade desk, I was wondering if you could go maybe a little bit more in detail as far as what that launch entailed and how you've seen interest kind of grow as a result of it. So you know, if anyone out there on the listeners side is you know, thinking about what happened with digital out of home.
So the transition from out of home to digital out of home was really about making it truly programmatic, an impression based business, right, tracking viewership and opportunity to see, you know, likely to see. And then some kind of like a gea path who's tracking foot traffic and impression. So they really switched from like a view a screen or a sign to like how many people can see it.
And so what we had to do was implement our technology, which is similar where it used to just be a media player, you know, in a store plane spots and that's what was purchased when we collaborated with the trade desk. What we really fought hard for was the introduction of impression multipliers so that we can say, yeah, this is one media player at one king Soopers in colorado. But really because the foot traffic gets X number of people can hear it.
And so that was the battle we had was to establish that currency and have someone like trade Dustin. We know other DSPs are going to follow them. We're already working on that and then educating the buyer on what that means. Right? So here's an audio impression that you might always think of as just a smartphone or a desktop or a home smart speaker as an impression were actually an impression multiplier.
So that's been probably the biggest change was getting that buy in from the we had the SSP buy in but the DSP buy in and now educating the market on it. And so we talk about impressions certainly but there's a value to those impressions and now that vibe economics has been at it for a bit. I know that you have a little bit more data about when someone hears a particular marketing message in store in terms of conversions in terms of how much more likely they are to purchase that product.
What kind of data are you seeing in terms of customers really following through on that messaging. It's a really fun question to answer.
And and then we put I would say substantial resources behind that because you know, when you're a category creator and when you might say music and a story is not, I'm not category creating but I am category creating it as a new way to reach people with technology and data and information and you can think of it as lift, you know, straight measurement, right lift. And in that regard we'll see anywhere between 22-50% incremental lift for the brand or for the product. And so that's an outcome.
Right? I mean that's the result of a shopper. We've done projects with Sushi distributor where we increased households by 2%. That's a phenomenal number to think a 2% household market increase, you know, and if they continue to buy a month over month, that's massive.
But the biggest thing that we see is through our own research and we use Susie market research for our shopper behavior analysis and we're seeing things like, you know, 41% of adult beverage buyers saying that the audio ad helped them or influence their decision. We're saying you know, 75% of people that here are add in the store are influenced to take action or change their buying decision because of it. So you've got measurement lift.
We're doing you know, case study after case study on that one. And then we're looking at kind of shopper behavior on both sides of that coin. We're seeing very positive progress and that's such a big impact. It seems like compared to traditional media, traditional audio. And I wanted to ask you about this because it really seems since we last talked Fiba nomics and I know you've done a great job in terms of partnering with retailers throughout the spectrum.
But one of your more recent focus areas has been convenience stores and customers when they go to a C. Store they might not be there as long as when they go to the grocer, general merchandise retailer. How does the approach to that audio out of home shift when you're talking about a grocery store versus maybe a C. Store.
You know last time we talked you know I had told you we selected safe graph as an early partner and that's the orange Hoffman company that exploded in the last two years with with a lot more information on the location basis of venue basis. And we've just really continued to grow that relationship and you know get better at isolating their data by location and working with them on how to trend that. And we're super confident in that information that shows hour by hour foot traffic right?
And that foot traffic can be compared within a brand or a banner or a city but also between a C. Store and a grocery store. And you know we really look at that information very closely. We look at the dwell times through the day parts and then we take our software which is really built for programmatic algorithms and we program an hour of a day to split time between the music, the messaging and the advertisements and messaging, meaning there probably are some self promos in there by the brand.
You know like buy one get one free today or something like this right or their own promo of their own brand. And so you'll see a comparison where because of dwell time and see stores there is more message frequency and a better blend of promo and adds versus a grocery store because you know dwell times usually three or four X. Longer than a C. Store. There will be more songs than messages achieving the same frequency with the listener and exposure and reach on a monthly basis.
It's just it's a better listening experience because people are there longer and we don't want to bother we want them to tune in to the music and be helped by the messaging. Not like ignore it because it's just a bunch of messages. It really comes down to dwell time and audience between the two between C. Store and grocery some great insights there as far as how often you might be interrupting that music and kind of the thought process that goes into it.
You mentioned day parts and that's something we talked briefly about the last time we met up but I wanted to go into it a little bit deeper here today. What impact does depart have in terms of not only the music that's being played but also some of the messaging that's out there. And how might you see the messaging change from say eight a.m. To the eight PM shopper.
You know it continues to be that translation for us right of we are not necessarily an app or a music service that gets to know, you know Trent and what Trent listens to and how old Trent is. Right and kind of program music or identify things you might like along with the ads that target you the best we have to rely on third party information.
And that information comes from companies like safe graph census bureau information information from our retailers and then layering that in my day parts so that the first party might be, you know helpful in some ways and the others might be helpful in other ways. You know, you see a bell curve in a grocery store, 12 P. A. P. Are their peak hours. The diversity of the crowd is a lot more broad and so we try to rely more on just the general data for the market.
When you look in the morning hours you'll typically skewed towards a parent with Children at home in the persona space, Call it the soccer mom. You know, you might see it's still a little bit older in a certain hours that'd be like 10 a.m. to noon. You have a slightly older audience,
maybe eight a.m. To 10 a.m. And then of course there's a younger crowd that comes after eight p.m. So you know, you kind of look at those day parts, most of our impressions because of foot traffic are in 12 P. A. P. So we try to be a lot more general and play a lot of music variety, all very noticeable recognizable music But you'll see a more variety in the 12 p. a. p. and then a little bit more specific to the age and the region outside of that time.
one of the things you mentioned in that answer is that it is a two way street. It's not just economics looking at data churning out music for a retailer. The retailer accepts it and brings it in. You and I were talking before we started recording here about the input that retailers might have in terms of that music mix. What are some of the things that you might weigh in terms of inputs from a retailer as far as music is concerned and what type of input leverage, so to speak do they have?
We have a team here that mostly have an audio background, audio programming background and so they're always watching trends and always looking at what's popular. We have audio experience managers. Their job is to make sure there's a communication path To the people at the retailer that have that opinion. Sometimes it's a top down opinion. Sometimes it's a regional or maybe even a store specific opinion.
But we open the door to that feedback and we say, you know what we've got 3000 playlist for you to pick from and then they could range from, you know country and classic rock to blends to pop to lots of things and a lot of times it's blends of all those things. And we'll establish that benchmark with the top company. We were aligned with their brand. We try to match up a programming style to what they want, their brand to be.
You know, like Kroger wants something like an animated world, which means there's always movement. There's always activity when they want the music to kind of reflect that we activate it. And then we asked for the feedback and I think, you know, we were talking before we started and you mentioned me where you live and I even told you, I said that banner is one of the most active of giving us feedback.
They know they're shopper, they not request specific songs because we're a background music company. So we can't fulfill like one on one request, but they can give us feedback on, hey, can we get a little bit more country in the morning or hey, can we get a little more classic rock in these couple of hours and we tuned to it? And then, you know, we respect that.
And I think that's really why you get such high shopper engagement with our audio is that the local person knows they're shopper, They probably the same people all the time and they see how they're responding to it and they're giving us that feedback from direct observation. So that's really been helpful part of our learning through the year to this point.
We've mostly talked about best practices because, let's face it at least in my opinion, biodynamics does it better than anyone else in the game. But I'm curious from your perspective when paul Brenner goes out to a store and experiences audio out of home, what are some areas in which you see for improvement for other retailers? In other words, what are retailers maybe getting wrong or misunderstanding when it comes to audio out of home?
Oh, it's a fantastic question because I pay attention to it everywhere I go. You know, just thinking about what is it that somebody's not doing what we're doing or what's our advantage or where is our lead? And we can compound on that? You know, I think, you know, I go to big box stores, you go to walmart right, when I don't want to, but if I have to take something there with my kids, the first thing I always think of is I can never hear it in walmart.
I think they put no investment in their A. V. It sounds horrible. Their P. A. Speakers. I'm almost embarrassed that they call it in store audio because you just can't hear it. And that's kind of one thing that we pride ourselves on is setting that up with the retailer in advance, that you have to make that investment in quality A. V. And you have to make sure that it's always heard.
So that's kind of one thing I always think about an improvement target actually they've rolled there on an in store audio out and it's louder. I've noticed that it sounds pretty good. Typically the stores I've been in but their music selections bad, it's covers it's unrecognizable music. It doesn't it just sounds like background noise and we put a lot of energy and passion into picking music that people normally sitting along with, that they recognized the tune very quickly.
And you know, I've walked around many Kroger banners around the country and watched people physically dancing tapping their feet, shaking their head and that makes me proud. That makes me realize that our job first is to entertain that shop or improve the retail experience. And then beyond that provide advertisers, that shopper so they can reach them and probably have a bigger impact with their own advertising. Got to hook the shoppers first with the music. Yeah, absolutely.
You mentioned audio levels and that that's also something that we haven't necessarily touched on in the past. But how do you go about evaluating proper audio levels? Because I'm guessing you can't just pop into a store at six a.m. When no one's in there and say, yep, these levels were good because in context of say a grocer, four p.m. is gonna be a lot busier than some of those other day parts. Yeah, that's a great point.
I mean we have a lot of remote monitoring of the volume outputs from our devices so we can obviously adjust some of that volume from our main location, our main headquarters? They're all IOT devices so we can control anyone at any time. But you know, once it hits the amplifier and some speakers, then it's really up to the local person.
We rely on personnel feedback, we rely on, you know, daily checklists approach to that where we can make sure that it's her, that's, you know, there are definitely some times where we have to go back and revisit it. But I will say that that's an area we just want to keep getting better at, we're in discussions with a couple of different companies to even be a little more active than we are.
I don't feel like typical of say a Nielson or someone like that who's sample based, I don't think that really helps us. We really have to be able to listen to just about every location on a weekly basis. And again, that's what we've learned compared to our competitors. If we're going to be this respected as a retail experience provider and guaranteeing impressions are delivered and heard we have to take it that seriously.
And so I'd say we're pretty good at it right now, but there's always room for improvement. We kind of previewed it a little bit with the audio levels discussion there, but we've talked a lot about what's happened the last few years with audio out of home. What's the next frontier, What are you most excited about developing here over the next few years in retailers? You know, I think we have the experience, right? You know, I think we've got the market fit.
You know, we have some scale coming that I can't really announce yet with new grocers, new C stores. So I think, you know, to make audio out of home even more successful, there has to be scale, more scale than what we have and we know that, and that's something that's, you know, job one for us, so that a buyer that wants to invest something across their entire portfolio candy or a home good. There's got to be more coverage.
And I think it's really kind of bifurcated between a couple of different companies right now in our competitor, well not really competitive. Someone who does it kind of like us, they're not even programmatic, they're very antiquated and they don't do any of these things that I'm talking about when it comes to improving the product. So I think the scale is one, the other is, you know, retail media has grown a lot and I'm sure you've had a lot of podcasts about that over the last couple of years.
You know, we're fighting really hard to make sure that the in store audio in particular audio out of home is a consideration as part of retail media.
I think the way retail media was defined and the market investment is so specific to e commerce and web sites on site off site, you know, they're not going to close their stores, the store the feet in the aisles, the loyalty card data, you know, the retail experience should be part of that retail media investment and I think that's the next frontier for us is you know, our involvement with path to purchase I. B the DP double A.
I mean we have a vested interest in ensuring that in store is part of that retail media growth and it should be because it can be and is a part of the success for a media plan, not just a bunch of e commerce and apps and offsite on site, but also that final path to purchase where you've got people in the place where the products being sold, so that's scale and retail media growth are probably our two forward thinking ideas.
I'm very much looking forward to seeing that expansion over the next few years, if nothing else or for no other reason then I'll be able to enjoy my in store experience that much more when you do roll out a little bit further. Once again, paul, thank you so much for taking the time joining us today and catching up a little bit on audio out of home Brent, thanks for your time again that this is a lot of fun as usual.
Mhm. As always we may have a position in or against companies we discuss on the podcast, do not invest in stocks solely on the input of the podcast hosts. Yeah, well as always it's great to have paul join us and I said it during the interview, I'll say it again. I feel like vibe economics does it the best of anyone that's in the game. That's why we have them on the show to begin with. Really a great resource as far as driving that nontraditional revenue and I encourage you.
Next time you're in a Kroger store, maybe just pay a little bit more attention or next time you're at a c store, just pay a little bit more attention To that. Audio to the interruptions in the audio where those take place. And I think it is fascinating from a retail perspective.
Certainly it's something that many people, you know, in the 80s, the 90s didn't really think about many large retailers didn't even have an audio in store program, but things are changing now that the world of nontraditional revenue. Certainly opening up To retailers as we enter 2022. Well in are looking ahead segment, I could cop out and say I'm looking ahead to the entirety of 2022 and story lines there, you know, to start 2021, you think about it.
Supply chain issues were said to be maybe going away slightly as vaccines were on the horizon. I don't think supply chain was necessarily thought of as going to be something that was going to be top of mind in terms of constraints of retailers to begin the year. I know inflation was on a lot of people's minds. Certainly That storyline panned out during 2021 But I'm not going to look ahead to the entirety of 2022 as a whole because again that's kind of a cop out.
And even though we are very much looking forward to what storylines will bear themselves out during this next year. I am looking ahead to retail real estate, specifically new capital entering the retail real estate world and what that means for retailers.
In specific an article on globe ST dot com by Kelsey Marie borland who by the way is very prolific and she is very much worth a follow on globe ST dot com if you're at all interested in the world of retail and retail real estate noted that a lot of new capital is beginning to flow into retail because investors who have invested previously in multi family and industrial driven the cap rates so low basically the rate of return so low that they are looking now towards retail investments.
And we're seeing this slowly spread throughout the country. Really started of course along the coast, but now you're starting to see it bear out in the Sun Belt. And this article includes an interview with Ben Snyder who's the E. V. P. And national director of Shopping centers at Matthew's Real estate investment services. He's mentioned that basically what you're seeing is a lot of new money coming towards retail. The number of bidders on grocery anchored centers in particular.
He saw more than double during 2021. Before the pandemic. He said 8 to 10 offers. Pretty typical for those grocery anchored centers. Now you're seeing 20 or more bids being the standard cap rates or rate of return looking from high 4% to the hype, 6% range now throughout the country where Both of those were easily 1-2% points, higher rate of return being higher. So all of this due to of course the market being flooded with new investors.
So you might be asking, well Trent that's interesting or maybe not so interesting. But how does that affect retailers? Well, here's the deal is you have these grocery anchored centers, people are purchasing them and getting a fairly low rate of return. So what happens when you get a fairly low rate of return on a property if you're an investor will typically not always but typically you're looking to increase that return on investment.
The easiest way to do that in a retail center, especially grocery anchored one is to start charging those tenants more, especially in the non grocery spaces. You know, you might have a safeway or Kroger or something else in the grocery space. Those are going to be inked for the next 15-20 years. Those are going to be relatively locked in. But you have a number of other retailers in the smaller adjacent spaces that might be least up for 123 years.
So this landscape of increased capital flowing into retail real estate. I feel like I could really affect some of those mom and pop retailers, some of the smaller retailers and even retailers like pet supplies plus for example, that make their home in these grocery anchored centers and a feeling you're going to see retail rental rates go up as 2022 2023 progresses. So that's why I'm keeping an eye on it. How does this landscape really change the world of lease rates in retail?
Do we see this coming from some of the larger reits as well? The likes of Kimco, for example, that hold a number of grocery anchored centers and what's that going to do? Is it going to have maybe a chilling effect on the smaller retailers and what's going to happen to those retailers that often accompany those grocery stores in those centers?
And again, you're not just talking about the mom and Pops, but I mentioned pet supplies plus dollar tree, another retailer that's in a lot of those centers as well. So it could have ripple effects throughout the retail industry.
Generally speaking, we've seen retail lease rates go up despite some of the softness you've seen in apparel based centers, but certainly going to be keeping an eye on it as far as how it impacts retail balance sheets and how it impacts the types of retailers willing to move in. Might it push out retailers and maybe insert some service oriented companies in those centers as well. We've already seen quite a bit of that over the last five years.
So I think an interesting landscape to follow certainly over the next year or two, and we'll be watching those balance sheets closely as far as lease costs are concerned for retailers. Well, that'll do it for us here on the retail focus podcast for Leighton working behind the scenes. I'm Trent saying thank you for listening. We thank paul Brenner for joining us. Coming up on next week's episode will be joined by dan Surtees. He's with X. C. Commerce.
He's going to talk a little bit about creating promotions platforms for apparel retailers, especially apparel retailers that have more than one brand. Kind of the difficulty behind that and what you really have to look to do if you're creating an effective promotions platform for apparel retailers In 2022. I think it's a fascinating concept. It's certainly not something we talked a ton about here on the show which is discount platforms or promotion platforms in apparel retail.
So we hope you'll join us then and we'll see us seven days from now. This has been the retail focus podcast for more, visit our website at retail focus podcast dot com and subscribe on itunes or stitcher. Follow us on twitter at retail podcast. Mm hmm. Yeah.