Dana Telsey, ICSC Conference, Dallas

Millennials Shake Up Retail Game, Says Keynote Speaker at ICSC Texas

by Jeff Shaw

DALLAS — While retail spending is on the rise overall, companies and brands that appeal to younger shoppers are having by far the most success, according to Dana Telsey, CEO and chief research officer at Telsey Advisory Group in New York City.

Shifting consumer trends mean certain retailers — such as off-price apparel chains and “eatertainment” anchors like Topgolf and Main Event Entertainment — are having more success than others catering to the demands of the younger demographic.

Telsey was the keynote speaker for the ICSC Texas Conference & Deal Making show that took place Oct. 5-7 at the Kay Bailey Hutchison Convention Center in Dallas. The event drew 4,008 attendees, the most in its history and the first time the conference has ever topped the 4,000 mark.

The brokers, lenders, developers and others who listened to Telsey’s speech heard mostly positive news about the state of their industry.

One retail subset seeing a lot of growth is off-price retailers, including TJ Maxx, Marshalls and Ross Dress for Less.

“The off-pricers are the new department stores of today,” said Telsey.

While those retailers are surging, some traditional department stores are struggling. Macy’s plans to close 100 locations, and Kohl’s has announced limited closures as well.

Nordstrom, a traditional department store chain, is seeing success with its off-price counterpart, Nordstrom Rack. There are currently about 200 Nordstrom Rack locations, and the chain could expand to as many as 300 locations by 2020, according to the company

Not only do off-price retailers generate significant revenue, they bring consistent foot traffic, benefitting nearby tenants located in the same shopping center.

With the holiday season fast approaching, the focus on maximizing revenue is particularly timely. The National Retail Federation (NRF) announced last week that it expects sales in November and December — excluding auto, gas and restaurant sales — to increase 3.6 percent to $655.8 billion, slightly above the seven-year average of 3.4 percent.

“Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season,” said NRF Chief Economist Jack Kleinhenz.

Online Presence is Key

A major challenge for nearly all retail outlets is adjusting to the increased demand from online and mobile shoppers, including exclusively online options such as Amazon. The growing presence of Amazon as a retail force is a trend almost every retailer must confront.

“In some respects, it’s every brand, every retailer versus Amazon,” said Telsey. The key is to closely integrate the brick-and-mortar experience with the company’s Internet presence, she said.

“Retailers need to be in all channels all the time in order to reach all consumers,” explained Telsey. “The customer doesn’t always go to the store anymore. In some cases the store is coming to the customer.”

This is especially true for the Millennial generation, persons born roughly between 1980 and 1999. Collectively, this generation totals 88 million and is even larger than the Baby Boom generation, which is 79 million strong.

Big-box stores like Target and Walmart are navigating the changes well, and mega grocery chains like Kroger are also seeing success.

There is more variety today in the types of retailers that can serve as the anchor of a development. Telsey cited “eatertainment” concepts like Topgolf and Main Event Entertainment as chains that bring heavy foot traffic, along with specialty “wine, dine and recline” movie theater chains like Texas-based Studio Movie Grill and Alamo Drafthouse Cinema.

“Retailers must cater to Millennials because they have tremendous spending power,” said Telsey. “It’s all about personalization, localization, customization and globalization.”

Millennials are also flocking to active wear brands such as Nike, adidas and Under Armour, companies whose sales are increasing year after year, according to Telsey. In turn, this is benefitting retailers like Famous Footwear and Dick’s Sporting Goods.

“Active is active,” she said. “The landscape is changing faster and faster.”

— Haisten Willis

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