Convenience, quality and experience are the key deliverables for today’s retail customer. Make it easy, of high value and enjoyable. Today’s shopper has less time, less money and less patience for retailers and developers to “get it right.” They want shopping to be an event and a social experience. They want a reason to get off the couch and go shopping instead of simply buying online.
Although e-commerce still accounts for less than 15 percent of retail sales in the United States, it dramatically impacts consumers’ expectations and will increasingly influence retail trends. Shoppers are better informed, often having thoroughly researched the options and narrowed their choices before ever setting foot in the store. Salespersons must be better informed and prepared to successfully engage sophisticated consumers.
Sales of consumer goods perceived to be commodities, some of which include books, electronics and office supplies, are continuing to migrate online. Retailers who are able to seamlessly integrate their brick and mortar stores with their online presence have been able to take advantage of shifting trends successfully, while those who haven’t struggle to compete.
Omni-channel retailing is becoming more mainstream. Retailers that haven’t adopted omni-channel retailing are racing to catch up to businesses such as Nordstrom, Apple and others. These retailers are capitalizing on e-commerce rather than being hurt by it. Many retailers, such as Macy’s, are turning their stores into distribution centers, allowing them to more effectively compete on pricing with online retailers while offering the customer service and hands-on shopping experience not available online.
Experiential Retail
Retail centers are becoming community social and entertainment centers. Landlords are working harder to create complementary tenant mixes that keep shoppers coming multiple times each week. As a result, new amenities, such as water features, parks, concierge services, entertainment and Wi-Fi, along with wellness concepts, food purveyors, medical centers and educational uses, are becoming part of the fabric of retail lineups.
Movie theaters are very desirable anchors and attract scores of other restaurants. This includes both traditional theaters and the newer variety offering upscale food offerings, reserved seating and in-house brew pubs such as iPic, Alamo Draft House and Flix Brewhouse,
Likewise, upscale bowling and game centers such as Lucky Strike, Dave & Busters, Main Event Entertainment and Big Al’s appeal to a higher-earning demographic, drive traffic and attract families as well as corporate events. Topgolf is one of the hottest new entertainment concepts in the country and is rapidly expanding.
The company offers a unique combination of sports, entertainment, food and alcohol and is attracting huge crowds to the retail and entertainment projects in which it locates. Combined, these concepts create what is known as experiential retail, giving consumers a reason to visit retail centers rather than shopping online.
Health-conscious consumers are driving the growth of health-oriented retailers, including fitness centers, organic food stores and healthy restaurants. High-quality quick service restaurants such as Chipotle, MOD and Blaze Pizza are enjoying hyper growth with the appeal of healthy, fresh and affordable dining.
Restaurants, bars and night clubs are in greater demand than ever, growing at their fastest pace since the early 1970s, and their historical relationship with retail sales is becoming unbalanced, outpacing the other retail trades. As we see it, retail market progress is deriving from promising economic trends, encouraging consumption.
Today’s consumer eats out multiple times each week, up dramatically from just a few years ago.
At the same time, consumers demand better quality and atmosphere for their dining dollars. Many traditional chain restaurants have seen their sales languish as new eateries have captured an inordinate share of the new dining dollars. Chains such as Olive Garden, Chili’s, Applebee’s and countless others will need to reinvent themselves in order to compete with a host of new competitors.
Outlet Expansion
Outlet stores have expanded rapidly in recent years as well, making them one of the fastest-growing segments in retail. Traditionally built on the outskirts of town, outlet centers and their tenants are moving closer to major cities as well as integrating in traditional retail projects.
Today’s consumer is both brand-aware and cost-conscious, making them ideal outlet store shoppers. This trend is illustrated by the fact that more than half of all Saks Fifth Avenue stores are now outlets and the vast majority of growth for Nordstrom is via its Nordstrom Rack stores. Macy’s is also rolling out their Backstage format to take advantage of this trend.
Retailers are looking to expand in urban markets as well as into markets experiencing high population and job growth. At the same time, retailers are looking to shrink their footprints and design smaller stores to suit these urban locales.
— By Craig Trottier, senior vice president, Trammell Crow Co. This article originally appeared in the December 2015 issue of Texas Real Estate Business.