The expansive rise of e-commerce and experience-spending over the last several years has impacted traditional retail centers and stores in many ways. From the closing of big box giants, such as Toys “R” Us and Sears, to Amazon’s acquisition of brick-and-mortar locations, the retail market is changing drastically. To give some perspective, retail stores turned off lights and shut the doors at over 12,000 locations around the country last year due to rising rents, over-saturation of malls / retail centers, low profits, and bankruptcies.
Additionally, consumers are becoming more savvy, and companies are facing the fact that adapting is the only way to survive and ultimately thrive.
We contacted several commercial real estate professionals who specialize in retail around the nation to give their interpretation on the recent changes in retail and the services that are offered by their tenants. The question is: How can traditional retail companies transform the retail experience to become more lifestyle-centric for their target consumers?
“Retailers need to focus less on extensive product lines and more on evoking a feeling in their customer base. Shopping in stores needs to be an experience the customers seek out if the retailer is to effectively compete with online pressures.
One way to accomplish this is by adding in store services (cafes, stylists, cocktail hours, etc) that further the brand image. Competing on price and variety alone puts retailers head-to-head with Walmart and Amazon and will likely be a loosing battle.
Conversely presenting thoughtful, forward-looking, and uncluttered product offerings allows a company to clearly showcase their unique value and the leisure that can be associated with lifestyle shopping.”
Karly Iacono, Associate Director, Marcus & Millichap
“It’s so easy to shop online with everything we could possibly want and need at our fingertips today. But traditional retailers can thrive by creating interactive, experience-driven stores that focus on showing consumers how that product or service actually fits into your life. Offering events like classes or demos that allow people to actually interact with your wares, can be an extremely effective way to engage with your customers.
To that end I’ve also seen great success when retailers get creative with their physical storefronts to draw customers into their unique space. And don’t be afraid to use social media to encourage your customer to visit your brick & mortar in a different way, perhaps through ‘grammable’ storefronts and interiors or by calling upon ‘influencers’ to help you promote.
Give people a reason to take the next step from interacting with their phone to engaging with you in person.”
Lisa Shields, Senior Associate, Radius Group – Hagelis Retail Advisors
“The retailers that find the best ways to use data and technology to promote convenience should see a benefit in sales.
We will continue to see an uptick in mobile food orders, and traditional brick and mortar retail using delivery services as a way to get their product to consumers, rather than see that revenue go to a competitor.
These trends should continue to grow in both urban and suburban settings with consumers benefitting by getting the products that they need while enhancing their luxury of time.”
Ray Schupp, Principal, H&R Retail
“Retailers large and small are responding to consumers desire to “experience” their transactions. A host of generations are using the internet for research and reviews, but are now looking to feel, touch and try their decisions, seeking out locations that offer a hands on experiences. For example, grocers are offering cooking classes and food pairing samples, clothiers are offering smart mirrors to heighten the ‘try on’ experience, gas stations adding more charging stations and handmade food offerings.
Single addresses are housing multiple restaurants (think food courts) offering a communal experience, rotating menus, multiple offerings and repeat visits. Nimble retailers are adding a host of unique lifestyle experiences to their goods and services pulling consumers off of the internet and into their locations. We are seeing smart landlords adding local, trending and popular ‘lifestyle’ companies to their tenant mix.”
Teal Henderson, Senior Director, 3 Properties
“As retail customers in the current age know their needs, it’s critical that retailers must identify and know who their valued core customers are. The maximization of customer meta-data gathered in many ways combined with profiled demographic spending habits have allowed retailers and retail developers to target areas that increase stronger long term sales growth for retailers.
That said, the traditional retailers are now in a position to understand who their best and loyal customers are and what they want through data driven customer analytics. We are seeing customer analytics used for target marketing, store design, site selection and relevant product placement and by using same, the retailers applying this data are seeing stronger long term sales and selecting markets with calculated applications.”
Tom Blaisdell, Vice President Retail, Nordlund Associates