My brother is a commercial realtor with International brand Colliers. He has indicated that there is definitely a sea change going on in the industry as it relates to retail space and malls. Lenders are not as excited about new mall construction, store traffic seems to be down, and the new retail formats seem to be coming from online retailers testing their concepts in physical stores.
We read headlines often promoting the storyline how shopping at home and technology are the death of retail. The sad fact is that many retail brands are no longer relevant whether by not staying up with current trends and fashions or by bad management.
There seem to be a number of trends that may be reshaping conventional retail. New distribution methods to accommodate same day delivery is one example. Many retailers are using new technologies to lessen the amount of in-store stock. Not only does this decrease inventory costs, but also requires less physical space that is rented. Realtors are calling this a “rightsizing” of space determining exactly what their needs are for each market. There is also something called a “Dark Store” where retailers take an underperforming store and turn it into a fulfillment center in an urban center where there a demand for same day delivery.
Internet retailers are taking a small brick and mortar store space in major metros, whether as a pop up or permanent space, and use that as a way to convert customers. There is a tremendous amount of competition online so this is a way to engage customers on the product in heavy traffic areas. They then try and drive customer online for sales. There is no inventory but samples of product to be delivered from a warehouse.
Retailers are gong to have to become much more experiential in order to get customers to come into their stores. Otherwise the customer will default to sitting in their living room and buying online. There has to be balance be-tween online and offline where the transaction is seam-less. This benefits the brick and mortar retailer that can execute in store and online versus online only.
People are using their mobile devices far more than ever. Mobile is huge and retailers need to invest because every-one is glued to a mobile device. A strong brand alliance can be created for those astute retailers who embrace it.
If there are any specific real estate questions you may have feel free to give Terry Root a call 402-578-1194.
As I foretold last month, there’s a couple of things I am watching develop in 2018 besides the rightsizing above.
1. Mobile will has become a very important ecommerce tool. How that plays for furniture transactions will be interesting. Stores need to be where the consumer is.
2. Mobile will be important for augmented reality. The tests Jay has been involved with AR suppliers indicate that 2018 could be a very big year for this technology. We showcased it over the holidays with family outside the industry and the Millennial generation thought it was the coolest thing. Call for a demonstration.
3. Enhanced websites with 3D images. Driven by consumers desires to pre-shop or buy online, the level of information and images has to get much better. Again, Jay is working with a supplier for enhanced 3D graphics that is very cool and economical.