Forward-thinking retail real estate and construction continue to approach a convergence, as the lines between digital and brick and mortar become more and more blurred each day. This year, the ICSC PA/NJ/DE Conference introduced some bold shifts in retail supply that are worth highlighting. An interesting research session shared that open air centers and malls’ inventory is not growing, just growing in relevancy for a consumer-led disruption.
It’s no secret that the media is fixated on an apocalyptic view of traditional retail, with e-commerce as a culprit for declining brick-and-mortar sales. Interestingly enough, out of 5 trillion dollars in annual American retail transactions, brick and mortar retail sales still represent 90%.
There is a two-part cycle known as the “halo effect” summarizing how modern retailers can bring their physical and digital presence together to work their customers’ loyalty to their benefit. The reality is that stores are critical for brand marketing (especially a well-constructed, engaging space). By strategically taking a potential customer and guiding them through the funnel of awareness, repeat impressions, consideration, identification—to finally, a purchase – there is a stronger likelihood of them becoming a loyal, repeat customer.
In an analysis covering $31.2 billion in transactions, there was support to patterns existing in follow up transactions from store activity (from in-store to online). This terms the phrase “omni-channel shoppers”, considered the most valuable consumer.
As retail shifts to accommodate a changing market, there are notable changes in spending priorities. Among consumers ages 33-54 (a segment overweight in terms of consumption in the US), fitness/sporting goods, discount retail, and restaurant purchases seem to outweigh other categories. Conventional shopping centers are now consumer engagement hubs, integrating diversified uses along with retail, such as apartments, offices, and hotels.
As the industry evolves to cater to the needs of a 21st century consumer, it’s interesting to note the implications for construction managers, especially if they are engaged in a design/build arrangement and in a position to offer feedback based on industry best practices.
The ICSC Conference is a nice avenue to getting face to face with some of these non-traditional uses for retail, and forming the relationships to raise the bar on any facet of a retail real estate opportunity. To see the market through a retailer’s eyes can be challenging, but as an attendee seeking to work in partnership with retailers raising the status quo, this knowledge is critical—and rare. Old Forge is proud to have been a part of this year’s production, and can’t begin to count the take aways immediately available to aid retail clients seeking expansion.