The pandemic shaping consumer habits has been an undeniable force, however much of the retail repositioning in 2021 has been in motion for some time – even before COVID. Following an ICSC discussion reflecting on big retail trends, there were some common threads worth expanding on: (1) diversifying the tenant mix is a must, (2) landlords and tenants are changing up conventional formats, and (3) last mile fulfillment is valued more than ever.
Tenant Mix Diversification
With millennials shaping trends and reaching family-raising age, there has been a suburban shift in play—originating before the pandemic, however sped-up by the desire to be in more less-dense environments. With a mass exodus from cities, a dream scenario is presented for suburban strip center landlords. While the tenant mix will shift, landlords must be cautious not to overreact. Tenants looking to target millennials may begin to evaluate suburban locations that weren’t previously considered.
Given the financial uncertainty COVID presented, higher-income crowds were attracted to value stores like Dollar General, Dollar Tree, and outlet stores. There’s a fair opportunity for brands to hold onto these new customers even as COVID concerns subside. These brands may also begin to reconsider their geographic territories based on the suburban shift underway.
With curbside pick-up at Target up 500%, landlords who are open to these shifting formats will see an attraction from tenants who are staying on top of these new adaptations of shopping.
Brands that traditionally had zero online whereabouts have now pursued an omni-present model. For example, TJ Maxx’s “treasure hunt” in-person model has even become available for online shopping to best meet the customer touchpoint. The example of Kohl’s integrating Amazon return services in their stores offers a great omni-present way to reach consumers. While making an Amazon return in their stores, they provide a 25% coupon for any Kohl’s purchase that lasts a week following the return date. The reinvention of what we once knew of retail has become a multi-function model.
Last Mile Fulfillment Implications
Leveraging spaces to do more is an important conversation in modern retail as certain concepts phase out and vacancies increase. An “online only” focus is not profitable, but a mix of some in-person and some online seems to be the perfect formula. The notion of massive fulfillment centers in malls is a bit too extreme, however within a portion of a closed big box retailer could be a feasible plan.
Time will tell what the future holds for top-performing retail prototypes. This year has proven that the flexible landlords and tenants are most likely to succeed no matter the roadblock.