There is no room for mediocrity in retail anymore. Consumers are no longer looking to “just go shopping;” rather, they require a unique experience to inspire a shopping trip. It has become crucial to the success of most retailers that their offerings provide a purposeful component which services the needs of the busy, ultra-connected consumer.
Those retailers who have not adapted their business models to the myriad challenges framing retailing today have either succumbed or are being forced to dramatically reposition their physical store strategy. Retailers, developers, and major mall owners are now compelled to be laser focused on curating “experience” into their offerings.
Kohl’s provides a good example of a retailer that is implementing creative tactics to its store merchandising and offerings. The company is bringing fitness and grocery to select locations by leasing spaces to Planet Fitness and Aldi. They have also partnered with Amazon, to offer free online returns and mini-Amazon shops within some of its stores. Kohl’s has also partnered with Weight Watchers to open a studio within its store, offering workshops and diet coaching.
Another innovated change that has the potential to be very impactful to the industry is cannabis. Estimates vary widely as to how large the legal, global cannabis market will be in the near term but, to that end, some main street retailers in markets where it’s legal are already capitalizing on this booming market. Barneys is partnering with cannabis brand Beboeto, which will open its own upscale dispensary aptly named “The High End.” The store-within-a-store will offer marijuana accessories including gold rolling papers, leather ash trays, pipes, $450 bongs, $1,475 pot grinders, and stash boxes.
Samsung is slotted to open “A Samsung Experience,” which will be its first freestanding retail space that sells products. Visitors can experience the next generation of Samsung technology, as well as purchase the brand’s newest products.
So, who’s driving this trend? Why millennials, of course….as well as those who identify with the millennial mentality!
Millennials represent the largest consumer group and their consumer behavior is drastically influencing the retail game. They are savvy shoppers who pay attention to innovation, creativity, and are dictating what’s cool. Woe to the retailer or landlord that underestimates the power of cool. “Millennials have prioritized the experience – whether that’s at home, at work, or on the weekends.” They demand experiences over stuff; a sense of intimacy with their shopping experience, authenticity, uniqueness, choice, and variety.
Providing a new immersive retail experience has become the focus of many successful retailers, whom are directing their attention of other property types like office, airports, and big-box stores to make their retail offerings deliver that unique consumer experience. Food, and it myriad of offerings is one of the fastest growing trends shaping the retail landscape today. Cushman & Wakefield has consulted on dozens of projects with owners and operators looking to make food a central focus of their project. Probably the trend that has received the greatest press is the phenomenon of the Food Hall – the latest weapon in the “Retail Amenitization Wars.”
Food Halls tend to provide a landscape for those unique experiences that which millennial consumers seek. They lend to an environment that can produce thoughtful and experiential programming, live entertainment, creative performance, pop-ups, product launches, and food and music pairings. Make no mistake, food halls are neither trend nor fad. They are the organic consequence of an evolution in our dining culture.
- Food, and more specifically a food experience, has been elevated to a point where it is an essential component or “amenity” that transcends retail. The food experience has now spilled over to other major property types such as office, hotel, and multifamily/student housing.
- You must give people a reason to come to your store or your shopping center in the age of new Commerce.
- Physical retail is not dead. Boring retail is. In retail, change is not an option. It’s a job requirement.
- The change impacting retail over the next 5 years will dwarf what we have seen over the past generation.
What’s Next: The Top 10 Trends in Retail
- More digitally native brands will migrate to brick and mortar opportunities.
- Technologies will drive new retail experiences from mobile purchases, cashier-less checkouts, digital shelves, automated warehouses with demand forecasting technologies, and expanded delivery options.
- Legacy retail companies who resist or are too slow to change will increasingly be eliminated.
- Physical retail formats will continue to shrink, offer pre-built formats, and shorter-term leases.
- Stores will evolve into showrooms and fulfillment centers.
- Pick Up options will become more widespread and diverse.
- Consumers will increasingly rely on A.I. for product comparisons and recommendations.
- Supply chains, a science unto itself are nearly as important as the showroom.
- New brands will get to market faster than ever and will be able to capitalize on knowing where niche opportunities exist.
- New developments will increase incorporate retail as an “amenity” which will be tailored to attract and appeal to its target market.
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Phil Colicchio, is an Executive Managing Director, Specialty Food & Beverage, Entertainment and Hospitality Consulting at Cushman & Wakefield. Rick Latella, is an Executive Managing Director and the Practice Group Leader for Retail Valuation & Advisory. Both are based in New York City.