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newCommerce and the Retail Evolution: The Future is Brighter Than You Think

newcommerce ecommerce retail
By Brandon Singer
Managing Director, Retail Services

In history’s pantheon of disruptor companies, few will loom larger than Amazon. When the company launched its tiny online bookstore in July 1994, fewer than 12% of American households had internet access. Barnes & Noble, Waldenbooks, Borders, these were the household names where books were purchased, whether in shopping malls, town centers, or retail corridors throughout America’s bustling cities. Amazon was a blip on the radar, and nothing more.

For years, Amazon did not turn a profit, and Jeff Bezos, the company’s founder, frequently came under fire. Short-term bottom lines mattered, but Bezos didn’t think short term. He had a vision. While most Americans saw Amazon as little more than a novelty in the growing online world, Bezos was busy engineering a revolution. That foresight has changed the world forever, in the way that only a true disruptor company can accomplish.

By 2007, 75% of all U.S. households had internet access, and Amazon had transformed into a full-scale marketplace, and they were still just beginning. There has been no shortage of ink spilled on how the retail industry was caught flat-footed, with those slowest to respond oftentimes never recovering.

Exaggerated Reports of Retail’s Demise

However, while doom and gloom may be the prevailing attitude among many observers, these prophecies are premature. It is more likely that retail right now is in the position of Mark Twain, who, upon hearing from a reporter that his obituary had appeared in the news, responded, “The reports of my death are greatly exaggerated.”

The truth is that the ubiquitous predictions of brick and mortar’s demise are as short-sighted as the failures to foresee the impact that a tiny online book store would have on the retail scene. Rather than the fulfillment of retail’s prophesied demise, beaten like a drum among forecasters and reporters alike, we are instead witnessing a transformation, a newCommerce transition where retailers understand that both online and brick and mortar as essential to their business strategy.

From eCommerce to newCommerce

We are beginning to see this already. As my Cushman & Wakefield mentor Joanne Podell wrote earlier this year in a piece co-authored with my colleague Stan Danzig, we are now witnessing online retailers like Amazon, Bonobos and Warby Parker open physical storefronts. Amazon has taken it a step further by purchasing its first major physical retail chain, Whole Foods. In the same way, traditional retailers like Walmart are purchasing eCommerce startups like Jet.com. Studies continue to show that consumers prefer the tactile experience of the physical location, and even prefer to purchase in-store – but not without shopping online first. To be successful, retailers need to account for both.

While so much focus has been on the need for traditional retailers to adapt to the online world, in this newCommerce transition it is just as important for online companies to understand the world of commercial real estate. On the one hand, online retailers are well-positioned to adapt to the desires of the modern consumer. Their eCommerce roots have taught them that a physical location need not be the actual point-of-service for sales, thus allowing these vendors to focus on building a retail experience rather than just building a retail store.

newCommerce Real Estate Challenges

At the same time, this transition includes challenges that these companies will need to navigate – challenges that they cannot easily overcome without a trusted real estate adviser. Commercial real estate is nothing at all like residential real estate, and the complexities involved are vast. To successfully develop a physical presence, let alone a broader market penetration strategy, a company has to consider things like capital expenditures, attorneys, construction and architects, HVAC needs, zoning and regulations, and more. Details like location selection require not only examining neighborhood trends or transit access, but must dive deeper to a more micro level: which side of the street has greater visibility? What are foot traffic counts on each block? What times are prime foot traffic hours? What is the density of competition? The answers to these questions have a significant impact on sales and thus on the success of a retail location. The intuition of a good commercial real estate broker can go a long way towards answering these questions and clearing these hurdles.

We live in a newCommerce world, a world changed forever by a tiny online startup in 1994. As the old world and the new come together in this transformation, one thing remains the same: real estate is central to any retailer’s successful long-term planning. With the counsel of a trusted real estate broker with a well-honed intuition, not only can these challenges be navigated successfully, but real estate decisions can also become drivers of an overall thriving business strategy.

Brandon Singer retail newcommerceBrandon Singer is a Managing Director of Retail Services in Cushman & Wakefield’s New York office. During his 10 years in the industry he has negotiated some of the most prolific retail leasing transactions in New York City, and in several gateway cities across the United States. His negotiated transactions have surpassed $2 billion of aggregate value for national retail tenants and landlords like Dean & DeLuca, H&R Block, Nike Inc., TD Bank, Restoration Hardware, and more. Brandon was an inaugural member of 2012’s Commercial Observer’s 30 Under 30 list for Commercial Real Estate professionals in New York. Brandon is a member of the International Council of Shopping Centers and the Real Estate Board of New York.

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