By Michael O’Neill, Executive Director, Retail Services, Americas at Cushman & Wakefield
There has been a significant amount of recent press and discussion about the state of the retail market and the challenges retailers are facing as it relates to balancing their brick-and-mortar stores and eCommerce business. In our numerous conversations with retailers about their omni-channel strategies we have observed a few common themes at this year’s ICSC RECon in Las Vegas that are critical to being successful in a rapidly changing retail landscape.
The first and arguably the most critical piece of the equation is the ability to adapt. It is important for retailers to recognize that technology and an increasingly more robust online offering has created a consumer that in many instances shops differently than they did in the past. Retailers need to stay connected to their customers and continue to innovate and change in order to provide consumers with a relevant and seamless in-store shopping experience. That brings us to another trend that is highly relevant to both retailers as well as Landlords and Developers; Experience. “Experiential retail” has been one of the most commonly used terms in our business in recent years for good reason. Today’s consumer needs to be compelled to shop in a store by an “experience” that is different, unique, and enjoyable. It is incumbent on retailers to create an in-store environment that brings consumers into stores and keeps them coming back. The same can be said about Landlords and Developers as it relates to curating a merchandising mix and shopping environment that provides a relevant and exciting customer experience. The last trend that is highly relevant is speed. Technology and highly disruptive companies like Amazon have provided the ability to provide goods and services quickly. In addition to providing an experience retailers must be adept at fulfilling demand and providing an efficient shopping experience in order to satisfy a consumer that expects to get what they want quickly and without hassle.
Despite all of the change in the retail landscape, much of which has been triggered by the emergence of eCommerce, it is clear that brick-and-mortar retail will remain viable. This has become increasingly clear as many pure play eCommerce businesses have started to open physical stores as part of their direct to consumer strategy. In many instances, the results have far exceeded expectations and have positively impacted both eCommerce and retail sales.
UNTUCKit, the popular apparel brand, is a good example of how an eCommerce based business has successfully integrated physical stores into their growth strategy. Founded in 2010, UNTUCKit developed a huge following and significant brand awareness as a result of an aggressive multi-tiered marketing campaign and effective utilization of social media. Originally a men’s clothing line solely focused on dress shirts designed to be worn untucked, they have recently introduced a women’s line and have also expanded the offering to include polos, henleys, and other related products and accessories. In September 2015 they opened their first store in SoHo on Prince Street. The store, originally a “pop-up”, was designed to test the retail environment. Since then, they have aggressively expanded nationally with ten stores currently open across the country and a plan to have approximately 20 stores open by the end of 2017. UNTUCKit, like other companies that started as strictly eCommerce brands, has the benefit of significant data that provides valuable insight into markets that would be best for retail stores.
We anticipate many more cases like UNTUCKit in the coming years where existing eCommerce businesses expand into bricks-and-mortar in a way that enhances what has already been established in their online arena. In addition, we anticipate the traditional retailers that do not have their roots online continuing to develop a more coordinated omni-channel strategy. There is an absolute recognition that both of the brick-and-mortar and eCommerce strategies need to be integrated in order to maximize total sales and capture greater market share.
As we look to the future, it is clear that there will continue to be challenges and headwinds through the balance of 2017. There will likely be more bankruptcies and closures adding inventory but we have seen a continued increase in the number of retailers that are adapting to today’s consumers and many others that are emerging from strictly eCommerce companies into viable retail brands. We are in a period of transformation and re-balancing but it remains clear that brick-and-mortar retail will continue to be highly relevant as physical stores continue to be the largest driver of retail sales by a significant amount and the most effective way to reach and interact with the consumer.
To view Mike O’Neill’s Video Interview from “Live at RECon 2017!” CLICK HERE.
Michael J. O’Neill
Executive Director – Americas