There’s no doubt about it: consumer preferences and habits are evolving, and to keep pace, retail must evolve too. But make no mistake– This is not the apocalypse some have claimed. The retail industry is the process of shifting, and the underlying fundamentals look good: unemployment is low, consumer confidence is the highest it has been in 17 years, and our overall economic outlook remains positive. What we’re really navigating is the new normal – an environment in which new types of retailers are entering the market and disrupting traditional sales channels.
Digitally native pure players who have a keen understanding of their customer base are focused on expanding their brand presence into untraditional bricks-and-mortar spaces. Well-known examples of these types include:
Experiential retailers are reinventing what it means to shop in a physical store. They are thinking differently and throwing out the standard playbooks on how to connect with the customer and make a sale. A few innovative, new retail concepts that illustrate this well are:
- b8ta—A physical store that removes the barriers for both new brands and customers and serves to open pathways between new brands and their target audience so that they can discover new products and make an easy purchase.
- Happy Returns—An in-person return bar for online purchases so consumers can avoid the hassle and wait of returns by mail.
- FitHouse—This concept puts a new spin on the boutique fitness craze by offering a wide variety of classes with top instructors at a relatively low price point.
Big data allows retailers to track consumer demographics and spending patterns and create a marketing and selling approach that’s finely tailored to their customers. For these emerging brands, it doesn’t matter where a sale is made as long as it’s made, and big data allows retailers to make predictions on how and when their customers will make a purchase. In turn, this helps brands figure out how much of each product they need to produce, and streamlines inventory management processes. And with eCommerce transactions approaching an adjusted 10 percent of total U.S. retail sales, retailers are revamping their marketing plans to focus on “social commerce” and turn Instagram “likes” into sales.
This affects retail real estate in a variety of ways, whether through pop-ups, national roll-outs of new brands in multiple cities, or creative deal structures like shorter lease terms, percentage rent participation for landlords, and landlord contributions for build-outs. As brokers, this means we need to carefully consider how we think, act, and work to drive our business forward. We need to change the way we do business so we evolve with our clients.
Our newCommerce initiative at Cushman & Wakefield—a thoughtful collaboration that connects our Retail Services platform with our logistics, industrial and eCommerce expertise—provides a seamless approach to a retailer’s real estate needs, whether it’s a new or enhanced distribution center for their business or a new bricks-and-mortar location strategically located near their warehouse facility (or anything in between).
Taking a holistic view and considering our clients’ online and physical store business needs and goals will set us apart as brokers and make us successful amidst the transformation taking place. We are just beginning to see the “new normal.” And as retailers figure out new and exciting ways to connect with their customers, we’re sure to see further changes across the retail industry— and I’m convinced they’ll be for the better.
To view Brandon’s interview on the topic from ICSC RECon 2018, CLICK HERE or below!
Brandon L. Singer
Managing Director, Retail Services
During his eleven years as a real estate broker, Brandon L. Singer has negotiated some of the most prolific retail, hospitality, and food & beverage leasing transactions in New York City, as well as several gateway cities across the United States. His negotiated transactions have surpassed $2,000,000,000 of aggregate value for National Retail, Hospitality, and Food & Beverage Tenants and Landlords such as Dean & DeLuca, H&R Block, Nike Inc., Thompson Hospitality, Ann Inc., TD Bank, Restoration Hardware, DXL, The Trump Organization, The Related Companies, TIAA, Blackstone, THOR Equities, and AAC. Brandon was an inaugural member of 2012’s Commercial Observer’s 30 Under 30 list for Commercial Real Estate professionals in New York.