From Food Halls To Unique Goods, Millennials Change Demand In Retail
As the largest consumer group in the country, millennials are changing the face of retail.
As major employers like Facebook, VF Corp. and Panasonic have opened shop in Colorado, millennials have followed in pursuit of high-paying jobs, and they have gravitated toward the urban neighborhoods where those companies are.
“That workforce wants to live, breathe and eat everything right next to their job,” Cushman & Wakefield Director Tyler Bray said. “The millennials are a very important part of the direction retail is going.”
Millennials, people born between 1981 and 1996, aren't getting married as young as previous generations and they don’t want to buy houses and mow lawns, Bray said.
“There are more important things to them,” he said. “They have a lot of disposable income, and they like to spend their money with their friends.”
Michael Staenberg of the St. Louis-based retail development firm The Staenberg Group said while millennials are fans of online shopping, the generation coming up behind them likes going into stores. But millennials, now in their 20s and 30s, are willing to drive farther for a shopping experience and are looking for inexpensive unique items — not designer goods.
Staenberg pointed to Indochino as a store millennials are drawn to. The retailer, which has a location in Cherry Creek, offers made-to-measure men’s clothing. Customers visit the store for the measurements, but the merchandise is shipped to them.
“Kids like to get stuff in the mail, but they like to go to stores, too,” Staenberg said. “They just don’t need as many of them. They’re willing to drive farther for a shopping experience. They don’t want to go to malls, they want to walk in and walk out. They’re into treasure hunts. They’re trying to show their friends they’re cool by finding something that’s unique.”
One retail trend that caters to millennials is the food hall concept, Bray said. Food halls in Denver include The Source, Avanti, Denver Central Market, Zeppelin Station, Milk Market, Stanley Marketplace and Broadway Marketplace. While that might seem like a lot, there are more in the works. Avanti is opening a location in Boulder, and Edgewater Public Market is taking over the old King Soopers on 20th and Depew.
“The food hall is interesting because it does play into the experiential concept of where retail is going,” Bray said. “I don’t believe it’s a fad, but it does need the right components — the right location in a heavy traffic area with good disposable income.”
Also critical is having a good bar operator because that is the component that is the most profitable and drives traffic, he said.
“The bar operation is so important because it sets the tone for the marketplace as a whole,” Bray said.
But that component could soon change with Denver considering permitting the drinking of alcoholic beverages from different establishments in a designated common area. While currently only the bar operator in food halls can sell alcohol, an open consumption law would allow food hall vendors to offer cocktails in addition to food.
“If open consumption does happen, it will allow food halls and marketplaces to see even more success,” Bray said.
Low vacancy and growing rents in Denver’s stable retail market have attracted the attention of investors, who are increasingly drawn to properties in the city’s urban core, Marcus & Millichap Senior Associate Ryan Bowlby said. Bowlby said the demographics in urban areas are also attractive.
“Sixty to 70% of the new people here are millennials,” he said. “Urban properties are restaurant-based and experiential. It creates a high demand for that space because there’s not as much that you can build out because it’s pretty built up.
“There’s just a ton of investor interest right now in everything urban,” Bowlby said. “Typically speaking, a lot of these properties have a low purchase price — $2M to $5M. You might just be dealing with local players, but you also have larger institutions targeting urban cores in select cities, so they’ve lowered their threshold."