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How E-Commerce Is Impacting Retail

Retail is facing its fair share of challenges these days, from struggling shopping malls to the pressure from e-commerce.

L.A. State of the Market:  
Allen Matkins partner Alain R'bibo, CBRE managing director Patrick McRoskey, Wilson Meany director of development/retail Greg Whitney, Rising Realty Partners senior vice president Matthew Ahrens and Prologis president of the Southwest region Kim Snyder.

Retail is in transition, according to Wilson Meany director of development/retail Greg Whitney (center). He and others talked about the current state of retail at our Los Angeles State of the Market event last week.

Shopping malls are struggling to be relevant. While South Coast Plaza and Westfield Century City and similar malls will always have their place, "B and C malls are having trouble attracting customers," he said.

Retail is also being impacted by the popularity of Amazon.

Everyone is struggling to figure out how they can get people to live, work and play in the same environment, Whitney said. Retail is a vital component of that equation.

Retail can help create a sense of place and can be an amenity in a housing development, he said.

L.A. State of the Market event Prologis president of the Southwest region Kim Snyder, Allen Matkins partner Alain R'bibo, Wilson Meany director of development/retail Greg Whitney, Rising Realty Partners senior vice president Matthew Ahrens, CBRE managing director Patrick McRoskey

Allen Matkins partner Alain R'bibo (second from left), who moderated the asset class overview panel, asked how retail and other sectors are being impacted by e-commerce.

Prologis president of the Southwest region Kim Snyder (far left) said e-commerce is cannibalizing a bit of the retail space.

"Big-box retailers are getting beat up pretty bad right now," he said."We're projecting close to $5 trillion in sales in the next 10 years in e-commerce."

Snyder said e-commerce is how people are doing business these days. Amazon is Prologis' single largest customer and is "growing like crazy," he said.

Rising Realty Partners SVP Matt Ahrens and Prologis President- Southwest Region Kim Snyder

Snyder (right) said there is not a lot of availability in industrial right now and no new supply is coming. As e-commerce is affecting storefront retail, it is also driving demand for industrial that can handle storing and shipping goods to customers.

As a result, developers have to create value, whether through a zoning modification, a reuse or repurposing.

"We think industrial has a long future in L.A. just to get goods to and fro," Snyder said. "People aren't going to stop buying stuff."

L.A. State of the Market:  CBRE managing director Patrick McRoskey and Wilson Meany director of development/retail Greg Whitney

Despite its challenges, Whitney (right) said retail is still an experience.

He said Nordstrom's new concept, which includes having customers sit in a lounge chair and sip cocktails while their clothes are brought to them, creates a personalized experience with a personal shopper.

Retailers who are combining a personalized element with an online experience are the ones thriving in today's market, he said.