What Retail Apocalypse? Brick-And-Mortar Retail Outlook Remains Positive
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LAS VEGAS — The doomsday scenarios about the retail industry’s demise that have made headlines are grossly overblown, experts say, and many expect retailers to continue to acclimate to the growing presence of e-commerce by shifting how they draw in consumers. Speakers at the International Council of Shopping Centers' RECon conference underway this week delivered reports and their assessment of the state of the industry.
“People still spend money,” JLL President of Retail Advisory Services Naveen Jaggi said at a breakfast panel with media Monday. “Consumer spending is still up. It is incumbent on the owner and retailer to shift and bring consumers in.”
“We’re going to see the pendulum swing back,” CBRE Americas Head of Research Spencer Levy told a crowd of hundreds at a luncheon where the company unveiled the company’s top three predictions of the future of the retail segment.
“The end of [brick-and-mortar] retail story is the most oversold story I have ever seen in my career. People are going to realize that bricks-and-mortar retail isn’t dead,” Levy said.
With the rising popularity of Amazon and e-commerce and the decline of legacy retailers such as Sears and Kmart, much noise has been made about the so-called retail apocalypse or e-pocalypse with some predicting that brick-and-mortar will eventually be phased out.
But in reality, while people are shopping online, the general consensus is they still have a strong preference to go out and shop in-store.
The U.S. Census Bureau in February reported e-commerce retail sales reached $453.5B in 2017, a 16% increase from the previous year. The spending accounts for 9% of retail consumer spending.
At the same time, physical store retail sales grew 3.4% in 2017. It was the highest growth rate since 2012, according to CBRE.
“The other categories are pretty obvious,” Cordero said. “My theory with health and beauty is the rise of social media and taking selfies on Instagram and other platforms. Another thing — male beauty. From the beard trimming to the gels, male grooming has seen big growth.”
Notably, CBRE's senior managing director debt & structured finance, Michael J. Riccio, said banks and lenders are still funding, and in some cases fighting for retail projects.
“They are looking for strong locations with great demographics, high traffic counts, and the retail strip does not necessarily need to have an anchor property, it is OK to be next to an anchor,” Riccio said.
JLL’s Jaggi said the retail landscape is evolving. Malls are being repurposed with more common areas and activities and landlords need to consider other forms of anchor properties to draw in customers.
Jaggi dismissed the notion that all retailers need to provide some sort of experiential retail component in their stores.
Jaggi has found there is still a large section of people who don’t care about such things.
“If you think about retailing today, experience is important but a vast majority want value more than experience,” Jaggi said.
Who Are These Consumers?
JLL Monday unveiled its own study evaluating 20 top retailers nationwide and examining consumers’ preferences.
The study’s goal is to evaluate what is most important to shoppers and how well retailers are delivering. The study interviewed 2,000 people nationwide and found six key components that consumers want in their in-store experience.
Stephen Jay, the managing director for JLL’s research company, Big Red Rooster, called it the six dimensions of retail experience.
The six are intuitive, human, meaningful, immersive, accessible and personalized, Jay said.
Jay said stores needs to consider intuitive layout to make it easier for customers to find the specific product “to get in and get out” and offer one-on-one specialized customer service.
Two of the best stores, the study found, were Apple and Victoria’s Secret.
The two companies sell vastly different products, but they scored high in customer service, JLL’s U.S. retail manager, Taylor Coyne, said.
“People want to feel special as a consumer,” Coyne said. “We found that people want more of that.”