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No Retail Apocalypse, But Brick-And-Mortar Is Changing With The Times

Brick-and-mortar retail is still alive and well, but it is changing. Stores are smaller and more sophisticated.

MG2 Architecture principal MJ Munsell, Seattle Pacific Realty partner Jeff Rosen and Tommy Bahama Director of Store/Restaurant Design and Development Frank Kennard

Seattle Pacific Realty partner Jeffrey Rosen said the number of retail stores is growing, and brick-and-mortar shops accounted for 90% of 2017 holiday sales.

Shoppers are still frequenting retail stores, but they have higher expectations of the experience once they get there.

They want to be wowed, Tommy Bahama Director of Store/Restaurant Design and Development Frank Kennard said at Bisnow's recent Seattle retail event.

Tommy Bahama is about the experience. The company started with restaurants that included a small retail component. Twenty-five years later, the restaurants still exist, but rather than providing a two-hour dining experience, meals are served in shorter time frames. There are also options for drinks and small appetizers.

“We need to try and figure out how people live today,” he said. “They no longer have the commitment to that full dining experience.”

MG2 Architecture principal MJ Munsell helped the company direct that change.

“The original stores were thematic,” she said. “What is Tommy Bahama? One long weekend.”

The team broke the store concepts up into three models. Resort-style, which is more of an elevated concept, Family Retreat, which is more laid back, and Island Bohemian. The store models vary by location. 

The change resulted in same-store sales increases, particularly in the locations with a bar and small meals — samples of mai tais do not hurt sales, she said.

Brick-and-mortar retail also is about the experience, and that means hiring the right people to work in the stores.

“There’s a baseline when looking for talent,” Kennard said. “They are inherently friendly. They have to understand the lifestyle we project is welcoming inclusiveness. There’s a sense of family as much as anything.”

SSA Acoustics Managing Partner Bill Stewart, RPAI Vice President of Investments Michael Hazinski and Merlon Geier Vice President James Alexander

When it comes to any retail space, functionality is important. Acoustics, for example, need to be good or it is tough to pitch the product, according to SSA Acoustics Managing Partner Bill Stewart.

You can have great talent, but patrons will have trouble hearing the presentation of the product in an environment where the acoustics fall off.

“We lose the ability to persuade someone in a sale,” he said. “You spend a lot of money on sales people, you have to give them the right environment. It is critical to being competitive in a retail environment.”

That goes for other aspects of the retail space as well.

When contractors are brought in during the planning stages of the retail space design, they are able to offer advice on implementation that will save money later, Abbott Construction Director Doug Klein said.

Klein said grocery stores are among the most complicated retail spaces to develop.

“For a grocer, visibility, parking and access are big issues,” he said. “We can look at all the elements and make sure everything that needs to be there is there so it doesn’t cost extra later. Forethought and planning make a big difference.”

When it comes to grocery stores, Klein sees the basic model getting smaller and offering more grab-and-go items and prepared foods.

“The biggest thing we see are the simplifications,” he said. “Polished concrete rather than floors, for example.”

Merlon Geier Vice President James Alexander

Retailers are doing everything possible to keep costs down.

“Construction costs have gone through the roof,” Merlon Geier Vice President James Alexander said. “We’re having a hard time even getting contractors to the site if the construction project isn’t big enough.”

Merlon Geier started out as a retail developer, but has since started thinking about how to create places patrons want to frequent.

The company now focuses more on town center concepts with restaurants, retail, movie theaters and residential units.

“Retail is still a good place to invest,” he said. “It’s harder to achieve returns, but they are still there.”

Munsell said retail is not seeing an apocalypse, but becoming more experiential.

“I think the consumer feels that if they make the choice to get in their cars and go somewhere, it better be worth it,” she said.