Retail is not dead – it is evolving. In fact, brick-and-mortar store openings are expected to outpace closures for the first time since 2017.
Following two years of restricted spending, consumer buying power is on the rise and approaching pre-pandemic levels. Similarly, we have seen an uptick in foot traffic as consumers are regaining comfort in visiting restaurants, gyms, hotels and shopping centers. People are yearning for in-person opportunities, opening the door for the revitalization of retail.
At ICSC’s premier retail event in Las Vegas, stakeholders will discuss the latest and greatest in retail trends and how commercial property owners, national brands and local retailers can capitalize on them.
Here are five themes I expect to be the talk of the town at ICSC RECon:
No. 1: Reimagining Outdoor Space for Shopping, Restaurants
While the pandemic spurred demand for more outdoor dining and retail options, this trend might be here to stay. Whether for restaurants where indoor seating is limited or retailers that want to expand curbside pickup and delivery capabilities, leveraging sidewalks and streets can facilitate these experiences.
No. 2: Flourishing Neighborhood Retail
We’re starting to see more companies opt for offices outside of the urban core. This, coupled with an uptick in families moving to, rather than out of the suburbs, has reinforced the vitality of neighborhood retail centers. Grocery- and entertainment-anchored assets are king, and incredibly attractive to investors. Neighborhood centers must offer convenience as well as a strong mix of high-quality goods and services to keep consumers there for longer periods of time.
No. 3: Smaller Store Footprints
Many said e-commerce would be the demise of in-store shopping, and while that certainly was not the case, we can expect to see retailers scale down their footprints. Consumer behavior has changed, fueling an omnichannel approach to the shopping experience that oftentimes requires a reduction or reconfiguration of space. Availabilities in dense markets are also a factor. Some retailers might opt for less square footage to secure a presence where availability is limited.
No. 4: Rise in Experiential Opportunities
Today, approximately 55% of consumers are spending more on experiences than hard goods. As such, we’ll see renewed focus on the consumer experience across the board, with every retail subsector aiming to stimulate the senses and engage patrons in a meaningful way. If done correctly, experiential opportunities can create a strong sense of brand loyalty, á la Apple. As one of the best examples of experiential retail, Apple’s stores offer knowledgeable sales associates, in-store classes and exclusive events that inspire loyalty and create satisfied, repeat customers.
No. 5: Exploring Conversions of CBD Office to Residential, Hotels
Many central business districts are struggling to lure employees back to the office for more than two to three days a week, often leaving office space underutilized. Retailers in those CBDs are challenged given that their primary consumers historically have been office employees. To generate more foot traffic and rejuvenate the urban core, expect to see more property owners explore office conversions to residential or hotel use.
Retail has proven its resiliency and is transforming rapidly. I expect the trends discussed here – as well as other innovations across the commercial real estate industry – to drive this exciting new era for the sector.
Connor McCarthy is Director, Retail Services at Transwestern. Based in Washington, D.C. he represents the leasing interests of institutional owners, national brands and local retailers.
SEE ALSO:
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