November 2015 — Retail Properties Quarterly —
Page 15
Retail Trends
houses for pickup.
In order to give consumers this
opportunity for instant gratification,
stores such as Best Buy and Kohl’s
allow consumers to buy their products
online and pick up the items in the
store. This eliminates the need to walk
the aisles, deal with purchasing at the
register and talking to a salesperson,
yet delivers that instant gratification.
Kroger andWalmart are doing the
same thing with groceries and even
offering delivery services.
The takeaway is that the store in
your hometown is now the distribu-
tion point. This could mean that these
stores may not need as much space
for merchandise or display or as large
of an improvement allowance for
build-out. In turn, they may not pay as
much rent.
The Great Recession saw the rise of
the discount store, and more people
frequently shop at off-price retailers
like Nordstrom Rack and Marshall-
now. Any stigma that may have hurt
these retailers in the past is gone,
as consumers want to hold on to as
much hard-earned cash as they can.
We know that Web shopping is forcing
retailers to compete on price, but, as
consumers, we are pushing retailers
to focus on discount concepts because
we are buying less at the full-price
stores.
Everyone wants to feel like they
are getting a deal that they can’t
pass up. The retailers are seeing this
and responding. For example, Macy’s
is testing Backstage, a second-run
concept similar to Saks Off Fifth and
Nordstrom Rack. J.Crew opened J.Crew
Mercantile, which the company says is
not an outlet center, but offers outlet
pricing.
From the retailers’ perspective,
these are opportunities to diver-
sify and add stores in markets they
already may have fully built out with
full-price stores. Also, they are seeing
the opportunity to build the right-size
spaces in less-developed markets,
which allows them to be mindful of
capital expenditures. These discount
stores are less expensive to open, and
they are easily merchandised, often
with existing inventory.
New off-price concepts offer the
opportunity to expand in saturated
markets, but so do off-shoots of some
household name brands. National
retailers, especially those publicly
traded that must continually exceed
investor sales and growth expecta-
tions, are finding ways to add more
revenue sources in related businesses.
For example, Target is testing Target
Express, a neighborhood quick-stop
store for daily needs in urban environ-
ments. It also is testing Target Open
House, which will offer smart-home
elements like integrated baby moni-
tors, automated lighting and thermo-
stats for customers to learn about, test
and take home. H&M is pushing out
three new concepts – Cheap Monday,
Cos, and & Other Stories to offer hip
and cheap, luxury and high fashion,
respectively. Dick’s Sporting Goods is
trying a concept called Chelsea Col-
lective to compete with similar highly
successful athletic-fashion concepts
like Lululemon and The Gap’s offshoot
Athleta.
These specialty stores are not only
offering new revenue sources but also
are catering to the shift away from
box stores that consumers are asking
for, and instead offering stores where
consumers can get more personalized
purchasing experience for a specific
ware.
As a real estate professional, the
takeaway is to consider these con-
sumer trends and understand how
the retailers are reacting to them.
These are the uses and users we are
going to see looking for space in 2016.
As brokers, owners and developers, we
have a role in shaping the retail land-
scape.We can execute that role more
effectively if we are planning shopping
centers and merchandising plans that
recognize where retail is going and not
expecting the large-format traditional
anchors, but rather the smaller-format
spin-off and off-price bands.
With the discount stigma gone,
shoppers are looking for value and
will price shop in any avenue they
can. They are looking for a specialty
experience even if it is coming from
a national retailer. If centers are
positioned to give the retailers and,
in turn, the consumers what they
are looking for, we will fill shopping
centers.
s
Dick’s Sporting Goods is trying a concept called Chelsea Collective to compete with similar successful athletic-fashion concepts, such as The Gap’s offshoot Athleta.
Second-run concepts, such as Macy’s Backstage, try to capitalize on consumers’ desire to find a good deal.
