Retail Real Estate is Evolving – Innovation is a Key to Success

Real Estate

Retail Real Estate is Evolving – Innovation is a Key to Success

Share on LinkedIn
Tweet Me
Share on Facebook
Subscribe to Withum News
With store closings, bankruptcies and increasing online shopping, retail has received a lot of negative attention in the news recently.  However, retail does not appear to be dying, rather it is evolving as all industries must over time.  Real estate owners must evolve along with this changing retail landscape in order to attract quality tenants.

Online shopping has been steadily increasing; however, traditional retailers have battled back by adapting their e-commerce strategies.  Meanwhile, traditional e-commerce retailers are exploring physical store locations.  This retail evolution is producing a hybrid model of retailers that offers both brick-and-mortar and online sales.

The new version of retail stores often includes the following:

  • Brand stores that focus on promoting the brand by delivering the brand’s message, values and community involvement.
  • Specialty stores that service certain niche markets.
  • Interactive stores that allow customers to touch, feel or try on a product, then customize the product through an online order. The store then serves as the place to return to pick up online purchases, creating additional customer interaction.
  • Experiential shopping, or providing in-store experiences and customer service, that cannot be replicated online.
  • Enhanced environment and amenities offering the target customer additional reasons to visit the store and enticing them to stay longer and continue shopping. These include food and beverage offerings, which can also serve as new revenue channels.
  • Smaller drive-through pick up locations, as shoppers move towards more targeted, time-efficient, needs-based shopping trips. This will involve online ordering prior to leaving home, work or the gym.

The type of store owner is changing as well:

  • Foreign retailers are steadily increasing their presence in the United States.
  • Small business owners that offer strong customer service and expertise in order to compete in niche markets.
  • Innovative new business models that appeal to the modern customer.

Some other innovations being tested by retailers include pop-up shops or flash-retail.  These are short-term stores that appear in a market and look to generate a high level of publicity and excitement over a short period of time.  This concept can be used to launch new products, generate brand awareness, move inventory, test an idea or increase the “coolness factor” of the brand.  The lease term can range from one day to three months.

Changes in the retail environment are being driven by both customers and business owners alike.  Property owners are tasked with creating a “retail destination” by offering a variety of memorable spaces and places.  Concepts such as combining several unique dining options along with fashion, electronics and specialty retailers can create shopping areas that serve as a neighborhood’s hub of activity and a desired gathering place.

Retail is changing and retailers are rapidly responding to a changing and challenging environment.  Property owners must evolve with the changing retail landscape or risk being left with outdated, empty space.  Property owners that respond quickly with new and innovative offerings will be rewarded with higher rent and occupancy rates.

Ask Our Experts

Rebecca Machinga, CPA, CGMA
609-520-1188
[email protected]

linkedin

To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

Previous Post

Next Post