Retail Revolution – or Evolution
…it’s amazing just how much you can spend sitting on your couch.
As I ready for the ICSC show in New York, I am keenly aware that everything in retail is in free fall. The headlines about the market resemble those about food. One day the sky is falling (record number of store closings) the next it’s bright (More stores are opening than closing). I frequently quote one of my favorite retail executives to clients “anyone who tells you they know what is happening in retail is lying”. Not even industry stalwarts can predict the future these days.
Who’d ever have thought that Barnes & Noble would open restaurants (check out this concept); That Walmart would purchase Bonobos – and then sell Lord & Taylor’s items on their website; That Target would open multiple 20,000 SF stores in an urban market such as Philadelphia; That match.com would open a retail store selling 3D models of matches; Or that Black Friday would yield $5B in online sales.
There are some truths we can rely upon:
- How we shop, why we shop and where we shop is changing.
- Online retail sales are still less than 10% but rising.
- Experiential retail is thriving. Today’s consumers expect to be entertained while getting a deal.
- Store sizes are shrinking, and retailers are consolidating.
- An omni-channel market (plainly put the integration of brick & mortar and online) is required to survive.
- Food sales out of the home now exceed those in the home.
- Fast-casual dining is experiencing the most robust growth of all food retail sectors.
- Technology is driving sales: 71% of all sales begin online.
- Convenience often trumps price – do you know how much you have spent sitting on your couch, from food to furniture?
Revolution or Evolution?
Evolution is survival of the fittest. What is happening in the retail industry is exactly that.
Disruption can be good. Personally, I think Amazon’s acquisition of Whole Foods, being touted by industry leaders as a huge disruption, might just be the best thing that has happened in the grocery world in years. Yes, it took the grocery industry by storm, and yes, there is some uncertainty ahead. But this acquisition has forced many to rethink and refresh how they market to customers and embrace innovative formats. I expect we might just see some amazing results.
Technology and showrooming are disrupting how, where, and when people shop. How we browse then purchase is evolving. Innovative retailers such as Warby Parker and Amazon once only online now have brick & mortar sites recognizing that you cannot eliminate the discovery factor that makes retail compelling. Coupons appear on our phones as we walk by a store. Nordstrom Local, located in LA, has no inventory. Walmart is upping its tech game, rolling out an app that allows customers to scan items with mobile devices and refill prescriptions without ever entering a store.
Developers are disrupting standard merchandising formulas to fill vacant big boxes. Gene Ventura of Faris Lee Investments thinks senior housing is an ideal use as it puts seniors near a variety of retail, services and amenities they wish to be near. Other uses include schools, tech centers, and even hydroponic farms.
Communities of all sizes are struggling with building a sustainable retail base for their citizens. They are challenged to find the right mix of tenants and even fill vacant stores that have become obsolete for newer, smaller footprints. Not to mention keep up with all the changes.
Food retail is undergoing a metamorphosis evolving to fill younger generations’ expectations that food is theater. Williamsburg, Virginia just changed its zoning to allow breweries; Frederick, Maryland passed a law allowing distilleries; Cleveland is witnessing a burst of artisanal food, a fare farm butcher, a greengrocer all an expansion of the food cluster anchored by the West Side Market. Food Halls are replacing cafeterias and food courts Pop-ups are trending; from national tenants testing concepts to entrepreneurs just starting out. Retail incubators and makerspaces are proving popular for apparel, furniture and food.
I end with a thought from a leading contemporary in retail and me.
“Life’s too short to hang out with people who aren’t resourceful.” Jeff Bezos
“The next time you find yourself complaining there is no place to shop, be resourceful, turn on your phone and cancel your subscription to Prime” – Catherine J. Timko
Catherine Timko is the founding principal of The Riddle Company, a Washington, DC-based economic development marketing firm, as well as a senior advisor at Econsult Solutions. Retail attraction is one of her specialties. Catherine has completed retail marketing and attraction strategies for almost every major market on the East Coast including Miami, Atlanta, Washington, Baltimore, Philadelphia, Newark and Boston.
Tags: digital revolution, Present Value, Retail
Categorised in: ESI Blog