Buzzwords like technology and experiential have many forms. In Vegas, one of those forms is a novel gaming lounge called eSports Arena at the Luxor where video gamers can gather and play each other or enter a virtual reality zone all their own.
Continuing on our retail journey, here are the final five lessons this year’s RECon. Enjoy!
6. Don’t Mourn the Death of Traditional Anchors
Although there is more than a little concern and complication involved with large traditional anchors closing up shop and exiting centers, the name of the game is opportunity. I was privy to many extremely encouraging redevelopment plans for former anchor spaces that are creating exciting new deals for everyone involved. These deals, when negotiated correctly, not only create a mutually beneficial relationship between the shopping center landlord and tenant, but – most importantly – these benefits extend to the consumers! They’re benefitting from restaurants with expanded outdoor patios, full-service luxury theaters, areas designated for rotating pop-up shops, outdoor spaces with free Wifi and designated rideshare locations that look more like pool cabana areas than curbside pick-up locations. In almost all cases, these redeveloped spaces significantly out-produce the former anchor tenant in both sales volume and total customer traffic count.
7. Experiential is the Buzzword of 2018
No surprise here. The future of brick-and-mortar retail lies in creating a customer experience that can’t be replicated online. But what, exactly, does that look like? Experiential can take many forms, but I tend to be a purist. The most basic, essential form of any experience tends to be the customer service. That means a good product, fast service and a high-quality, clean environment. No matter how many bells and whistles a restaurant adds, if my food is cold, the restrooms are dirty and the waiters are rude, the “experience” is not a good one. My point is do not rely on gimmicks or technology to compensate for the mediocre execution of time-tested customer service basics. Adding a cold brew coffee or glass of wine, tailoring services, in-store lounging and free Wifi – all with a genuinely nice and attentive staff helps to round out the experiential part of the shopping trip.
8. Technology Can Be Your Friend
Smart retailers are utilizing the latest technologies to improve upon their execution of the basics: shortening check-out lines through mobile line-busting POS (point of sale) technology, implementing “just in time” merchandise management and logistics systems that keep the most popular items in stock, and crafting interactive, tablet-based “signage” to communicate pricing and product knowledge. Landlords are putting seating and landscaping with free Wi-fi into their developments, installing censors to guide shoppers to open parking spaces and creating touchscreen directories for way-finding.
9. Pets Should Be Your Friend (Because They are Your Customers’ Furry Friends)
I have to mention the importance of considering pet-friendly environments and accommodations when it comes to the new retail environment. Simply put, if your shopping center or retail store does not accommodate and cater to pets – outside of service dogs and any laws prohibiting the entry of pets – your likelihood of a positive experience may suffer with a large population of shoppers. The statistics are clear: 44 percent of all U.S. households have at least one dog. The presence of pets can add maintenance requirements, insurance expenses and an operational complication. However, in the grand scheme of things, I consider pet-friendly accommodations to be a huge positive, comparatively inexpensive and essential “experience” for many shoppers. Fenced-in pet areas, strategically located “doggie bags,” water bowls, dog treats and an animal-loving (or at least tolerant) staff can make your center or store a destination, period.
10. New-to-Market Retailers Often Need Assistance with Store Design, Construction
With the rising costs of construction, it is critical developers and tenants understand all of the options available in the store design, architectural, construction and project management areas. These are the real brick and mortar aspects of brick-and-mortar retail. I’ve heard more than a few horror stories from landlords regarding new tenants who missed their grand opening date by several months because of operational, design, permitting and construction delays. This situation negatively impacts both the tenant and the landlord, sometimes with catastrophic consequences to the tenant. A sports bar in a city competing for the World Series cannot open the day after baseball season ends. Nearly every goods-based retailer will not have a happy holiday season if it cannot take advantage of the period between Halloween and New Year’s. Deadlines can be crucial, as can budgets. Neither should be taken lightly when someone’s livelihood may be on the line. “On time and under budget” is not just a catch phrase.
11. Entertainment as Anchor
Maybe it’s the kid in me, but I suspect it’s actually the kid in all of us that has eagerly welcomed large entertainment concepts into our shopping centers. Trampoline parks, high-end theaters, X-Games-inspired sports venues, climbing walls, indoor snowboarding parks, virtual reality “esports” gaming and bowling alleys that include high-quality food and drink menus are the latest and greatest ways to keep people on property. They’re also ideal tenants to scoop up those large boxes left vacant by many of today’s traditional anchor tenants. This exact situation is where vacancy can equal opportunity. I don’t know about you, but I’d much rather scale down a climbing wall than walk through the never-ending men’s section of a 1970s-era department store.
This year’s RECon was extremely positive, energizing and exciting regarding the future of brick-and-mortar retail. Shopping center owners, currently existing tenants and ecommerce outposts just entering the retail real estate environment all have reasons to feel optimistic about this current market. They simply have to position their real estate and operations in ways that allows them to grow and pivot along with their consumers in this extremely dynamic and exciting retail environment. That’s where we come in. Give Crossroads Retail Advisors a call today.
