As published on GlobeSt.com, September 5, 2017
LOS ANGELES—ICSC’s Western Conference and Deal Making event is fast approaching and will be held October 2-4 at the Los Angeles Convention Center. The annual event unites owners, developers, retailers, brokers, lenders, municipalities, property asset managers, and product/service providers.
In preparation, GlobeSt.com caught up with numerous industry experts and talked about the evolution of retail and why now is a great time to be in the business.
“The changes we’re seeing in the sector are driven primarily by omnichannel shopping, traditional (yet experiential) physical stores, and the back-end supply chains that support them.” That is according to David Gorelick, the new head of retail services of the Americas at Cushman & Wakefield.
He tells GlobeSt.com that technology, of course, has been the biggest force of change, with an estimated 25% to 30% of all retail e-commerce sales taking place on smartphones. “Brands are implementing artificial intelligence and interactive new technologies to curate a truly unique experience for their customers—retailers like Uniqlo are rolling out in-store vending machines and smart fitting rooms, and Neiman Marcus offering a digital ‘Memory Mirror’ that allows shoppers to compare outfits side-by-side and share photos with friends for feedback,” he explains.
And as GPS, geofencing and beacon technologies continue to advance, retailers will benefit more than ever, he adds. “They’ll have access to better, more nuanced customer data, which will allow the savviest among them to not only survive but thrive.”
Matt Hammond, partner and SVP at Coreland Cos., tells GlobeSt.com that as far as challenges go, unlike popular rhetoric, for the West Coast at least, retail is thriving and deals are getting done, but he points out that they move slower and are causing “a bit more brain damage.”
According to Hammond, the deals are more complicated as uses change. “There are more restaurant, medical, and fitness deals being done than ever before. With that comes unique challenges associated to increased parking requirements that often need city approval; bigger build-outs demanding additional permits, heath department approvals and increased power requirements; and co-tenancy issues associated with specialty uses,” he says.
He also tells GlobeSt.com that we cannot spend all of our time focusing on store closings, noting that they are a very natural part of the retail and restaurant business. “Closing underperforming locations and opening new stores will always be a part of the industry. From a leasing perspective, these transitions offer great opportunity. Opportunities to backfill spaces with new, fresher concepts, or change uses completely if a site hasn’t proven to be a best fit for food, service or soft goods, as examples.”
In a strong market, he says, landlords have the luxury of leasing spaces to quality operators. In recessionary times, they are looking for almost anyone who will pay rent, he explains. “As those leases are expiring, landlords are evaluating tenant sales, customer service, quality, etc. If a tenant isn’t cutting it, there are plenty of quality operators on the sideline in growth mode waiting for an opportunity.” Typically, operators that do the right things such as marketing, quality build-outs, good customer service and more, generate more sales, he says, allowing them to pay more rent.
As for the fastest growing retail segment, Hammond says it is off-price retailers, and he doesn’t expect that to change anytime soon. “In our online world full of convenience for name brand goods, customers enjoy the ‘treasure hunt.’ In many ways dollar stores are just as experiential a lifestyle centers full of amenities.”
“Treasure Hunt” retailers, he adds, also go hand-in- hand with unique restaurant and dessert concepts. “When we walk away from our computers and look up from our phones, consumers want to experience something that’s new and different. Experiences that can be shared on social media or be part of our everyday conversations.”
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