CBRE: Brick-and-mortar’s BOPIS biz is on a fast track
Six out of 10 consumers told CBRE that they prefer an in-store experience over one online, and the global retail services provider predicts that retailers will be taking steps to better that experience in 2023.
Walk-out purchasing that automatically charges shoppers for items as they leave the store and a focus on merchandise that satisfy the sustainability standards of environmentally conscious consumers are two things we’ll be seeing more of according to CBRE’s recently released U.S. Real Estate Market Outlook for 2023.
One digitally powered, consumer-initiated trend that promises to boost brick-and-mortar visits, maintains the report, is the fast rise of mobile commerce.
Digitally influenced retail sales--those that consumers pay for online but pick up in-store—currently account for 62% of total retail sales and will account for 70% by 2027, according to a Forrester report cited by CBRE. Lots more of that is going to happen since mobile device purchases--which now account for 47% of all e-commerce sales--are expected to rise to as much as 58% over the next four years.
CBRE retail research director Brandon Isner believes that one way brick-and-mortar will increase its share of m-commerce business is via shopper apps being introduced by retailers and shopping center operators alike.
“By providing different touchpoints, retailers are able to provide the ideal shopping experience for a range of shoppers,” wrote Isner in a recent article in Chain Store Age. “For example, if a retailer schedules a special discount day at their store location, they can launch a similar offer on their local app.”
Shopping centers, power centers, and malls experienced positive net absorption, rising rents, and lower vacancies in 2022 due to the lack of new supply of retail real estate. Ten million sq. ft. of retail space has been removed from the market in the past five years, and CBRE predicts more gross leaseable area to disappear in 2023.
“This is the lowest availability of retail space I’ve seen in the last 20 years,” said Mark Hunter, CBRE’s managing director of asset services, at the recent ICSC New York trade show. “And mall sales are up by 8% this year.”
Retail sales per sq. ft. rose sharply over the past five years, though CBRE’s report expects them to slow in 2023 before rising again in 2024. Net absorption is also expected to slow, but not from lack of demand. Supply-side snaggles and high development costs continue to stall aggressive expansions by retail brands that prefer to hold out for prime space.
Instead, holds CBRE, retailers will focus on redesigning and redeveloping existing space to attract more shoppers—especially in those prime markets where center operators are experiencing record-high occupancy levels and charging higher rents due to strong demand.
CBRE does, however, expect many retail brands to become more active in tertiary markets, where cheaper rents will allow them to build brand awareness at a lower cost.