How to use retail space as a magnet for both customers and talent
The goal of retail is to attract, retain, and convert customers. At the same time, retail needs to attract and retain talent— people who help bring the customer experience to life. How can retail attract both customers and talent? Through years of lessons learned in creating magnetic spaces.
Pivoting to physical: Before 2020, the workplace was just that—a place where people went to work. Then came COVID-19, and the workplace swung digital. Return to office has pushed the pendulum back a bit, but the nature of the workplace has changed. The physical space has lost its primacy. To attract the best talent, it needs to be more than convenient. It must become a place people want to be.
Retail knows this thinking well. Fifteen years ago, retail faced seemingly existential threats from cannibalization and e-commerce. Daunting vacancies dotted the retail landscape, while apocryphal rumors of a retail apocalypse echoed across the industry. Flash forward and now we’re marking five straight quarters of the lowest retail availability in history—4.7% in the United States.
How did that happen? The retail industry spent 15 years finding ways to turn space into place. More recently, retailers have been focused on putting the customer at the center. The goal: being as convenient as possible across every physical and digital channel. (Retiring obsolete stores also contributed to the rising occupancy rate. For a deeper dive, look for the upcoming Retail Space Conundrum: Navigating the Rise of Obsolete Space from CBRE Econometric Advisors.)
Giving space its place: Retailers obsess about their real estate almost as much as they do about their customers, for good reason. Real estate is core to retailers’ business. They live or die by the way they monetize their real estate. A few blocks can have a multiplier or divider effect on customer traffic or impressions and sales.
With the stakes so high, solid data has gone from essential to critical. In the digital realm, retailers have deep data about their interaction with the customer. In the physical arena, the analytics are just starting to catch up. Closing the gap is a personal passion of mine. And it’s crucial as retailers race to make themselves as convenient as possible to the consumer, across both digital and physical channels.
To bolster this effort and our overall strategy, we have brought in Scott Schnuckel as Managing Director of CBRE Americas Retail. Formerly the real estate chief at Kohl’s, he led his team through dozens of store openings and relocations as well as redevelopment, lease restructuring, capital market plays and a transformational partnership with Sephora. His retailer DNA and penchant for deep thinking help break our ideas out of the box and into a new way of approaching retail space.
Making space for talent: What the physical store does for customers, the workplace does for talent. The muscle memory of creating space that attracts, retains, and converts customers gives retail an edge with employee engagement.
At the headquarters level, elevating the workplace experience not only promotes employee engagement; it provides a competitive advantage in the race for talent, as well. The same thinking applies at the store level, where the quest for customers dovetails with the rising challenge of hiring and keeping employees who want a better workplace.
What’s it worth? Recently, I have been hearing from more brands how they are balancing the CapEx for breakroom upgrades against the cost of high staff turnover. After all the expense of bringing the right customers to the stores, retailers can’t afford not to have the right talent converting them into sales.
As of this writing, tariffs are in play, and uncertainty is in the air. But this much is sure: Making the physical store attractive to both customers and employees creates a magnetic field of opportunity. And retail knows how to make that opportunity a reality.
(Thanks to Sarah Drew, head of Workplace Experience at Gap, Inc., for helping me evolve and inspire my thinking on this topic.)
Laura Barr is Americas Retail leader at CBRE
