Revitalized retailers chart a new roadmap for success
As someone who started his career in his family’s chain of women’s specialty retail stores, I became aware early on that retail is an ever-changing business. That’s because consumer behavior and trends are always changing, and, therefore, leaders of retail brands must always be preempting those changes. I always felt that as a retailer, you needed to reinvent yourself about once every seven years, and that still holds true today.
Over the past few years and post-COVID, a new era has emerged in retail which is being driven by two factors:
- The reemergence of merchant-led retail, and
- Shrinking real estate inventory
Post-COVID brick and mortar shopping has returned to dominant retail centers. We are seeing a return to merchant-led retail with relevant and engaging brands now delivering a much more cohesive omnichannel experience. Sephora, Gorjana, Lululemon, and the URBN brands Anthropologie and Free People are all delivering an omnichannel experience that makes shopping more convenient.
At the same time, former online-only retailers are opening brick-and-mortar stores to support new market expansion that can only be achieved by opening physical locations--illustrated by the growth of brands like Warby Parker, Madison Reed, and Tommy John. These brands are acutely aware that 80% of consumer purchasing decisions are made in-store, although the majority of customers have been to their websites first. The customer gains the added convenience of a seamless browse to purchase experience.
Savvy retailers are combining the use of both e-commerce and brick-and-mortar stores, resulting in the delivery of a better, more robust experience to consumers.
The United States has historically been overbuilt with retail due to extended periods of rapid expansion. Over the past few years, however, net shrinkage of less productive GLA has helped balance the national footprint. CoStar recently reported that post-demolition net deliveries dwindled to 52.9 million sq. ft. in 2023, the lowest level recorded since it began tracking that measure some 20 years ago.
In conjunction, the better shopping centers are doing better. Rents are rising in Class A centers and highly competitive retailers are willing to pay them because they are being deliberate in choosing the ideal location. We’re seeing this play out at centers across the country. The Summit Birmingham, Pacific City in Southern California, and Chicago area projects like Hawthorn are a few examples of these highly sought-after locations. Retailers have a better roadmap for success which is exactly what merchant-led retailing is about.
The real winner in all of this is the consumer, which is exactly how it should be.