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12/09/2019

What’s ahead for retail? Simple…just look to the past

Anne Mastin
Anne Mastin

I started in this business 36 years ago.

When I think about where the industry is headed, it’s only natural to start with where we’ve been—and how far we’ve come.

Reflecting back on three and a half decades of success, failures, and extraordinary growth in an industry that has been undergoing near constant evolution, there are clear themes that emerge, some obvious lessons to be learned, and some important clues about the big developments—and big questions—that will shape the future of retail and mixed-use development going forward.

Retail Apocalypse?  Don’t be ridiculous.

Over the course of my career, I have been personally involved with some of the foundational shifts in formats, formulas, and retail product types that have framed the evolutionary arc of the industry.

I started in the golden era of the enclosed regional mall, and was around for the invention and rise of the value mega malls in the late 80s to mid-90s. I was there for the outlet center boom in the 1990s, and the subsequent bursting of the outlet center bubble not too long after that. I saw the lifestyle centers of the early 2000s follow the same pattern, and I’ve witnessed the emergence of the highly successful regional town center model. I’ve been personally involved in the development of the iconic Easton Town Center in Columbus, Ohio, a project that brought in almost a billion dollars in sales last year and remains one of the highest-grossing centers in the nation.

There’s a reason we say that these concepts evolve: The retail business is incredibly Darwinian. From the mid-1990s to the mid-2000s, half of the outlet centers in the country closed. More than 90 of the original retail brands at a project that I worked on the 1980s, Kenwood Mall in Cincinnati (now Kenwood Towne Centre), have since gone out of business. This is why all the talk about a “retail apocalypse” is so silly. We are in the midst of a generational shift. Industry turbulence is less about the internet and more about boomers giving way to millennials as the key consumer demographic. Going forward, stores and formats will continue to need to evolve if they want to survive. That’s not new—that’s how it has always been in the retail world.

Developers who relate to retailers succeed

The emergence of a robust and viable digital marketplace has prompted a great deal of handwringing in recent years. The growth of online and mobile retail stores and online-only brands isn’t a bad thing! It’s just another evolutionary pressure-point in the Darwinian dynamic I referenced above. As much as consumers appreciate the convenience and flexibility of online shopping, they will always value great spaces, and experiences they can’t get online. The big digital-native brands have succeeded because they listened to their customers and provided them with something (an innovative product, a seamless purchasing experience) they couldn’t get from traditional brick-and-mortar retailers. Those traditional retailers would be smart to listen to those customers—they’ll take you where you need to go. I expect to see creativity and adaptation, and more hybrid retail concepts where the lines are blurring between brick-and-mortar and click-and-order.

The emergence of food and beverage is another key theme that has shaped retail development over the course of my career. F&B has gone from afterthought to anchor, with exciting new restaurant concepts now a critical component of almost any project. When I started out, there were only a handful of national publicly traded restaurant companies—and food courts were still a new idea. Now, food and immersive entertainment concepts like high-end cinemas, sports and games experiences are a central feature, and are likely to continue to become even more pivotal as regional attractions, experiential elements, and digital differentiators.

This has always been a relationship-driven industry. You can’t force a retailer to do something that doesn’t make sense for them—but if you can prove you have their best interests at heart, you can earn their trust. That trust will get you a meeting. It will get your call returned. That’s all you can ask for as a developer: to pitch an opportunity from your perspective. It will be incumbent upon developers to continue to work hard to build and sustain those essential relationships in the future, especially when more and more communication is conducted via email. I predict that the most successful development professionals will continue to be those who do the legwork, and work hard to travel and meet face to face to get deals done.

The role of women

Finally, a topic that is incredibly important to me and to the future of industry: the role of women in retail development. Happily, things are changing in this traditionally male-dominated business. Women have come a long way from the early 80s. Unfortunately, however, a thick glass ceiling remains. There are still far too few senior women at the highest levels. We need to continue to support and promote talented and assertive female leaders. At the same time, industry women need to support each other, as well. I’ve learned so much from so many smart, dedicated and generous professional women in my career. I’m enormously grateful for that, and proud of the mentoring that I’ve provided in turn for young women. Properties can be demolished or replaced, but relationships will endure.

Big questions remain. What product types will survive? Why has the enclosed mall prototype declined and why is mall traffic down? What is the long-term viability of regional town centers? What role will the phasing out of baby boomers as consumers play in the future retail environment? What new and unique offerings will retailers find to differentiate themselves and create that all-important regional draw?

We don’t yet know the answers to those questions. History tells us that success will come from creativity and innovation. Anticipating and responding to the evolving preferences and priorities of consumers will continue to be critical. Continuing to design and build great spaces and places that people will gravitate to when they are looking for great products, services and experiences will also never go out of style. Those core truths haven’t changed in the last 36 years. They won’t change in the next 36 either.

Anne Mastin, executive vice president of retail real estate for Columbus, Ohio-based Steiner + Associates, is retiring after a storied career in retail real estate shaped by companies like The Taubman Co. and L Brands. She can be reached at email [email protected]

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