This post is sponsored by RPAI.
Retailers are constantly changing their strategies to meet shifts in consumer demands and changing needs from physical locations. Many are using more sophisticated technology to anticipate trends and respond accordingly.
In this post, we talk with RPAI’s Maria Toliopoulos, senior vice president and director of national retail leasing and services, about the changing nature of shopping centers and how they’re positioning to meet consumer demands.
Question: Can you tell us a little about current market trends in the retail space?
Maria Toliopoulos: While brick-and-mortar locations continue to be the dominant format for retail, customers are increasingly seeking seamless and cohesive omnichannel customer experiences. Today, millennials are looking for instant gratification, yet they are also seeking unique experiences and stories to accompany their purchases. To provide these, retailers are continuously seeking ways to use retail spaces to showcase products and services while also gathering information from consumers. For example, stores are tracking how many times certain products enter dressing rooms and translate into sales using new technological advancements with RFID, and stores are also monitoring repeat guests and what other stores those guests have visited based on their smartphones’ Wi-Fi.
Companies that can gather and use data to target consumers with meaningful, relevant and personalized offerings will continue to beat the competition. In addition, services such as BOPIS (buy online, pick up in stores), same-day delivery and free shipping are no longer premium purchasing options but are instead becoming expected service offerings. For retailers to compete, they are also rethinking the traditional use of retail space as a point of sale and are beginning to view it as an additional distribution point. The successful retailers of tomorrow will be the ones that create engaging and unique interactive experiences in stores, in addition to online and on mobile, to optimize their brands, generate customer loyalty, and make their retail spaces more productive and diverse.
Q: What is the outlook for 2016?
MT: With job growth, housing performing and consumer confidence remaining high, the outlook for 2016 is positive and full of opportunity. As for retail, sales, excluding auto and gas, are up 3.2% year-over-year. New supply in the shopping center sector remains at or near all-time lows, and we have not seen wholesale degradation in tenant balance sheets. While we had a modest number of tenant bankruptcies in 2015, we believe those store closings indicate a loss of retail relevance, not a future trend. In fact, we continue to see tenant expansion from a number of large retailers, including Dick’s Sporting Goods, Fresh Thyme Farmers Markets, DSW, Five Below, TJX Companies, Ulta and Sephora.
Q: How do you see the landscape shifting in the next five to 10 years?
MT: As all generations, from millennials to baby boomers, look for ways to include more experiences in their already hectic lives, we are seeing more demand for locations where consumers can do it all, from work and dine to sleep and shop. This means both a geographic shift and a change in the locations retailers are seeking. Shoppers expect centers to offer food, fun and entertainment, as well as services such as medical care, health clubs and spas. Also, the growth of online purchases has pushed both retailers and shopping center owners to create unique store and center experiences to attract customers. The traditional concept of a “shopping center” is changing as consumers demand higher quality and variety, plus convenience, such as access to public transportation and other needs and services. To serve these demands, retailers will continue to migrate toward high-density markets and seek additional infill opportunities.
Q: How is RPAI positioning its portfolio to get ready for what’s coming?
MT: As retailers continue to implement new technologies and strategies in their stores and as online retailers look to open their first brick-and-mortar locations, they are seeking centers with great demographics, including dense population and high income. Our 2015 acquisitions and 2016 announced acquisitions in Chicago, New York, Washington and Baltimore represent RPAI’s continued focus on buying high-quality real estate, not configuration, and are in line with retailers’ continued demands for more quality spaces in these high-density and high-income markets.