Last week I attended the International Council of Shopping Center (ICSC) research conference in Denver. The mood was energized and the content was excellent. It covered a good deal of ground to address the current health of retail, e-commerce impacts, and changes that could potentially “revolutionize” the industry.
Deborah Weinswig, Executive Director and Head of Global Retail Research and Intelligence for Fung Business Intelligence Centre, kicked-off the sessions by asking, “What has happened to retail? It used to be fun to shop, right?”
That got me thinking. Many point to E-commerce for provoking the industry’s troubles, but I don’t think it’s that simple. Over the last few economic cycles, retailing in the U.S. evolved rapidly. We saw the rollout of big box retailers that changed the way we shopped. New centers popped up from coast-to-coast to accommodate this format and give popular home improvement, pet supply and discount retailers the locations they needed. Back then shopping was new, and it was fun.
But, consumers are easily bored, so the industry adjusted, as it always has. Lifestyle destinations became the new rage and shopping and entertainment came together in retail matrimony. Book stores, a multitude of restaurants, and cinemas drove us into the new, often “cool” mixed-use, centers. Simultaneously traditional malls added lifestyle elements to attract shoppers and compete. This is when we saw the rollout of unique niche clothiers and home furnishing retailers that targeted generations across the board. How much fun was that?
Today, shopping is mundane. Why? Retail is in a state of “transition,” a reoccurring theme discussed at the conference.
There are no major innovations drawing us to shop as we had. Think about it – there is limited new construction, so there are no new centers to visit. Few new retailers are emerging and existing retailers are not introducing new formats, so there are no “must-sees” anymore.
Is it all E-commerce’s fault? I think the answer is yes – but it’s just not that simple. People are still shopping in stores and, in fact, surveys suggest that millennials actually prefer “shopping.”
So, what’s the deal? I think retailers have trained us to find the best bargains and get it as soon as possible. The department store industry saw this years ago when they ran coupons every weekend. It had a reverse impact though because no one shopped during the week. JCPenney witnessed this when they eliminated coupons in favor of a daily low-price guarantee policy. The result, they lost customers en masse.
I’ll repeat my theory, we have been trained to find the best price and get it as quickly as possible. That is e-commerce’s strength! Today, it’s tough for a retailer to develop brand identity and a loyal following, if the key thing that makes them competitive is the lowest price and quickest delivery.
Things are changing though – and that is the “transition” we are in. Technology is advancing to re-engage the shopper, emerging mobile apps will make shopping easier, beacon technology will know who we are, and social media will allows sales associates to connect with us directly. These may be the innovations needed to make shopping fun again. But, we will have to be patient to see how it all plays out at the “register.”
About the author | Research Director Walter Bialas
Bialas is a seasoned real estate professional with more than 25 years of creative problem-solving experience in the consulting, banking, and development industries. He has comprehensive knowledge of all the major markets and property types, as well as a particular strength in quickly assessing market dynamics and their implications on project feasibility.