Retail Industry Renaissance

By  Lynn Dehlinger, Sr. Economic Development Manager/Broker Associate

The party line is that physical retail is dying, however this industry, as well downtowns, are in the midst of an amazing renaissance – diversifying their offerings like never before to create unique experiences for shoppers, visitors and residents.

The retail industry is evolving, by putting the experience back into the equation in order to thrive in modern society. Retail and Mall operators will have to continue to find innovative ways to fill spaces that motivate consumers to leave their homes. Mall operators especially must analyze what a mall can be, and they must envision themselves no longer as real estate brokers, but instead as customer-facing providers of shoppable entertainment.

Consider that today, a shopping center might tear down a vacant anchor store to add a hotel or a medical building, or it may remove the roof and add an open-air atrium where shoppers can relax, visit and even work – enhancing the community it is a part of.  As malls transform use, a former retail mall or vacant anchor store might now include retail space and a mix of amenities that bolsters the property and makes it a vibrant complex that may include medical, office, dining and entertainment facilities.  Among its new amenities, activities like a rock-climbing wall and indoor skydiving, educational labs for kids, culinary arts classes, pottery and craft making, art galleries and craft beer-making classes may be offered.

What e-commerce can’t offer, that these activities provide, is the human interaction and live hands-on experiences that consumers crave. In our increasingly digital world, more and more people seek opportunities to spend quality time with other people.  There is a need for shoppers to be able to see and touch the products, and to be afforded unique opportunities for experiences they cannot get in cyberspace.

Tom McGee, President and CEO of ICSC (International Council of Shopping Centers) and a Forbes writer/ contributor, highlighted in an article last year that “the increasing popularity of dining out is revitalizing retail real estate across the country by creating a true sense of community where people can go out to dinner, take in a movie and shop, all in one place. Shopping center investors, landlords and other tenants are seeing reenergized properties and storefronts as well as the workforce”1.

Focusing on the full social experience has helped downtowns and retailers redevelop and become vibrant again even as e-commerce grows. In fact, the shopping center occupancy rate stands at a healthy 93.2 percent, according to the National Council of Real Estate Investment Fiduciaries; while research by the International Council of Shopping Centers finds that American consumers log 1.5 billion visits to shopping centers every month. By transforming vacant anchor ghosts and empty stores into destinations that offer more than just shopping, more people will ultimately stay longer, spend more money, and experience the offerings that promote an excellent quality of life.  A successful example of this is Jacksonville, Florida where aging shopping centers are making a comeback2 in suburban areas.

The evolution of both private and public spaces goes hand in hand as cities strive to continue place making – defined by the Project for Public Spaces as “a collaborative process by which we can shape our public realm in order to maximize shared value. More than just promoting better urban design, Placemaking facilitates creative patterns of use, paying particular attention to the physical, cultural, and social identities that define a place and support its ongoing evolution”3.  Retailers and downtowns have discovered that a store’s or area’s artistry must appeal to the shoppers’ sensory experiences.  The design and layout of the area/stores must be pleasing to the eye, but the best designs of all, specialists say, will incorporate immersive experiences that affect the person’s very soul.  As we have learned from the Knight Foundation, which RMA consistently emphasizes to our client cities, it’s the feeling and experience that people get when they come to your city (or store) that makes the difference 4.

Links:

1 https://www.forbes.com/sites/tommcgee/2017/06/07/follow-the-jobs-how-consumer-retail-is-making-a-comeback/#3328a572dc5e

2 https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-future-of-the-shopping-mall

3 https://www.pps.org/article/what-is-placemaking

4  https://knightfoundation.org/sotc/