Retail, the fallen angel of the industry. We have been barraged by negative headlines this past year, of which company has filed for bankruptcy, or which mall is now a ghost town. However is this bleak outlook really true? It seems that experts in the industry think the retail sector is simply in a transitionary period, where evolution is extremely important. The companies that embrace the change and remain creative and innovative need not worry.
However, this is not a time for stagnation. Only the strong (retailers) will survive, as the market’s landscape changes. So, let’s take a look at some predictions for 2019 and beyond for retail real estate.
Brick and Mortar Stores Will Survive
With all the talk of brick and mortar crumbling into nothingness, the future can seem bleak for retailers. However, experts seem to think that physical stores will continue to survive, while also being extremely profitable. Look at Target, for example, they have been able to pull in the growth of profit of nearly 20% compared to last year. They are able to keep their physical stores relevant while also offering other shopping channels, but it always comes back to the physical store as the home base. Retailers that follow suit are sure to survive.
Online Retailers Will Expand
Online retailers purchasing physical stores? Now, this may seem backward but it seems to be a trend that will pop up more frequently in 2019 and the future. Stores like Bonobos are perfect examples. These online retailers will want to expand their real estate portfolios, and allow their specialty merchandise to be seen, felt, tried on and showcased in a store.
The catch? Shoppers won’t be able to purchase clothes in-store but refer back to ordering online. These online retailers could be interested in short term leases, pop-ups or long term, how Bonobos does it. This creates expanded opportunities for landlords of vacant space.
Big-Box will become Small-Box?
Some retailers such as IKEA and Sears feel that there is value in beginning to downscale their stores. They can save money on space and create a more intimate shopping experience for buyers. Additionally, they can create a more appealing looking space that will draw shoppers in. Combine this with the ability to simply deliver large, heavy items and it could be a new way to find success in the industry.
Discount Stores Will Thrive
Sales reports show that discount store such as TJMaxx, Ross, and Burlington have been doing especially well. This is because they are able to appeal to the essence of millennials, the crave of luxury goods and items while making a fourth of what previous generations made. Shoppers still want good quality, but they also want to find great deals. These niche discount stores offer something that online shopping can’t, the ability to walk into a store not know what you need and come out with a full cart because you got a great deal. It’s almost like treasure hunting, and that is enough to drive shoppers offline and into stores.
The retail industry is always changing, but it is for sure not dead. We will have to keep an eye out for these and additional predictions for 2019 and the future.