E-commerce is surely killing brick-and-mortar retail or at least that’s what CRE data and recent stories of storefront closures tells us.
But brick-and-mortar isn’t dead, and brokers shouldn’t write it off. Physical retail locations are going to need to keep evolving with technology and consumer preferences, and if they do, a major brick-and-mortar resurgence is on the horizon.
An undeniable benefit of e-commerce is the lack of checkout lines, but technology can revolutionize the way consumers make in-store purchases, too.
Amazon Go, the new grocery store concept currently in beta testing in Seattle, has completely removed the hassle of a checkout line from the in-person shopping equation. With sensors, customers can walk into the store, grab their items and leave. Their purchases are automatically tracked when they walk out the door.
This technology is just beginning to take off, but soon it will be the new standard. And it’s one of the things that will keep brick-and-mortar retail alive. In a not so distant future, every retail property you sell will need to be able to adapt to this shift.
Experiential retail stores are thriving because they provide consumers with experiences they can’t get online.
Outdoor stores like Bass Pro Shops, REI and Cabela’s provide immersive experiences that make shopping feel like an exciting activity rather than a chore. Even though their products are available online, their brick-and-mortar retail locations continue to succeed because of the experiences they provide–from the opportunity to climb a rock wall (REI) to the chance to kennel your dog for the day while you browse the taxidermy museum (Cabela’s).
But it’s not just outdoor brands that are embracing the power of experience. The high-end home decor brand Restoration Hardware recently opened a new flagship store in Chicago that provides visitors with a full day of leisure activities via a cafe, bar, restaurant, performance stage, contemporary art gallery and social gathering spaces. They’ve truly blurred the lines between shopping and socializing: you can eat a meal or drink a glass of champagne on every piece of furniture that’s for sale in the six floor store.
It’s clear that the retail spaces of the future need to be flexible in order to accommodate a wide variety of experiences other than shopping. These types of spaces are ultimately more likely to convert sales for investors both today and as experiential retail continues to grow in the future.
Even with the rise of e-commerce, consumers still believe that some things just shouldn’t be bought without testing them out.
Warby Parker, a prescription glasses retailer, began as a purely e-commerce business that sent customers a selection of six pairs of glasses they could try on at home and send back for free. They bet big on e-commerce, but quickly learned that many people didn’t want to wait to try on their glasses or wanted to try more than just a handful of pairs. They made the transition into brick-and-mortar retail while maintaining their e-commerce presence. Research featured in Harvard Business Review shows that many of today’s most successful retail brands are doing the same.
Until recently, many retail experts believed that shoppers were beginning to use brick-and-mortar stores as showrooms before making their actual purchases online. It’s now been found that more and more consumers, especially Millennials, are “webrooming,” or researching product options online and then purchasing them in real life. And customers who did prior research online spent 13 percent more in stores than those who did not.
Keep these trends in mind and encourage your retail investors to look with a smart eye toward the future of brick-and-mortar stores. Demonstrate that you’re ahead of the curve and have a vision for how their business can adapt along with changes in retail technology and consumer preferences. You’ll be a forward-thinking investor’s perfect partner if you can show them you’re going to help them thrive in the face of the rapidly-evolving retail world.