It’s been described as a retail apocalypse.
Numerous stores across North America shuttering in recent years.
But it’s not all doom and gloom in that sector of the economy. In fact, the retail industry has remained resilient particularly for those retailers who have been successful in adapting to the burgeoning growth in ecommerce.
Kruti Desai, Manager of National Research Insights with Data Solutions at the Altus Group, said there is a clear message in all of this – retail isn’t dead, it’s just evolving. And the retail landscape is also changing.
“Yes, we have seen several store closures happen in the last few years but these are also very traditional retailers that left behind larger spaces and now with changing consumer behaviours, preferences, changing habits, these changes are driving the changes in retail which means a lot of these spaces which were left behind that were vacant are now being transformed and they’re being carved out into more innovative store designs that cater to some of the needs from customers,” she said.
“So what landlords, and tenants, and retailers are trying to do is encapsulate a lot of these trends whether it’s from consumer shopping behaviours or even demographic changes and they’re trying to encapsulate that into the single location because we’re seeing the way people live, the way people shop, eat, even travel. It’s all changing. Now these big expansive spaces are changing with that as well. So we are seeing major transformation in the retail landscape.”
Desai said more retailers and shopping centres are reinventing their spaces into “destination” and “convenience” type retail. For example, the Upper Canada Mall in Newmarket, Ontario, added a food market in the large space left behind by Target, bringing in more local chefs and local retailers with shorter-term and flexible leases.
Another example, she said, is that landlords and tenants are now working together, trying to bring the digital age to the mall. So the retail landscape in stores is actually changing and they’re using artificial intelligence to deliver more personalized experiences from push notification where they are engaging the customer directly through their mobile phones. Also, augmented reality displays are coming into stores. Customers are now able to try on products without actually physically trying on the product.
“The landlords and the tenants are working together to add more value to the mall and keep customers more engaged,” added Desai.
Ecommerce is also playing an increasingly more important role in the retail landscape. Its growth has created more demand for logistics processes as well as warehouse and fulfillment centres. It’s also led to more adoption and adaptation to a seamless and efficient omnichannel experience for consumers.
“We know that ecommerce itself is growing and we know at the same time that Canadian shoppers – a larger percentage of them – are still shopping in-store. So what retailers are now trying to do is create an omnichannel strategy where they can engage customers and have customers access their products through different mediums – from online to in-store, they can have them delivered to their home or they can have them delivered to the store where they can actually physically still experience the product,” said Desai.
“And we know consumer demands are definitely changing. Next-day delivery is now becoming the norm and it’s likely going to keep growing. So we are seeing how that omnichannel strategy is changing the way retailers are selling their products, storing their products. They’re not necessarily keeping a larger inventory in-store. That’s now translating to an increased demand in industrial product where they can house a lot of their products there. It’s a very symbiosis relationship.”
She said customers now want products in their hands at a faster rate and products are now more accessible because of technology and companies like Amazon.
In a blog on the subject, Desai wrote that retailers and owners are changing the way stores are laid out, and thinking of different amenities that can be offered in shopping centres.
“The industry seems to remain dynamic, some say resilient, but only to a certain extent. There are still some retail centres that are underperforming and dealing with the aftermath of store closures such as Sears and Target, while others that are simply outdated representing opportunities to maximize zoning for better uses and adding value, such as mixed-use, office co-working space, professional medical offices, or even subdividing the space into additional or smaller retailers,” she wrote.
“In this climate, this is becoming the norm and it’s important for retailers to provide different options to customers, from shopping online where the product is swiftly delivered to their door to having customers pick up from the physical store so they can experience the product firsthand.
Successful retailers need to adapt to the needs of consumers. The retail store pushes the product branding to the customer and offers them a unique and immersive experience, a trend which is transforming several shopping centres and retail stores and moving them to integrate these types of experiences into their spaces. Going forward, owners and tenants are going to need more effective and collaborative partnerships to create strategies to attract and retain customers.”
Pop-up stores are also increasing the demand for flexible leases and becoming the preferred channel for new retailers to test out different markets and concepts, she added.