We’ve heard it ad nauseam at this point, “the retail landscape is changing.” Industry experts have spent plenty of time, and ink, discussing what that means and how it will all play out, but what do consumers actually want to see — and more important, expect — in shopping centers 10 years from now? JLL recently surveyed 1,500 U.S. consumers to find out and the results were, well, somewhat surprising.
For all the constant consternation over the need for retail and shopping centers to evolve, consumers were relatively reserved in their desires. While robots and magic mirrors may make for great headlines, consumers favored skilled customer service, personalization, and convenience. That’s not to say that retail doesn’t need a makeover, it’s just that consumers aren’t necessarily interested in integrating their favorite sci-fi movie into the shopping experience just yet.
What’s old is new again … kind of
Shoppers still place an emphasis on value and efficiency — especially when it comes to shopping for daily needs — but they also want to be surprised and delighted. That doesn’t mean we need centers made up entirely of axe-throwing and beercade tenants, however. Surprisingly, 37 percent of consumers just want new and innovative retailers. For example, Glossier, a beauty brand and retailer, creates “Instagramable” stores that are all about fulfilling their consumers’ quest for the perfect selfie. So far that concept has worked, as its New York showroom generated more revenue per square foot than the average Apple store. So, it’s clearly not about completely deviating from retail, but the concepts need to be modernized to fit today’s consumer and, more importantly, need to be updated constantly. The original 10-year timeline for store-roster updates simply won’t cut it. As a result, shopping-center owners will need to be creative and flexible in their leasing structures in order to bring in these types of emerging brands that can’t yet commit to long-term deals.
Move over, AI, personal service still matters
Despite all the noise to the contrary, roughly 90 percent of retail sales still occur in a physical store. However, that doesn’t mean that stores should rest on their laurels. What it means is that stores need to be even more diligent in perfecting their in-store experience for shoppers. One way they can do that is by prioritizing people, as a little over 50 percent of shoppers said that skilled customer-service associates were a deciding factor in where they shopped. That’s not to say technology isn’t also important, especially with consumers becoming more channel agnostic — especially younger generations. Combined, just over 70 percent of Millennials and Gen Z shoppers want stores to remember their preferences as they switch from researching, browsing, and buying across the brands online and in-store offerings.
Wellness – the newest status symbol
The global health and wellness economy has grown 12.8 percent in the last two years to $4.2 trillion. Wellness is a broad term that is defined differently by different people, but includes mental, physical, and emotional health. In retail, we often talk about fitness or health-care tenants. While those are both important aspects, the No. 1 thing consumers wanted to see in their shopping centers was open green space (41 percent). They are looking at shopping centers as a place to congregate and relax. About 17 percent of consumers want fitness concepts in their shopping centers — a trend that shopping centers have already been hitting on as fitness-tenant move-ins grew by almost 14 percent in 2018. Health-care tenants are also seeing dynamic growth, with a 47 percent increase in retail centers over the last three years. Even so, of the 116,000 shopping centers in the U.S., only 12,000 have a health-care tenant — which means there is still a tremendous amount of growth opportunity for the segment. We expect that number to double by 2022, as the demand from shoppers is rising. From a landlord perspective, these types of tenants — especially physician and hospital groups — are strong additions, as they provide foot traffic and have high credit ratings, which adds stability to the center.
For tech, stick to the K.I.S.S. model
Of course, consumers are interested in tech as it continues to permeate our everyday lives, but experiences with clunky self-checkout registers and AI-enabled phone attendants have made them wary of automated experiences. Just 11 percent of shoppers are interested in seeing customer-service robots in their center in the next 10 years. Just over 31 percent do expect to see a more seamless check-out experience over the next decade. While the allure of the latest tech will always be a draw, shopping-center owners would be well advised to focus their tech investments on back-of-house utilizations that improve logistics, efficiency, and inventory management to provide a more frictionless experience for the shopper.
The shared economy isn’t just for housing and vehicles
The average shopper buys 60 percent more clothing than 15 years ago but keeps it only half as long. However, as shoppers become increasingly more mindful of consumer waste, the concept of renting goods is becoming more mainstream. Just over 57 percent of shoppers are now willing to rent trendy, well-made products. That number increases for both Millennials (70.9 percent) and Gen Z (72 percent) as they are the generational groups most concerned with their environmental impact. Some retailers are certainly taking notice — Rent the Runway, the rental-fashion service, and West Elm, a traditional home-goods retailer, are partnering this summer on a home-design rental concept. For now, just 12.6 percent of shoppers say that Home Goods is a category that they are willing to rent in, trailing Electronics (18.6 percent), Sporting Goods (17.1%), and Clothing (13.2 percent).
Hello, 2030
I don’t want it to seem as though I’m advocating for the status quo when it comes to retail and shopping centers; quite the opposite, in fact. But at the same time, the industry needs to show some restraint in terms of jumping on every single hot trend that pops up. This is very much a case, as the consumer data bears out, where it is better to be on the cutting edge, not the bleeding one. Shoppers definitely don’t want to see the same tired retail concepts or shopping centers, but they also don’t want all the latest bells and whistles, either.
Shopping-center practitioners should focus on bringing in new, exciting retail concepts, enhancing their common spaces, incorporating wellness-focused uses into their tenant mix, and upgrading their technology to create seamless and efficient experiences.
This article was written by Greg Maloney from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.
