Everywhere we look the headlines regarding online, Internet and mobile sales are striking fear into the hearts of brick-and-mortar retailers across the country. 2016 saw the largest Internet and mobile driven black Friday sales to date with totals of well over $3 billion. CRE professionals know that trends that affect their client’s and tenant’s business ultimately affect their ability to continue to grow and generate revenue from a diverse commercial real estate portfolio. Before you start a fire-sale on your retail units, let’s talk about a few reasons you may want to maintain some level of optimism regarding technology’s potential future impact on traditional retail business.
Consumers Still Like to Shop
While the online convenience of ordering any product, on demand, certainly has its appeals, consumers still enjoy the shopping experience of visiting a physical location. This is especially true in certain industries that require physical interaction with an item or purchase to know whether it’s the right fit for you. Online clothing has certainly come a long way over the last few years, but the prospect of cumbersome returns means that consumers still enjoy shopping for those business slacks in person where they can critique the fit in the comfort of a store dressing room. CRE professionals should pay close attention to product or industry specific trends when it comes to shifting brick and mortar demands.
Experience Driven Sales
While the mega mall concept may have peaked, there is still a demand for social gathering places where friends and family can meet for a quick bite, movie and shopping excursion. Stores that offer an interactive element may pair well with more traditional inventory selling establishments. Adding in technology advances such as wi-fi or interaction games makes for the best of both worlds when it comes to tech meets shopping.
The Potential for Synergy in Tech meets Brick and Mortar
Perhaps one of the most hopeful areas of tech meets brick and mortar is in the ability for these two shopping mediums to capitalize on the strengths, and fill in for the weaknesses of the other. Consumers still crave the tactile ability to view and carry their purchases out of the store. In addition, while shipping and delivery has certainly come a long way, we’re still a far cry from teleportation, drones, or other nearly instantaneous forms of delivery. The ability to have in store pick-up of items bridges the gap between virtual and physical stores in ways that are only just beginning to be explored.
If business moves are any indication of where brick-and-mortar trends are headed, the recent announcement of the multi-billion-dollar combination of virtual behemoth Amazon and real-world food staple Whole Foods, should have CRE professionals seeing light at the end of the tunnel for their brick-and-mortar portfolio properties. While in previous years Amazon has been adamant about the domination of online shopping, even this stalwart of the virtual space has now acknowledged the need for a physical presence for at least some types of product lines. In short, if the biggest name in online shopping still sees opportunity in the world of traditional retail, CRE managers and owners should know it’s not quite the time to start cashing in their brick-and-mortar chips just yet.