It's estimated that over 30 percent of malls in the United States are dead or dying. That amounts to millions of square feet of commercial space. Does this mean retail is dead? While we're going through a metamorphosis in the retail space, I believe retail isn't dead, it’s simply evolving.
Demographics, transportation, logistics, technology and social behaviors are shifting consumer retail needs. Therefore, so is the retail market vertical. E-commerce isn’t going away anytime soon. It's a fast-growing portion of overall retail sales. But what e-commerce lacks is the core element of successful retail: human experience and interaction. As commodity-based goods are transacted increasingly online, retailers are turning their attention toward human scale interaction.
The word retail derives from retaillier (French) meaning to “cut off,” implying the early origins of what's now known as the art of tailoring. Tailoring is driven by service, fueled by customization and advanced through hospitality. Tailors are confidants, therapists and friends. They simultaneously engage in trade and commerce.
Like our interactions with a tailor, nothing will fully take away the desire for experience and human interaction in retail. In order to keep up, retail will remain one of the fastest evolving markets.
Here are three trends to watch in retail this year:
Everything Inconvenient Will Change
We're in the middle of a metamorphosis. Landlords and brands are changing how they deliver products. If there's a way to make trade and commerce exchange more efficient, cost effective and experiential, landlords and brands will not hesitate to pivot and evolve.
Automation, machine learning and stronger technological tools for improving efficiencies pervade the entirety of the retail experience. We're not far from the ability for anyone to get what they want, where they want it, when they want it.
Health is the New Wealth
The numbers don't lie:
- Approximately $200 billion spent in wellness tourism in the United States
- More than 50 million gym members in the U.S.
- In excess of 50 million people have chronic sleep disorders
- Wellness is a nearly $4 trillion business.
Health and wellness is at an all-time high. Today, we're seeing vacant big-boxes turning into fitness facilities and high-quality organic food concepts are seeing tremendous success. As a world that recognizes decades of diversion from a healthy lifestyle, retail is responding accordingly.
Reposition and Repurpose
From small, incremental “face lifts” of retail properties to massive billion-dollar renovations, this is the age of repositioning. In the last five years, tremendous amounts of retail square footage have been repositioned or repurposed from department store to food hall, big-box to gym. There are pro forma-positive moves to enhance “B” and “C” properties to current successes.
What has my attention is the repurposing of retail to atypical applications. One such use is NOAH, or Naturally Occurring Affordable Housing — natural demographic shifts based on time, place and context. While some may suggest this has nothing to do with retail, I’d argue that this is absolutely a part of the evolution and future of retail. Another is the repurposing of empty retail space into creative office space. Vacant retail spaces are now being transformed into collaborative work spaces. This is extremely appealing to large creative corporations looking for a new unique space to showcase the type of work they do.
While our notion of retail still reflects its human-driven origins, its functionality is shifting. Retail is no longer solely about trade and commerce; it’s a fusion of hospitality, food, fitness, entertainment and, most of all, experience, all coming together in an organic collision.
David Sheldon is responsible for Retail Design Collaborative’s brand and business alignment.
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