In Evolving Industry Landscape, Changes in Big-Box Retail Tell a Fascinating Story

At a time when the commercial real estate landscape is evolving with unprecedented speed, changes in big-box retail are an important storyline. Appreciating how and why big-box concepts have thrived in a post-pandemic environment, and understanding the logic behind decision making with regard to everything from store layouts to merchandising, is an important first step in recognizing how retailers are responding to new pressures and consumer preferences.

Boxing Day

There were clear retail winners and runners-up during COVID. At the top of the list of success stories are club retailers and big-box concepts. The ability of familiar and iconic brands like Walmart, Target, and Costco to appeal to a wide demographic range was based, at least in part, on their diversity of retail offerings. That appeal has endured, despite economic uncertainty, inflation and other factors. Today, consumers are still looking to big-box brands as dependable options for both want- and need-based retail.

Online and Inline

Online ordering and in-person pickup surged in popularity during the pandemic. This was a trend that started in grocery and restaurants expanded to other retail segments as well. Perhaps no retail segment has more effectively embraced that model than big-box retailers. Dick’s Sporting Goods, for example, now uses its brick-and-mortar locations to fulfill most online orders. Dick’s, which has increased inventory by 50 percent and now fulfills up to 90 percent of online transactions through its in-store network, is representative of how big-box retailers have made significant investments upgrading their multichannel capacity. Retail and mixed-use centers with a significant big-box component, like the 500,000 square feet of big-box retail at Easton Town Center’s Easton Gateway district, have seen that new emphasis on multichannel translate to a surge in both sales volumes and foot traffic.

Fulfillment Centers

Part of the big-box embrace of multichannel has been a corresponding willingness to rethink the very nature of how their brick-and-mortar stores operate. Today, growing numbers of big-box brands have taken on an expanded role as online fulfillment centers, with significant design and operational changes to accommodate that shift. Those changes include interior space dedicated to pickup and logistics, as well as modified parking fields with space reconfigured for pickup lanes and spaces, and parking specifically set aside for online order pickup.

Bigger is Better?

Big-box concepts are leaning into the bigger is better approach, with larger formats that accommodate the more substantial back-of-house areas needed to handle increases in multichannel sales and click-and-pick logistics. Walmart became one of the latest to think bigger, recently announcing plans to build or convert over 150 larger format stores in the next five years, the majority of which will be new builds.

Welcome to the Jungle

There's no bigger factor in the world of brick-and-mortar retail than Amazon.com. The Amazonian influence on consumer behavior and expectations is profound, and the pricing and logistics advantage that the online giant enjoys is driving big-box concepts to continue to innovate to keep pace. One area where big-box concepts have an edge is in the introduction and expansion of popular loyalty programs. Costco, Sam’s Club, and Ulta Beauty have shown how effective those programs can be, and other big-box retailers are taking note — and taking action to implement their own programs.

It's not hyperbole to say that the post-pandemic changes in big-box retail are emblematic of a profound and possibly even historic shift in retail. With big changes and bold innovation taking place both inside and outside of their stores, big-box brands are thinking differently to ensure the success that the segment has enjoyed in recent years has long-term staying power.

Spencer Jordan is the senior vice president of leasing for Columbus-based Steiner + Associates, the co-owner, developer and manager of the award-winning Easton Town Center and corresponding Easton Gateway.