Online shopping might be easy, convenient and prolific, yet it hasn’t erased the need for flagship brick-and-mortar retail establishments. In fact, retail real estate is undergoing a phenomenal — and some might say surprising — comeback.
As REJournals reported, roughly 60 percent of businesses with physical retail assets plan to expand their footprints in 2022. What’s driving the momentum? Retail stores offer the personalization and community that virtual shopping lacks. Plus, those stores can serve as locations to test concepts, continue customer journeys, and forge deeper bonds with patrons.
Even brands with wildly successful online presences are bumping up their in-person shops. Take Warby Parker, for instance. As CNBC reported in late 2021, the eyewear giant, known primarily as an e-commerce destination, brought in 40 percent of its revenue from retail locations in 2020. Physical stores were essential for providing customers with full-service experiences.
This isn't to suggest that online buying isn’t increasing. It is. Instead of usurping physical browsing and shopping, however, e-commerce is augmenting physical shopping and fostering the growth of omnichannel retail. Omnichannel retail has been around for a while, of course, but McKinsey research shows that the e-commerce element soared in 2020 amid the pandemic.
And it’s true that physical retail took hits during mandatory shutdowns. Consumers opted to stay at home and order items for delivery. Developers had trouble getting construction permits. Property managers lost tenants as they forced retailers to reduce payroll. But now, brick-and-mortar is springing back to life, thanks in part to the benefits of omnichannel retail experiences.
Case in point: In-person shopping allows brands to develop deeper relationships with consumers. Even if consumers begin their journeys online, they frequently jump from the virtual world to the physical one when given the chance to touch, see and understand products. In this way, brick-and-mortar stores become destinations, not just massive inventory warehouses. And by using physical spaces in fun, personalized ways — like Sephora’s engaging kiosks that merge the digital with the physical — retailers can significantly enhance their customers’ journeys.
This isn't to say that retailers can expect fluid customer movement between online and in-person without a plan. Retailers need to map out everything from the new purposes of their spaces to the layouts of those spaces to meet — and possibly exceed — shopper expectations in specific communities. Below are some of the workable trends that companies can consider as they push ahead with omnichannel retail strategies to rewrite physical shopping experiences:
1. Develop experience-first stores.
Modern shoppers expect cohesive, experiential shopping journeys. With more of them adopting online and mobile shopping, they appreciate businesses testing out retail models with enhanced offerings.
Just look at SaksWorks for inspiration. The collaboration between Saks Fifth Avenue and WeWork offers unique co-working spaces to remote workers. Or consider DICK’s Sporting Goods and its House of Sport concept, created to give customers spaces to throw footballs, climb rock walls, and try any of the brand’s merchandise. These are all experiences that consumers can’t get virtually.
2. Leverage real estate to construct communities.
Brick-and-mortar retailers have discovered that they're stronger when they strategically position themselves with harmonious brands to establish cultural hubs. This type of “cluster retail network effect” leverages real estate to solidify bonds between customers, brands and communities.
For instance, some retailers use Leap Inc., an Occupier client, to determine where to open omnichannel, immersive, turnkey retail locations. Once open, those retailers support other retailers within the clustered space. Ultimately, the physical shops drive foot traffic between one another, ensuring a holistic and seamless retail customer experience.
3. Redesign for curbside shoppers.
The upsurge of online ordering ushered in the era of more in-store pickups and curbside returns than ever. As such, some retailers have re-evaluated their physical retail spaces to accommodate these new engagement methods.
Big-box retailers, including Target and Walmart, have gone so far as to redesign their physical storefronts to meet these demands. They’re incorporating different spaces and technologies to iron out the flow between online transactions and in-store services.
The future of retail real estate might have looked rocky in the second and third quarters of 2020, but it’s having a roaring resurgence amid omnichannel retail opportunities. That’s great for not only brands, but also consumers who want their shopping journeys to have multiple online and offline touchpoints.
Andrew Flint is a co-founder at Occupier, a transaction and portfolio management software helping commercial tenants and brokers manage their real estate footprint.
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Andrew Flint is a co-founder at Occupier, a transaction and portfolio management software helping commercial tenants and brokers manage their real estate footprint. Occupier’s software helps teams make smarter, more informed lease decisions by centralizing the way they work. In turn, teams ensure alignment between their real estate decisions and business successes. Andrew has a wide breadth of experience in the sales and commercial real estate spheres and is currently based in New York City.