The Future Of Brick-And-Mortar
When you need to buy something, do you check to see if it’s on Amazon first? Maybe hope it’s eligible for same day delivery? If so, you’re not alone. Most millennials and 51 percent of Americans prefer to shop online. With marketplaces like Amazon, eBay, Etsy, and Alibaba, the world is just a click away and waiting for delivery on your doorstep. You never even have to get out of bed. So does that mean we’ve reached the end of the traditional brick-and-mortar store?
Not quite. While skeptics have focused around the closure of stores and the reinvention of retailers in the digital space, ecommerce only accounts for less than 10 percent of actual sales according to the US Census Bureau’s 2018 3rd quarter report. And while Millennials seem to be driving those digital marketplaces, a new generation is stepping up to the plate and revitalizing the traditional retail space. And it’s centered around convenience, value, and, most importantly, experience.
Using Technology To Enhance The Retail Experience
The next wave of retail shoppers are what the Retail Industry Leaders Association calls the (R)Tech shopper: consumers who want to shop anytime, anywhere, in any way. For a long time, that meant exclusively shopping online. But online shopping has its share of drawbacks: inconsistency in online products, waiting days, sometimes even weeks for shipping, and the hassle of mailing back returns encroaches on the factor of convenience. And convenience has been the main driver of online sales for years.
When I sat down with Steve Bowler, executive vice president, and resident commercial retail expert at Colliers International, he was already aware of the problem. “(R)Tech shoppers know they can buy it online, they know they can have the product in two days with Amazon, but they’ve gotten to the point where they want it now. ” And he has a point. In the age of convenience, why wait for a product to arrive when customers can order it on their phones and pick it up in-store the very same day?
“What the [millennial] shopper doesn’t want to do is have to wander down the aisles to find the item they’re looking for and then hope to have somebody there who can help them if they have a question,” says Mr. Bowler, and the data shows he’s right. According to the International Council of Shopping Centers, millennials are 84 percent more likely to research a product online before even setting foot in a store. And they’re 87 percent more likely to be on a mobile device while they’re there.
So the challenge is integrating the digital space with the physical space. Especially with mega-stores like Walmart and Lowes. “Millennials will think the store is too big, so they’re actually working on an app that will walk you through the aisles to the product you’re looking for,” Mr. Bowler says, pulling out his phone and pantomiming the process. “The traditional retail space isn’t going anywhere. It’s just becoming more innovative.”
Designing The Shopping Experience Differently
As retail becomes more innovative, it also needs to become more flexible, especially as the younger population grows. In 2000, the number of millennials surpassed the number of baby boomers in Utah, and in 2015 they surpassed three million residents. The population is exploding, and young consumers are taking over the market, which leaves retailers optimistic. Consumer confidence is at an all-time high. But how do we attract young consumers to traditional spaces?
I asked Anjee Solanki, the national director of retail services at Colliers International, how traditional brick-and-mortar retail spaces anchor themselves back in the spotlight, and she came back with a simple answer: food. “The tech boom is, of course, tied to food,” she says. “Retail space is now, too. With the millennial generation, food is massively important.”
Mr. Bowler agrees. “In a retail complex, it used to be we had an anchor tenant, a Walmart or a Dillard’s. But now, that anchor tenant is actually food. It used to be that it was all about these national credit tenants, too,” Mr. Bowler continues. He’s referring to a Red Lobster or an Olive Garden, national chains that have backable credit. “But that’s not the case anymore. They want something unique. They want an experience.”
Because, for the (R)Tech shopper, it’s all about the experience. Both millennials and Gen Z are less about using their money for things and more about spending their minimum wages on experiences. And with the impact of social media, young consumers, and particularly Generation Zers, are more likely to be using retail space as social space, both in the real and virtual worlds. They’re looking to build a community around that space. It’s all about a perfect photo for the “‘gram.”
“Gen Z is the ‘I want to touch it, I want to feel it, I want to explore it with my friends, and socialize in the space’ generation,” Ms. Solanki tells me. “We’re going to see a resurgence of that craft specialty to create a tactile space people can engage with and customize.” But Ms. Solanki assures me this isn’t just small bookstores and boutiques. Chains are embracing this, too, customizing the experience according to the community they’re in and making their customers feel special.
But adapting that space to a more experiential generation can prove difficult. Especially when the only space you have available is what used to be a Walmart or an Olive Garden, spaces that were designed for one exclusive purpose―to be recognizable. “It hurts the future of retail to have this habit,” Mr. Bowler says. “So we have to make the spaces a little more generic, a little more flexible.” So when one tenant moves out, it’s still realistic for someone else to move in. It’s important we keep looking to the future. “We have to conscious about the spaces we’re creating. And we have to keep innovating. Always keep innovating.”