The rise of omni-channel
The physical shopping environment thrives when enhanced with alternate channels. Omni-channel customers tend to shop more frequently and spend 3.5 times more than single-channel shoppers, according to a study by IDC Retail Insights.
Buyers can now pick out an item from a retail tenant’s webpage and pick it up at their nearest store. It doesn’t help that smartphones are also delivering coupons along with exclusive sales offerings. Shopping center owners are developing apps to assist customers and drive sales to their shopping center tenants.
“The smartphone is a true accessory to what we’re doing in our life,” said Anjee Solanki, Colliers (NASDAQ:CIGI) national director of retail services, to Hightower.
Major cities are seeing retail vacancy plummet due to, in part, a high level of employment and a lack of significant new retail construction. Rent is one of – if not the highest – expense a retailer pays, and that’s caused tenants to re-strategize how to increase sales and reduce costs, said SRS Real Estate Partners SVP Randol Mackley.
The advent of digital shopping systems is allowing tenants to save money with less square footage while maintaining or increasing sales volume. “Modern logistics can deliver goods more efficiently, negating the need to have deep inventories and therefore allow a reduction in store size and rent,” he said.
Balancing in-store and online
Consumers still prefer in-store shopping, as 94% of total retail spending happens within the four walls of a physical store, according to ICSC. It’s why traditional online-only companies are beginning to invest in brick-and-mortar channels to boost brand awareness.
Take clothing company Bonobos, which raised $55 million in 2014 to let customers try on the merchandise at new showrooms, or “guideshops.” Shop assistants act as personal stylists, and orders are taken with iPads and shipped directly to the customers’ homes for free.
“Hop off, bag-free, to your dinner engagement and get those clothes delivered right to your door,” said Solanki.