From “Bricks and Sticks” to Bricks and Clicks: the continuing change in the operating world for physical retailers and on-line retailers.
We continually hear the discussion about the end of brick and mortar retailers due to e-commerce, this is not true. The real point is how e-commerce is changing retailing. E-commerce is a growing business because many individual people can start a business online and sell products through sites like Etsy or their own websites – and there are now solutions and guides like this over here on TradeBeyond to help with sourcing materials to help people stay ahead of the game and meet their long-term goals. The internet is available on such a large global scale and therefore, many people are taking advantage of it for their business innovations. They use things like yourvirtualofficelondon.co.uk – registered office addresses for businesses to be able to work from home, but still have an office space for correspondence. Also, e-commerce businesses can now hire employees easily and with the same quality as a non-computer based company. This is because websites like https://WorkBright.com/remote-onboarding-best-practices provide a virtual onboarding process, which gives you the same amount of legitimacy as any other business. With things like this being widely available it is no surprise that businesses are taking advantage of the e-commerce network.
Part of our job as service providers is to help our clients move to where the market is going.
I thought it would be helpful to describe some of the changes that the Coldwell Banker Commercial organization is observing in the Retail sector:
- The move to smaller footprints and less stores is occurring, firms such as Walmart, Target, Best Buy, Lowe’s are all experimenting with small store formats.
- Part of this is to embrace the “showrooming ” effect – meaning people still want to physically touch certain products before they buy them ,
- Also, this allows the store to cut back on inventories
- Because of the smaller store and less inventory, look for a lot of emphasis on “Same Day Delivery” from retailers in order to compete with the e-Commerce businesses that are already offering it.
- The competitive environment is evolving to the “battle of the supply chains” with retailers are using stores for showrooming and their larger facilities as inventory supply chain centers.
- The lines between retail and warehouse space will become more and more blurred.
- The result is retailers taking an “Omni-channel “approach to customers and melding their merchandising mix with both delivery areas
- Given these trends, developers and landlords will need to alter retail construction.
Eric DeVorkin of our team brings up an excellent counterpoint to the conventional wisdom out there, maybe the Big Box retailers are reducing their footprints because retail shopping is cyclical in nature and the Big Box /Mega store format has fallen out of favor with consumers just like downtown department stores did in the 1970’s.
He also points out that some stores traditionally thought of as ‘online only’ are now moving into physical stores. As such, business owners will be looking to lease a space in order to set up the foundations of their business. Some landlords may even provide tenants with the prospect of using a tenant improvement allowance to help cover the costs of things like the permit fees and architect costs. It is very unlikely that this will go towards furniture and decor, but it’s definitely a step in the right direction when online stores are transitioning into a physical one. These include: BaubleBar, Warby Parker, Fab.com and even Amazon has been tossing the idea around. “I believe we will see smaller stores but a wider variety of them, not unlike the way it was before the advent of the Big Box and Mega Stores “(again cyclical).
New construction in retail has been muted or very low to say the least, Big Box /Value retail has seen the largest number of completions over the past four years.
Retail in planning stages are starting to reflect the demands of consumers and how retailers do business, as a result (this has been well documented and projected by the Urban Land Institute (ULI)) mixed use developments with a combination of retail/office/residential are coming on line. This is leading to the positioning of properties to where consumers work and live.
As a service provider addressing these trends will put you in a winning position.
By: Fred Schmidt, President & COO, Coldwell Banker Commercial Affiliates