Is retail change sitting on the runway waiting to lift off, or will we find ourselves strapped into a rocket ship blasting straight up at 6 G’s? As members thought about this in a discussion group, opinions flourished. Some believe that change will come slowly and gradually and that retail owners will be able to manage with equanimity. As with most change, some will ignore it, some will wonder what hit them when its over, some will embrace it and some will take the lead. These tensions might cause angst across the industry: owners, tenants, designers and intermediaries. History would favor those with foresight, those able to see the future trends and sort through the cross currents and select a path that suits their unique situation. The reality is…the situation is getting very real. Current CEOs and leaders will make decisions over the next ten years that will influence the physical assets we design, develop and operate as well as investment returns and the success of their very own companies. Unlike the past given the velocity of change, place-making today must withstand the change that will occur within the amortization period of that very asset. Some of the ideas which emerged….
Three product types may well sort out the shopping environment. Those basic goods such as canned goods and paper products and other staples which will be sold based on price and convenience. The big box stores and online with rapid delivery are the likely leaders in this arena and will target our push for efficiency. Luxury goods are less price sensitive and are marketed based on specialized customer service. And washing over all this is the emphasis on experience. The time we save will be replaced with time well spent. Families want to take a day with their children and will go to an entertainment venue, have a meal and shop for a treat or just visit. Restaurants and food service at all levels differentiate themselves and pay great attention to the entire shopping experience from grocery displays to the dramatic increase in ethnic and cultural restaurants and markets.
As drones make delivery same-day, as shared cars and even driverless cars allow for lower parking ratios and the ease of valet type drop-off, and omni-channeling becomes omni-present, the street and entries of retail outlets will change. The supply chains will shorten and stores will become showrooms; full service retail selling high end and high service. The viability of individual retailers may well shorten and flexibility will be key. What is the appropriate length of a retail lease? How will landlords charge? What uses should landlords exclude and/or encourage; and how will these extra costs get covered? How will land use regulation and zoning change to accommodate the new experience? No doubt, Across the retail spectrum, change will happen and our collective guess is that our imaginations only covered about one half of what the new reality will look like in 10 years.
Embrace change, put blinders on and hope for a smooth take-off or strap onto the rocket of disruption. Your choice.