Editor’s Note: If you’re a retailer, hats off to you for navigating another year of pandemic-era bumps in the road.
But I hope you’re keeping your chin up because, if there’s one thing I know, it’s that physical retail is not dead. And even though the pandemic taught us a lot about the impact of e-commerce shopping and the staying power of curbside pickup and BOPIS, there is still very much a need from consumers for earnest, hospitality-driven retail experiences.
Read on to learn more about a few strategies we might see from retailers in 2022.
Retailers have really had to stay on their toes for a while now to stay afloat. Those that were already prepared to pivot to a more e-commerce-centered approach before the pandemic began were in a better position to survive the safer-at-home climate. Those with a weaker online presence struggled, and many went under.
Then came labor shortages and supply chain issues. Many retailers have increased wages and benefits to battle the former. Some have leased their own ships and purchased their own shipping containers to get ahead of the latter. Through all these obstacles, retail as a whole has proven itself quite adaptable and resilient.
But what are retailers doing to draw customers inside their physical stores? Let's take a look at a few of the strategies we might see from retailers in 2022 and how commercial real estate investors might be affected.
An increasing number of mall properties are being "de-malled," or repurposed as something other than a shopping mall, and this trend is likely to pick up steam next year. These buildings are being given new lives as everything from schools or libraries to offices. Urban Edge Properties is one real estate investment trust (REIT) that recently announced plans to de-mall a few of its major properties. But it's not all bad news for retail.
Many of these mall properties are being converted into mixed-use spaces that still include a considerable amount of retail alongside apartments, offices, or other uses. And some are literally being turned inside out, meaning the interior hallway spaces are being eliminated and all the store entrances moved to the outside of the building. This is a win for investors, as these open-air shopping centers have become more appealing to many shoppers in the wake of pandemic quarantines, according to research from commercial real estate services company JLL.
Retailers need to give shoppers good reason to get ready and drive to the store instead of simply walking to their computers or grabbing their phones. That's where incentives come in. Digital coupons that are only good (or that offer a better deal) in-store are one way to go. Loyalty programs offering more generous perks for purchases at a physical store are another.
With stricter privacy laws and concerns, data gathering is getting tougher these days. But retailers need consumer information for marketing and product development. It's important that they know who they are and aren't attracting, as well as what consumers would like to see from them in the future. So expect to see more retailers offering incentives, such as discounts or reward points, to consumers who agree to fill out a survey or provide a few pieces of personal info inside a store.
Few people enjoy packaging things back up, filling out and/or printing some kind of paperwork, and then dealing with shipping when they return a product. It should be much easier to just take the item and the receipt back to the store. But often, it's not. You might have to find someone to help you, wait in a long line, or wait even longer while a trainee gets help because something went awry and they don't know what to do.
We'll likely start seeing more self-service kiosks popping up in stores, allowing customers to quickly and easily return items themselves without help from a worker. And of course, giving consumers another reason to set foot inside the store is always a win for real estate investors.
The idea of experiential retail is to ensure that shopping in the store is an enjoyable, rewarding experience that can't be duplicated with a few clicks of a mouse. Think shopping trip and fun outing combined. With experiential retail, a store might hire pros who can teach shoppers how best to use its products, hold special events, or create exciting ways customers can enjoy the products in the store.
These experiences can encourage not only in-store shopping but also brand loyalty as well as free social media marketing thanks to some enthusiastic shoppers. Dick's Sporting Goods is one retailer making the most of this strategy right now. The sporting goods chain has seen impressive spikes in foot traffic at its first experiential location in suburban Rochester, N.Y., according to research from retail analytics firm Placer.ai. As a result, investors should expect to see an increasing number of retailers following suit soon.
Bringing retail customers back inside
Online shopping was a huge trend long before the pandemic hit, but it certainly didn't help matters for brick-and-mortar businesses. Now that more people are getting back out there and shopping in person, retailers will find ways to ensure that consumers continue to see the value in doing so.
Retail real estate investors should keep an eye out for these strategies next year. The brands utilizing them may be best positioned to encourage consumers to step away from their laptops, change out of their comfy jammies, and head to the store.