Last Updated on May 31, 2023 by Amanda Lee
Team Occupier had a blast sharing our love for leases at ICSC New York! We had a lot of great conversations about what’s top of mind for the retail industry, where it’s headed in 2023, and how to be prepared for what’s to come. Here are our top 5 takeaways:
1. Brick and mortar retail is strong
Brick and mortar continues to drive powerful in-person retail experiences. “The physical store is now clearly the absolute most important part of a retailer’s ecosystem in terms of delivering goods to the consumer efficiently, affordably, quickly, and correctly,” said Adam Ifshin, CEO of DLC Management.
Retailers and restaurateurs continue to boom. “Vacancy is at historically low levels”, said Karly Iacono, Senior Vice President at CBRE. “And a lot of tenants are still looking to expand, which bodes well for brick and mortar.”
“I’ve heard really high store counts and new stores for the upcoming year, which is really exciting and negates what we’ve been hearing in the headlines.” said Ashley Casey, Vice President at The Shopping Center Group (TSCG).
Open air retail centers are on the rise. “In 2023, we will see continued improvement in occupancy and increased demand for existing open air retail space” predicts Adam. As consumers emerge from COVID, their desire for in-person, community oriented activities like shopping, and dining is stronger than ever.
2. Retailtainment powers the customer experience
“So many entertainment groups are entering the retail sphere. They want to be the destinations in major shopping centers.” said Ashley.
“Entertainment is hot. Big box development has been evolving, and entertainment is a big component of that now, and will continue to be.” predicts Michael Smith, Leasing and Marketing Director of LLD Enterprises.
Shoppers are entering stores with an expectation for an incredible experience. Whether that is via Amazon’s Just Walk Out technology or Bonobos highly personalized Guide Shop Experience — consumers want awesome in-person experiences. And brick & mortar retail is taking a page from the entertainment world to craft great shopping experiences.
3. Convenience is key: Bridging digital with in-person
“There is so much going on right now at the intersection of the retailer seeking to improve the customer experience in so many ways in the store. Not only in the store, but also online. So if you order online, what’s that experience in store?” said Adam.
“It’s the little things. What do people care the most about? They care the most about their time. So the best thing is if the retailer gets it right the first time. If the technology enables the retailer to get the customer in and out of the store faster, not only does it mean the sales associate can help more people, but it also means that the customer had a positive experience because you saved them their most precious asset, which is time.” said Adam.
“For example, I just met with a concept called Kura Sushi. They are integrating technology into every restaurant that they have, making it more interactive for the consumer. So if you order on a touch board, a robot might bring you the dish you just ordered. Making it unique and stand out, and adding that fun touch to the retail landscape, and making it more of an experience than in the past.” said Ashley.
Between ordering kiosks, pick-up windows, drive-thru and smart checkout, the online world is merging with the off-line or in-person world. Consumers value convenience, efficiency and experience. So, digital technologies are removing the friction from shopping and making for better brick & mortar experiences.
4. Healthcare is taking a page from retailers
Expectations for convenience now go beyond in-store pick up for shopping and grocery delivery. Consumers are looking for more convenient access to health and wellness services.
“Medspas – Restore Hyper Wellness, VIO Med Spa, Face Foundrie, Skin Laundry – these are huge brands that people are going to and that are coming to the retail space.” said Ashley. “And similarly, medtail. Huge. We’re seeing so many medical tenants that want to be where people live, work, and play. Meaning shopping centers, meaning retail, and NOT hospitals.”
The Prime example of this (no pun intended) is Amazon with their acquisition of One Medical. One Medical is re-writing the healthcare experience, with accessible, neighborly medtail clinics that are conveniently located in retail community centers. So, the consumer can do their grocery shopping, holiday shopping, grab a quick lunch and their primary care appointment in the same open air location.
5. Inflation and economic uncertainty are here
Optimizing your data goes hand in hand with making strategic decisions. “Technology is driving how people are choosing their sites – integrating more data, information, analytics – and how people are choosing where they want to be,” said Ashley.
Technology is always about efficiency. “As interest rates hike and deals become more challenging…however you can analyze more deals or make your portfolio more efficient is certainly a competitive advantage.” Karly advised.
“We need to keep looking out into the future. The opportunity is there and you’re going to have to count on your local market knowledge to really understand where you need to be and what’s going to be available to you.” said Ashley.
After payroll, most retailers’ second largest expense is their real estate portfolio. Being more prescriptive about the lease data that you are tracking enables better decision making, opportunities for cost saving and strategies for real estate growth. With an uncertain market, the easiest step any business can take is leveraging automated lease management software solutions to help ower their real estate strategy.
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Retail Trends in 2023
An overarching takeaway from this conference is that economic uncertainty is here to stay well into 2023. While we have faith that the retail industry will remain resilient, it’s now more important than ever to be prepared. So, what can you do?
If you’re a retailer:
- Clearly define your real estate strategy and growth goals.
- Ensure all your stakeholders are empowered to collaborate on the entire lease lifecycle.
- Take advantage of market conditions to lock in favorable economic conditions.
If you’re a broker:
- Become a strategic advisor for your clients.
- Help companies solve business problems and navigate economic uncertainty within their lease portfolio.
- Build relationships with companies that are currently struggling with decision making fatigue, and creating long term relationships.