Retail Transforming Requires New Approaches, and Reinvention
The demands of today’s consumer have shifted, and “experience” has joined value and convenience as top priorities. As a result, the retailers and brands that are responding to these needs are finding success, while others work to catch up.
Simultaneously, the convergence of online and the physical store is requiring retailers and brands to elevate the in-store experience and create a seamless integration of the brand across channels and devices. Here, Stephen Lebovitz, chief executive officer of CBL Properties, discusses opportunities for brands and retailers in this current environment and why site redevelopment works.
Q: Would you agree that despite dire headlines, the retail real estate industry — as it transforms itself — is full of opportunities? Why or why not?
A: Headlines are designed to entice and often oversimplify and distort the facts. This is certainly the case in the current publicity surrounding the retail real estate industry. While this is definitely a time of evolution and change in our business, these changes are creating tremendous opportunity for those willing to look beyond the headlines and see the complete picture. Technology and time constraints are changing the way people shop, but consumers still do 90 percent of their shopping in brick-and-mortar stores and want more than an online-only shopping experience.
The modern consumer prioritizes convenience, value and experience. Given these priorities, our properties need to become more than just a place for visitors to shop. Physical stores and shopping centers are evolving to look and feel different, becoming experience-based destinations that emphasize entertainment, dining, fitness, service and other uses including grocers, medical, hotels and more.
Q: What’s driving the growth in some of the nontraditional retailing segments such as wellness and the more niche food and beverage concepts? Is it driven by a consumer desire for more meaningful shopping experiences?
A: In today’s world, it is no longer enough for shopping centers to only provide visitors a place to shop. Big boxes and online shopping provide the customer with the lowest pricing on most commodity purchases, and shopping centers need to stand out based on other characteristics. Creating memorable experiences for the shopper is imperative and it is not just incumbent on the brands to do this — as shopping center owners, we need to be active participants in the process.
While online shopping is increasing its market share, it still represents less than 10 percent of total retail sales and is only one factor driving changing consumer preferences. The reality is that the biggest competition we face today is any place that people choose to spend — not just their money, but also their time. Therefore, we need to create destinations that provide a reason for the consumer to be excited enough to get in the car and drive there. We have responded to these shifting consumer habits by adding more niche F&B, health and wellness, and other experiential concepts to the tenant mix at our properties.
Q: Are there retailers that are performing well in this environment?
A: Despite the headlines, it is far from all doom and gloom in the retail sector. Numerous categories continue to perform well, including beauty and cosmetics retailers fueled by growth from Ulta Beauty and Sephora. Value retailers such as T.J. Maxx, Marshalls, Five Below, Ross and Burlington are also doing well in today’s market. We’ve seen expansion among traditional retailers like Altar’d State, Torrid and Box Lunch. Another category that we have pursued more heavily in recent months are regional and local boutiques and “pop-up” concepts.
Our Pop-Up Shop concept offers smaller, local retailers the ability to tap into the high traffic at a shopping center without the commitment of a long-term lease. It also creates a sense of urgency for our shoppers because concepts are only available for a short time (usually a week), which keeps the experience fresh and new.
Q: As the industry goes through this reinvention, what are some of the ways your company is helping to redevelop traditional sites? And how are brokers and retailers responding?
A: Our strategy is to reinvent our properties to include more diverse uses, including a greater focus on food and beverage, entertainment, health and wellness, cosmetics and other categories. In certain markets, we are also including the addition of office, medical office, residential or hotel components. Across our portfolio, we are negotiating more than 65 restaurant transactions. Also, as part of our planned redevelopments, we are currently negotiating with six hotels, one apartment, a grocer and five large-format entertainment concepts.
Our goal is to transform our properties into vibrant suburban town centers that offer a variety of uses and experiences. In the past, these spaces were dedicated to primarily retail users. Today, brokers and tenants recognize that these redevelopments offer a great opportunity to enter prime locations in growing markets. We’ve received tremendous interest from these nontraditional tenants wanting to become a part of these exciting projects.
Q: How has technology changed the retail real estate landscape? Has it changed the way you market your properties?
A: Technology is a major driver of change across the shopping center and retail landscape. I am constantly surprised by those that assume technology is the enemy of in-store shopping. The same technology that fuels e-commerce can, and is, being applied to enhance the customer experience at shopping centers while also starting to provide analytical insights into consumer behavior for physical stores. As people become more comfortable with providing certain demographic information in return for a better and more tailored experience, physical retailers are gathering data previously only accessible to their online counterparts.
The insights gathered by physical retailers and shopping centers will overall help create a better experience for consumers at physical properties. One way that we at CBL are utilizing technology to do this is our collaboration with WWD on the Ultimate Holiday Gift Guide. We curated the gift guide with retailers across our national portfolio, highlighting some of the most coveted looks and trends for this holiday season.
Click here to see the gift guide.
Through digital pixels and a promotion where consumers can win the entire guide, we will actually be able to track views of the gift guide all the way through to purchase of the items within it. This is a major shift in our corporate marketing paradigm in order to directly help drive traffic and sales for our tenants during the most crucial season of the year.
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