Twelve Trends Will Shape The Year in Retail

Ahead: Smaller Stores, Personalization, Experience, and Tech Everywhere
Last month – January – is always “Predictions Month,” with pundits in every industry scanning the horizon for what’s ahead. We’ve reviewed most of the 2017 retail and retail real estate outlooks and wanted to share what we think is the best of the bunch. The comprehensive list that follows is from the Vend blog and includes observations from experts worldwide. Keep an eye on these twelve as the year rolls forward.

Shoppers Will Seek Retailers Who Deliver a Good In-Store Experience
1. Stores offering unique shopping experiences will thrive. “Experience” includes special additions like food services, but also the delivery of a seamless shopping experience, reflecting the online world. Crate + Barrel’s “Mobile Tote” is a good example. Shoppers use store-provided tablets to browse and note their favorites, while sales associates ready their orders.

2. Smaller stores will win out over their super-sized counterparts. Time-starved shoppers have less tolerance for navigating big spaces and look for easy-to-access inventory. Target, Best Buy and Ikea have jumped in with junior box stores. Expect more to follow.

3. Specialty stores will perform better than department stores. Building on #2 above, smaller venues with well-curated inventory and a knowledgable staff will beat the traditional department store concept. Note: those Millennials everyone is chasing are specialty store fans.

4. “Retailment” (the fusion of retail and entertainment) is the new game in town. To entice shoppers to leave their screens for an out-of-home experience, retailers will deliver everything from virtual reality to pop-ups. Note the rise of theaters that serve dinner and cocktails along with the movie.

 

Services Will Be Expected

5. Shoppers will expect same-day shipping. Consumers want the traditional gratification of having their purchase on the day they make it.

6. Personalization will be more important than ever. Shoppers want to be recognized and rewarded. Loyalty programs will step up their game with more customized offers based on buying history and other data.

 

The Reign of Tech Will Continue
7. Mobile will be the way to pay. TechCrunch predicts that there will be 447.9 million mobile payment users this year. Purchases in this mode will total $60 billion in 2017 and $503 billion in 2020. Savvy retailers will adopt whatever system fits them best, choosing from custom apps or third-party options like Apple Pay.

8. Omnichannel growth will continue. Effective omnichannel strategies will separate the winners from the losers in 2017. Vend’s retail trend watchers expect to see retailers push omnichannel in bold, new directions to deliver that seamless experience.

9. Data will continue to drive retail success. Data will be a force in every aspect of the retail process from supply chain to purchase. Collection and analysis of information will be a top focus, with social shopping making a major contribution.

10. Retail and tech will unite to deliver new ways to bring shoppers into bricks and mortar stores. Science fiction will come to shopping: the Internet of Things, virtual reality, artificial intelligence and robots.

11. Apps, services and third parties will help bricks and mortars compete with online. But there’s one caveat: retailers will need to be selective about the tech products and platforms that serve their particular needs. There will be many to choose from. The best options are the ones that free the user to focus on the customer.

 

Transparency and Sustainability: Must Haves for Success in 2017
12. It’s no longer enough just to sell quality products at good prices. The Internet has created a hunger for information. Shoppers want to know what goes into a product. They’re driven by both ethics and a commitment to sustainability. This trend will continue into 2017 and beyond. (Think Millennials).

If you’ve enjoyed these highlights, read the complete Vend report at:

https://www.vendhq.com/university/retail-trends-and-predictions-2017 and watch these predictions become reality.

 

 

 

 

Big Boxes Are Discovering That Small Can Be Beautiful

Retail Real Estate Trend: “Right-Sizing” to Reach New Markets

It’s a retail real estate trend that began nearly a decade ago when Walmart and Home Depot began exploring the concept of smaller stores in or near urban centers. There’s been some bumps in the road, but it now appears that big box retailers can succeed as “small box” retailers. Eager to attract urban-oriented Millennials, as well as affluent empty nesters who have left the exburbs behind, major retailers are shedding square footage and creating accessible pint-sized versions of their massive models.

Unlike their big brothers, these minis range from 20,000 to 50,000 SF – a footprint that offsets the higher rents in densely populated areas. Instead of stocking “everything under one roof,” they offer a curated inventory matching local lifestyles. Companies are betting that proximity, convenience and branding will divert shoppers from their mobile screens and bring them into their neighborhood junior boxes to browse and buy. As regional leaders in commercial retail real estate, this is a trend we’re watching closely.

Hip Enclaves, City Centers, Inner Burbs, College Towns: Junior Boxes Are on the Move
Target, the leading upscale-downscale retailer, is offsetting the reduced traffic in its mammoth suburban stores, by going small in major metro areas like New York City and Chicago, in corporate hubs and in college towns. These new Targets, some at just 20,000 SF, feature hyper localized offerings. The State College, Pa. store, for example, features pantry items for dorm living plus Penn State fan merchandise. The Cupertino, CA Target, meanwhile, aims at Silicon Valley workers with grab-and-go lunches and techie gear. In many pint-sized, urban Targets, shoppers can pick up or return their online orders. Prices are on par with nearby suburban Targets, to avoid cannibalization. And Target is thinking big when it comes to rolling out these stores. There are over 30 already with more planned for 2017. Read more: http://www.wsj.com/articles/target-goes-after-younger-market-with-small-focused-stores-1475597213

Whole Foods has joined this retail real estate trend with a hip brand extension – 365 by Whole Foods Market, located in hot neighborhoods like LA’s Silver Lake and Portland’s Lake Oswego. Like Target’s junior format, these stores are smaller than their suburban counterparts. But unlike Target, prices are generally lower than in their traditional stores. The company sees its brand extension not only as a way to tap a desirable demographic, but as a “lab” for testing new products. Read more: http://www.latimes.com/business/la-fi-365-store-opening-20160525-snap-htmlstory.html

Walmart Tackles the Art of Thinking Small…Again
Walmart was a pioneer of “junior boxes” with its 12,000 SF Walmart Express stores. Launched as a pilot in 2011 and situated in major cities like Chicago, as well as small towns near the retailer’s home turf, the stores featured a limited selection of groceries, household supplies, beauty products and pharmacy. The competition was the dollar and drug stores, the 7/11s and Wawas that drew customers on price and convenience. But Walmart’s supercenter supply chain model simply couldn’t scale down and the 102 unprofitable mini-markets were shuttered last year in a chain-wide downsizing. Read more: http://www.marketwatch.com/story/wal-mart-to-close-walmart-express-stores-as-part-of-reorganization-2016-01-15

The world’s largest retailer hasn’t abandoned the “junior box” concept though. Its focus is now on its Neighborhood Markets. At 28,000 to 60,000 SF, these minis are just one-fifth the size of the typical supercenter. The 600-plus fleet of stores (85-95 more will be added this year) includes some urban locations (for example, Chicago and Minneapolis), but tend to be located in highly accessible inner suburbs. Groceries, household supplies, health and beauty products and pharmacy comprise the inventory, at Walmart’s “always low prices.” Traditional bargains plus greater accessibility, the company believes, will deliver a new wave of shoppers.

Junior Boxes: A Retail Real Estate Trend That’s Here to Stay?
A downsized generation of big boxes is going strong at present, with smaller Home Depot, Bed Bath and Beyond, and Lowes operating in non-traditional settings. It’s a big play to win Millennials and offset flagging traffic in some supercenters. Let’s keep watching.

Re-Inventing Retail: Think Customer Experience First

In Retail Real Estate, Concept Stores and Non-Stores are the Next Wave
By Melissa Sievwright – VP, Marketing

The re-invention of retail is underway, driven by tech advances and new shopper preferences. The impact of mobile and online are obvious. Less quantifiable is the attitudinal shift from acquisition to experience among consumers. Millennials and boomers alike are opting to invest in experiences over things. Think travel, live performance, hobbies, events, fitness – instead of fashion, jewelry, footwear or furniture. (One exception? Tech products.)

What is a retailer to do? As regional leaders in retail real estate, we are already seeing changes in store design and service. Even more intriguing is the breakthrough ideas put into play by some major retail re-inventors. They are melding lifestyle with shopping and giving consumers a reason to step into the store. We have rounded up some of the big ones here.

Big Box Retailers Get Out of the Box
Staples is the latest story. With traffic declining in its mammoth stores (averaging 20,000 square feet), this major name in office supplies and services has just launched communal workspaces carved out of three suburban Boston stores. Managed by Staples’ partner Workbar, the 2,500- to 3,000-square-foot areas offer conference rooms, work stations, and private phone rooms, Wi-Fi and beverage service, plus immediate access to all the office supplies members need to buy. Read more here.

And then there’s Target’s Open House, located beneath its store in San Francisco’s Metreon Center. The 3,500-square-foot space features a walk-through house of acrylic panels filled with interconnected products from the Internet of Things. It is authentic “retail-tainment” and a dazzling demonstration of how connected devices (all available upstairs at Target) work in sync to solve everyday problems in home management and maintenance. Open House also hosts meetings, events and product launches. Take a peek at what’s happening in this press release.

The New Retail: All About Interactivity
When it comes to physically engaging the shopper, Reebok’s FitHub is the champ. “Gear, Classes and Camaraderie” is the brand promise, and Reebok is delivering in an over-the-top in every way style. Go inside the company’s latest Manhattan mega-store and see how far interactivity can go.

The Non-Store Could Be the New Store
Samsung 837, “where tech and culture collide,” is the electronic giant’s 40,000-square-foot tech playground in the heart of New York City’s Meatpacking district. Nothing is for sale at this retail destination. Step inside and fall in love with the latest Samsung products – which you can then buy online. Live music, a VR tunnel, cafe, workshop and connections with events like the Tribeca Film Festival draw crowds. People do not need another store, says Zach Overton, VP and GM of the space. “They need a place where they can have a deep dive into the brand.” Take a deep dive with this video shot at Samsung 837.

Bonobos Takes Showrooming to a New Level
The hot name in menswear built its brand on the perfect fit. Its 20 Guideshops bolster that promise by focusing solely on customer service. There’s nothing to buy at Guideshop. Rather, visitors find samples of every piece of inventory in all sizes, colors and fabrics. Make an appointment with a Bonobos associate (aka a ninja) and get the perfect item – which is then ordered online for next-day delivery. For this retailer, with no inventory management at the store-level and no stockroom to manage, what’s not to like? Read more here.

Retailers Don’t Need Big Budgets to Be Re-inventors

Part 2 of this blog will share tips for smaller players who want to join this retail trend and become re-inventors, too.