The retail location and site selection process has changed in numerous ways this year due to trends that have caused disruption in the retail industry. It appears that these trends, centered around consumer behavior changes and technological advances, are likely here to stay and will continue to impact how businesses choose their next new location.
Read on to learn about some of these retail real estate trends and their implications on the retail site selection process.
Experiential and Mixed-Use Retail
You’ve probably read headlines for months now about the shift to more mixed use and experiential retail in the retail industry, and it’s important to take notice. Experiential retail is becoming increasingly important as consumers are looking for a unique shopping experience.
One way that this has affected the retail real estate industry is that companies are starting to open smaller locations with less inventory and more room for experiential events and promotions. This pushes more sales to the online space, which is one of the driving forces behind the trend.
In new retail development, it will become more common to see a wide variety of tenants including medical offices, retail, restaurant, fitness and experiential retailers like aquariums, bowling alleys, etc. This allows people to do many things in one centralized location.
Additionally, malls across the country are starting to implement an experiential approach. They are also finding creative ways to utilize a resource they have that some new developments do not have: ample parking. It’s not uncommon to see a mall hosting a concert, pumpkin patch, carnival, etc. in their parking lots to encourage shoppers to spend time at the mall.
Pop-Up Stores and Shorter Lease Terms
Pop-up stores are not a particularly new topic, but the trend has picked up momentum and popularity in recent years. A pop-up store can work for both traditional retailers looking to make a splash with a new product or offering, as well as e-commerce retailers looking to dip their toe into a physical store without the long-term real estate commitment.
Pop-up stores require very short lease terms, but retailers are pushing for shorter lease terms in non-pop-up locations as well. In the past, it was common for retailers to be locked into 20-year lease terms. That just is not the case today. Retailers are on the hunt for shorter lease terms to accommodate the tumultuous retail environment. Landlords are also jumping on this trend to fill vacant spaces left by recent store closures.
Both pop-up stores and shorter lease terms mean the real estate team must play a more active role in reevaluating existing sites and determining whether to stay or move to a new location.
The Bottom Line
While there are always trends that affect site selection decisions, the fundamentals remain the same. To learn the basics of the site selection process, read our blog “The Ultimate Guide to Retail Site Selection.”