Just as we saw endless headlines spouting off about the death of print media, for years there were similar headlines about the downward spiral of brick and mortar stores.
While I’m not going to speak to whether or not print is dead, I will comment on the so-called death of brick and mortar retail (if we can even say that anymore).
At this point, I think it’s safe to say that the majority of, if not all, retail experts will agree that those reports – while they may have seemed true at the time of publication – don’t actually hold water.
Now, don’t misunderstand me, brick and mortar retailers most certainly still have their work cut out for them. The world of retail is changing and retailers must change and evolve with it.
But, retail construction is skyrocketing, with developers adding approximately 111.9 million sq. ft. to the nation’s retail inventory this year.
The Urbanization Effect
What really seems to be driving this retail development is the trend of urbanization, which is occurring at an extreme rate. By 2050, 67% of the world’s population will be living in a city.
You can see the influence of urbanization as these dense, urban areas make up more than half of the new retail activity.
And retailers are so determined to open urban retail locations that they will modify their store formats to fit any available space.
Barriers to entry in an urban environment are higher than other retail locations…and there is an incredibly steep learning curve.
For example, with new store formats that are typically much smaller, retailers still have to be able to tell their story, share their brand values and connect with their current and potential customers.
Those retailers who are moving into the city have to develop the strategy and direction required to execute successfully in an urban space, while determining what elements of their overall brand to import into the smaller store design and experience.
Given that, there are no one-size-fits-all strategies. It’s important for you to remember that the same assumptions that may hold true for other property types don’t work for urban site selection. There are too many other factors and variables at play.
The Bottom Line
Even though it seems that everyone is jumping on the urban retail bandwagon, developing an urban store network is a potentially perilous undertaking.
That’s why it’s still imperative that retailers pick the best markets and the best sites within those markets for their new locations, determine the optimal number of locations for each market and keep up with consumer expectations of what the in-store experience should be.
The good news is that with customer data and insight, retailers can understand their customers, understand how their best customers want to interact with their brand and deliver an experience that meets their customers’ expectations.
The analytic insights help retailers keep their best customers’ desires and needs in focus when assessing the potential of new markets and new sites, even with the magnetic draw of some of the most sought after urban streets.
If you are interested in learning more about how using the right analytic solution can help guide the execution of successful urban real estate strategies, then we should talk.