By Naomi Tobin
"Retail is synonymous with innovation," says Ted Chryssicas, executive vice president for retail services at Colliers International. "The best performing retailers are reinventing themselves every day. The ones that continue to do things the same way, regardless of the region or demographic, will not survive."
America's ghost town shopping malls are vivid reminders of the ones who didn't make it; the real estate itself embodying the outdated retail model. But the survivors— they're the ones who remain continually relevant as consumer tastes change. They do this by listening to their customers—social media offers new inroads here—and innovating in response. The smartest of them are not changing just to change, but to give people what they want and need in an evolving society. A few common threads can be found across innovative retail today: an emphasis on the local and unique, a smoothly integrated omnichannel and a renewed focus on brick-and-mortar as the experiential showroom.
Breaking the Chain (Store)
A few decades ago, a retail center in Anytown, USA, looked about the same as a retail center in any other town. "It was cookie-cutter," says Chryssicas. "You'd see the same tenants everywhere." Now, however, this trend has shifted dramatically, with a strong emphasis on the unique and local, especially on the coastal markets.
"Something generic means you lose all the cache. The more local and the more locally sourced, the cooler," he says. Developers, however, need to be mindful of the right tenant mix. "The right mix is a balance of local color and national credit tenants," says Chryssicas. The combination of retailers needs to be viable; if too many are wildly unique and local, it might be a challenge to deal with operators, or some may not have the infrastructure to maintain and innovate.
San Francisco's legislation is the most dramatic example of this change—the city has banned chains with 11 or more stores. And the same trend can be found elsewhere across the country. Chryssicas points to the example of an office or apartment developer who formerly might have opted for an established chain or bank for their ground-floor retail space, but now looks for more unique retailers that set the desired tone or image for a building.
Retail Your Way
Want to buy it in store? Online? Try it out in store and then buy online? Research online and buy in store? Want it tomorrow? In two hours? No problem.
The most innovative retailers are finding creative ways to respond to consumers calls for on-demand merchandise. Amazon, for example, now offers delivery of groceries in New York City within a few hours by leveraging the existing infrastructure of the Uber rideshare service.
In general, retailers are offering ondemand service by seamlessly integrating their many (and growing) retail channels into one "omnichannel," through which products move fluidly between the online experience and brick-and-mortar locations.
Chryssicas cites department stores like Macy's and Nordstrom as great examples of leveraging the omnichannel, utilizing stores as warehouses to some degree. Salespeople use iPads and have at their fingertips not just the store's inventory, but also the inventory of other locations, as well as online. If an item is unavailable in store, a customer can have it shipped directly to the home or can pick it up in the store later.
The retailers who survive will respond not just to those demands but will remain relevant by responding quickly to changing consumer preferences, building a brand identity that has innovation at its core.
For innovative retailers, the same brickand- mortar that serves as an uber-flexible warehouse to maximize the omnichannel will also need to be a destination, an experience in its own right. Chryssicas explains that the emphasis is on creating a brickand- mortar flagship destination that is a brand ambassador to encourage customer awareness and loyalty. In these experiential showrooms, products are shown off in their best light by highly educated salespeople.
A successful example of this is eyeglasses and sunglasses company, Warby Parker. The company started online but then moved into brick-and-mortar, with their locations now the second-most productive stores per square foot.
Even traditional experience commodities, such as movie theaters, are innovating to become more experiential. The luxury movie theater chain, iPic, was first launched in 2007 and has grown to 11 locations. It offers food and beverage service designed from a culinary perspective. Patrick Quinn, iPic's vice president of real estate, explains that iPic is "less of a commodity-driven experience…it gives customers the ability to customize and let their experience unfold any way they want it to." Movie-goers can eat at the theater's adjacent restaurant or in the theater, and they can use the iPads at their seats to have food delivered directly to them. It's a new model for entertainment that caters to the way people want to experience movies.
To continue innovating and reinventing themselves, retailers will need to maintain constant awareness of consumer tastes and continually adapt to them. Demand now is for local and unique shops, fast and efficient shopping across channels, and retail as experience, both for online and brick-and-mortar shopping. The retailers who survive will respond not just to those demands but will remain relevant by responding quickly to changing consumer preferences, building a brand identity that has innovation at its core.