The Future of Retail: 4 Trends Investors Need to Know About
According to reports, more than 30% of retail sales are predicted to be online based by 2030. Projections like these are causing investors, brands, and the global industry at large, to seriously question the future of retail stores.
With proclamations such as “retail is dead”, many are questioning whether or not physical stores will even exist in decades to come.
While this seems plausible at first glance, a deeper look into the trends surrounding retail paints a different story. Read on to find out what the future of retail is, as well as the trends that are forecasting it.
1. The Pulling Points of Malls Are Shifting
Gone are the days where malls pull shoppers simply for being a mall. Estimates suggest that 1 in 4 malls could be out of business by 2022 — if they do not pivot to meet the changing needs of consumers.
In the upcoming years, commercial retail property is likely to see a sharp shift away from generic centers, to specialized, mixed-use spaces. It is predicted that these will include:
- Destination centers: large spaces surrounding a central attraction ie. indoor ski slope, museum, concert space, etc
- Innovation centers: highly smart centers that collect data on shoppers’ behavior and which develop new offerings which consumers can test out firsthand
- Value centers: centers that hold a draw based on shared values such as sustainability, support of local industries, or even a sports team
- Retaildential centers: mixed-use areas that incorporate residential space, which target demographics, and which provide retail space tailored to the targeted demographic’s needs
This last center type is predicted to be one of the most successful and serviceable, as it can cater to the imminent retirement crisis. These spaces are already being successfully implemented in Japan to provide facilities for their seniors.
2. Retail Is Turning Experiential
According to findings from the Harris Group, 72% of millenials would rather spend money on experiences than on physical possessions. Millenials are also shown to spend on average 4x more on experiences.
For these reasons, it is likely that retails spaces will shift away from box store outlets to smaller flagship-like spaces that focus on providing experiences to consumers.
3. Online-Only Brands Open Flagship Stores to Build Brand Engagement
While some brands are retracting their physical retail space, others are predicted to increase theirs. A number of brands that started as online-only — such as Everlane, Casper, and Amazon — are now establishing physical outlets.
One of the reasons for this is that in-store experiences offer an opportunity for enhanced brand engagement. This is something that can strengthen brand/consumer relationships.
4. Sustainable Choices Will Top the List for Consumers
During 2018, the US government and the United Nations released reports stating that climate change is occurring at a heightened rate of acceleration than predicted.
With the growing and urgent climate change concerns among consumers, it is likely that retail spaces which are sustainably built, and host sustainably orientated brands, will be a prime focus.
The Future of Retail Is Just Around the Corner
The trends and shifts discussed above are taking shape at a rapid pace and it is likely that the future of retail is literally right around the corner.
Commercial property investors would be wise to keep abreast of developments in the area.
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