Word on the Street

by | 09 May 2016

Every industry has to keep its finger on the pulse of emerging trends to stay relevant. But in retail, the sense of urgency to understand what’s hot and what’s not is even more intense. Retailers who have a strong understanding of their consumers, like Trader Joe’s, Lululemon, and Nordstrom Rack, thrive. Those who don’t struggle to remain competitive. To illuminate what’s driving the industry today, Knowledge Leader magazine asked industry leaders across the country about the state of retail in the U.S. market.

Download the Spring/Summer 2016 Knowledge Leader magazine

Positive economic numbers and increased consumer confidence have enticed national and regional players to expand and grow their businesses in new locations. Demand for space has been the strongest in coastal markets, especially in California; Seattle, Washington; Florida; Greater Washington, D.C.; and Texas. All of these markets feature desirable locations and have a strong mix of density and favorable zoning.

Despite the positive environment for growth, online shopping has caused retailers to face major challenges the retail property market. Notably, our experts have witnessed not only the changing shape and size of physical brick and mortar stores, but also the changing character of the spaces themselves and the experiences they provide for consumers. People now head to retail properties as much for social interactions as for the products themselves. Retail tenants that offer experiences and merchandise that are not easy to replicate online are appeal to today’s consumers.

Inside the physical spaces, retail centers are rediscovering the importance of providing shoppers with quality dining options. It’s more important than ever, and many experts consider restaurants to be an additional anchor tenant for retail centers. Sit-down and fast-casual restaurants that feature a great product and good value, such as Panera Bread, Modern Market, and Urban Plates, are in tremendous demand.

Value-conscious consumers are also creating a demand for Fast fashion. Younger generations are less inclined to pay for traditional items and spend more on technology, travel, and entertainment. Fast-fashion retailers such as H&M, Forever 21, and Zara have experienced tremendous growth over the past few years. As a result, top-tier, full-price retailers must watch price points and increase promotions to capture customers.

To read more from industry experts about how the retail sector is evolving, download the Spring/Summer 2016 of Knowledge Leader magazine.