The new normal in the retail real estate environment is complex. It includes the Darwinian nature of shopping malls, the casualization of America and the move to omni-channel marketing among retailers – three trends that were accelerated during, rather than caused by, the COVID-19 pandemic. Consumers facing shelter-in-place and work-from-home orders had no choice than to turn to the Internet for every shopping need, including fitness and recreation. As the economy moves to the next phase of reopening, many people are resistant to falling back on pre-pandemic shopping patterns. These insights were recently presently during a webinar sponsored by Placer.ai.
“Certain retailers are built for the long haul while others are not, with the additional element of the migration to the suburbs placing certain stores at risk,” explained Ethan Chernofsky, Vice President of Marketing, Placer.ai. “Starbucks Coffee has built an enviable brand and provides a place to sit, Staples sells products for the home office which everyone needs and eGaming may emerge as the answer for theatres.”
“Give TJ Maxx a lot of credit for staying the course and not changing what consumers like most about the store’s format which is its treasure hunt concept,” added Eliot Bencuya, Partner and Co-Founder, Tryperion Partners. “TJ Maxx realized this does not transfer well to the Internet and remains committed to its bricks and mortar presence.”
“Full-price apparel retailers have been hit hard across the board,” explained Joel Mayer, Executive Vice President, Lowe, “with the weak getting weaker and the strong getting stronger. Those that are thriving in the current environment are investing heavily in omni-channel marketing with stores being used both as a place to retrieve goods ordered online and to shop. Dollar General has also done well and there has been a casualization of the United States with the worker of today investing in only one wardrobe style – casual. The value segment, in general, has thrived during the pandemic.”
“Another thing that started pre-COVID was the deterioration of the outdoor mall with only A and A+ malls expected to survive long-term, with B and C malls being reimagined,” Bencuya added. “It is certainly a case-by-case situation based on location, competition and tenant mix, but we envision many lower-class malls being totally demolished and redeveloped based solely on existing land values.”
Mayer predicts that “fitness, food and furniture will return to its pre-COVID form. Besides, have you ever tried to purchase a sofa online? It is impossible to determine what it feels like and even harder to return. People haven’t quite figured out how to master fitness while at home and people will definitely buy less clothing at department stores. We see a shift towards open-air shopping centers, surrounded by residential offerings and medical uses. There is a strong movement towards walk-to retail locations and a general reclaiming of suburban downtowns. The new normal in retail is actually the continuation of existing trends.”