The Future of Retail
As we look ahead to the future of retail reports have shown that there have been significant signs of progress for the US economy in 2021. This year, retail sales reached $3.28 trillion, up 14.5% from $2.87 trillion in the first three quarters of last year, a historic low in the wake of the pandemic. In comparison to retail sales growing an estimated 6.7% in 2020, 2021 has been a marked milestone for recovery. Ecommerce sales in the US alone reached $612.86 billion, up 16.4% from $526.72 billion in the first three quarters of 2020.
Looking into the new year, as life, face-to-face interactions, experiences, and buying habits are normalizing after two years of navigating COVID-19. The dependence on consumers buying online is no longer as prevalent globally, while still an uncertainty long-term. Store closures around the world will undoubtedly change how companies approach their brick-and-mortar presence, but so far it appears that retail will only further make a comeback. That said, we don’t assume ecommerce will decline, but rather that retail companies will have to find new and better ways on engaging in-person and virtually.
Retailers (and developers) are leveraging today’s technology to ensure a seamless purchase, such as providing curbside experiences, self-checkout, and even fully virtual simulations of product experiences. Retail will no longer be the “enter, seek and purchase” process but stores will become an inclusive experiential experience. For example, Tangram, a mixed-use development project located in the heart of Downtown Flushing, Queens is elevating the shopping experience through its groundbreaking vision of immersive, curated retail. Cultivating a center of community and commerce, Tangram offers a state-of-the-art 4DX movie theater from Regal Cinemas (the first in the neighborhood in 35 years), an Orangetheory Fitness studio, an upscale steak house with sweeping views of NYC, a 24,000-square-foot food hall and retailers making their NYC and/or US debuts. , Tangram is designed to become a global destination, marking a new chapter for entertainment and experiential shopping in NYC in late 2022.
In addition catering to consumers new lifestyles and buying patterns brands that have historically been exclusively sold B2B are further expanding with their first-ever direct to consumer (DTC) offerings. For example, Ori, a company transforming the way we live with transformable furniture, is on a mission to help people live large in a small footprint by creating solutions for a space-challenged world. The company recently launched DTC in October 2021 for the New York City area. Responding to the growing individual demand for its transformable furniture Ori products were previously available only to real estate developers. Ori’s signature Cloud Bed is designed to effortlessly transform spaces traditionally designed for a single purpose and turn them into multi-use spaces on demand (in under 30 seconds). As the rate of mass urbanization accelerates, and home sizes shrink, Ori combines its engineering, technology, and design expertise to empower people to see and use spaces differently.
What to Look for and when to Launch Brick-and-Mortar
With the pandemic fueling such a wide dichotomy in a single market space, it was inevitable that the future of the brick-and-mortar stores versus online retail operations became the focus of this year’s National Retail Federation conference. Mike George, NRF Chairman, President and CEO of Qurate Retail Group Inc., opened the virtual event with a keynote titled “Retail’s Resilience” and discussed how despite the crushing effect that the pandemic has had on brick-and-mortar retail, the industry remains resilient.
The National Retail Federation reported that a year and a half after the onset of the pandemic, consumers are now returning to in-person retail — with 81 percent of Gen Zers saying they prefer to shop in store, according to A.T. Kearney — and the time has come for a new era of flagship stores.
Perhaps one of the most important factors for a successful brick-and-mortar opening is timing. Other practical things to consider are location, demographic, niche and seasonal selling trends, which are largely dependent on the store concept and merchandising strategy. For example, retail sales typically decrease in January and February, following a booming sales period during the holiday season with significant declines during the post-holiday lull. The key to timing a successful brick-and-mortar launch is maximizing seasonal calendars and ideally opening one to two months prior to the time period, which is anticipated to yield the greatest opportunity for increased sales.
For nearly every retail category, the holidays are the busiest time of the year, which is why it makes the most sense to open new brick-and-mortar locations in the fall to capitalize on the holiday sales period. A September or October opening gives retailers time to get the store operating at peak efficiency before heading into the holidays.
Overall, there has been a trend of increased investment into physical retails locations by notable companies such as Macy’s, Kohl’s and Amazon over the last year, indicating that brick-and-morter remains an integral component to business models. Looking ahead to 2022, according to CBRE’s reports, many retailers and private equity firms see a robust future for brick-and-mortar retail.
