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Retail outlook: Things are often bleaker than they appear p2

1/30/2014 | Real Estate Blog

We are returning to our discussion of retail trends started in our Jan. 26 post. The sector looks pretty grim on the surface, with so many major chains shuttering stores in Philadelphia and all over the country. Traditional indoor malls will likely feel the worst of it as large anchor stores empty out. In addition to their sheer size (and the rent that comes with it), Anchors like J.C. Penney, Sears and Macy’s offer shoppers key access points to indoor malls. When they close, shoppers’ routines are interrupted, sometimes to the point of striking the entire mall of the shopper’s list of destinations.

Part of the problem, as we said, is the increasing use of the Internet for even small purchases. But technology does not always have to be the enemy — and it does not always have to involve an online mirror of a bricks-and-mortar store.

Smaller retailers are using technology to enhance the shopping experience by integrating mobile apps for coupons and other on-site advantages. Again, it’s all about the experience. Shopping will become interactive on a new, digital level. No size 10 on the rack? Order it from your phone and shipping costs will be waived.

Young brands will also increase their physical presence in the market. Lululemon, Michael Kors and Vince, for example, are slated to open new stores this year. They are not general merchandise stores, though, like J.C. Penney, so the shops will take up less space — but they will take up space, and that’s always a good thing in commercial real estate.

These younger brands will be developing their Internet presence as they develop their in-store shopping experiences. The key to attracting younger shoppers is to create a unique shopping experience that sets the retailer apart from the pack. For mainstays like Macy’s and Sears, integration has been harder — they have had to change decades-old practices while developing new approaches. They’ve been laying the track just ahead of the speeding train.

Retail market analysts will have to look in every direction to keep up with the industry over the next few years.

Source: CNBC, “A ‘tsunami’ of store closings expected to hit retail,” Krystina Gustafson, Jan. 22, 2014