Refining Retail

Bigger, better, faster—the refinements keep coming. That may be human nature, but today it reflects the nature of the retail market as manufacturers and retailers harness ever-advancing technology to attract and retain customers. Over the years, there has been much concern about where technology’s new tools will lead. Real estate owners have feared a waning demand for bricks and mortar. Consumers have feared invasion of privacy as their preferences are recorded and targeted in minute detail. Retailers have feared a loss of turf to e-tailers, in particular Amazon and other mega-players. All are valid concerns. But over time technology has also brought brand awareness, better customer service, greater convenience, even a competitive edge.

As the speed of e-commerce increases, the technology needed to meet higher expectations grows ever more complex. Same-day delivery of consumer and business goods is one new wrinkle. Once limited to local delivery in big cities (Barnes & Noble has long offered the service in New York City), this trend promises to spread in the not-so-distant future. Extending the reach and volume of same-day service demands new types of machinery, new sorting capabilities—in fact, an altogether new breed of distribution facility, as Dees Stribling discusses in “Instant Gratification,” this month’s technology article. If the idea catches on, it could create a brand-new subcategory of industrial product.

Bricks-and-mortar retail, meanwhile, remains in demand, though growth continues to be slow in this post-recession era (discussed in the property management feature “Rich in Opportunity”). Attracting shoppers to stores requires sophisticated analysis of trade-area demographics, store performance and brand credit quality (this year’s CPE-Nielsen Special Report examines the links among affluence, new business creation and retail real estate investment). Not to be neglected is consumer appeal, which still depends largely on the basics, such as store mix, convenience, security, accessibility and property age.

Beyond those practicalities, lifestyle-related attractions are more important than ever. That is why the new Scheels sporting goods and outdoor equipment store in Sandy, Utah, features a 65-foot-tall Ferris wheel and why Brookfield Office Properties Inc. offers a busy schedule of free performances and art exhibitions at the Winter Garden, the soaring, glass-clad space at Brookfield Place in Downtown Manhattan. These savvy players understand that entertainment draws customers to their venues and the mix of retailers keeps them there.

Though online shopping offers unprecedented speed and convenience, bricks-and-mortar stores give consumers what they cannot find on the Internet: hands-on browsing, live entertainment, true social interaction. The task ahead seems clear: making the most of these built-in advantages while creating innovations in customer experience and technology for a new age of retail.

Suzann D. Silverman, Editorial Director