The State of Retail

April 2017

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Much has been written in the past year about the end of retail as we know it.  According to several reports, U.S. retailers are on pace to close more stores in 2017 than they did during the 2008 Great Recession.  These reports cite to several key factors: the growth of ecommerce and omnichannel sales, over supply of retail space, the shift in consumer spending toward discounters such as TJ Maxx and Nordstrom Rack, and a shift by consumers toward experience-based spending, such as travel and restaurants, over money spent on material goods such as apparel.
 
At the same time, retailers that were previously only selling products online (most notably Amazon) are opening brick-and-mortar stores.  Reports show that when an online store opens a brick-and-mortar location, online sales increase within the same geographic area. This is referred to in the industry as the “halo effect.” The reverse is also true: when a store closes, online sales in the same area drop.  In addition, owners of class “A” shopping centers are boasting of record occupancy rates.
 
So which is it?  Is retail dead or is it merely in the nascent phase of a new paradigm?  Next month we will survey the top brokers throughout the U.S. in our annual post-ICSC Las Vegas convention round-up to hear from the experts on their take on where things are headed for retail.