Image source: theboutique411.com
Anyone who knows me will attest that I’m an optimist. In fact I’m genuinely excited by many things happening in today’s retail real estate market. Technology, sustainability, a renewed emphasis on experience – each of these contributes to an exciting future for the retail industry. But I’m a realist too, and another big scary trend is hard to ignore: retail developers have to figure out how to connect with their customers in every way possible, or they won’t survive. This mirrors the very same thing that their tenants are grappling with only they have it even harder. Today’s successful retailers have to engage their customers both online and in-store, and it is not at all easy to do both well.
A recent column in The Atlantic expressed that while the shopping mall prototype – envisioned by Victor Gruen in 1952 – turns sixty, it’s preparing for retirement. We wouldn’t get anywhere by standing still, so on the surface I’m okay with that evolution. The article goes on to suggest, though, that tearing down old suburban shopping malls and starting over with open-air “lifestyle centers” is the best solution for retail developers. When you consider that by conservative estimates between 20-30 percent of US landfills consist of construction debris (and I have heard much higher percentages than that) I am personally against demolition of a serviceable building no matter what the reason. But beyond this, I think that replacing one development scenario with another is short sighted and greatly oversimplifies the problem. If they want to survive, developers in the U.S. have to figure out how to maximize their current real estate assets – make them meaningful again.
The best way to create meaning and true connection with the customer is through relevance. This is not a simple task. There is no one size fits all. Relevancy is directly related to the level of your understanding of your specific marketplace now, and your ability to successfully project that for years to come. I’ll give you an example. Since its origin, one of the prototypical U.S. mall’s most significant target markets has always been teenagers. But today’s young adults shop differently than the generations before them: they’re more connected; they’re far more price savvy than their parents; and very often they’re more concerned with supporting local businesses and their community. If a retail center happens to be located in a marketplace that will serve primarily this demographic, it has to be relevant to this audience and acknowledge their preferences in order to be successful.
Let’s stick for the time being with the idea of a center that exists to serve a trade area that is primarily oriented to a younger demographic. This center would be well advised to celebrate and support small and emerging retail through traditional leasing, pop-up, kiosk and retail merchandising unit programs. Emerging retail trends, what is hot, what is new and what is in limited supply will resonate with a younger customer base. The emphasis would be on flexibility, changeability and value.
Taking an interest in small, local retail isn’t limited to merely the youthful demographic. Shoppers everywhere, at any age are becoming more and more inclined to spend their increasingly limited time and money at stores that have exceptional offerings and that provide inspired choices. These are the stores that we recommend to friends, stores that we visit over and over.
Earlier this year I was a guest speaker at Downtown Works’ annual Retail Recruiter Workshop, where I spent a day with business leaders and retail recruiters from downtown retail districts from Los Angeles, Philadelphia, Washington DC, Seattle, Austin, Chattanooga, Norfolk, and other U.S. cities. We asked ourselves “what makes great retail?” and explored the components of a truly satisfying shopping experience – of course comparing notes about our favorite places to shop, too. Consistent favorites included Opening Ceremony, for its focus on constantly changing, collaborative collections of local fashion and design; Dave Eggers’ 826 Valencia stores, for their wonderful good humor as well as charitable connections to the local communities they serve; Watson Kennedy in Seattle, for its passionate expression of good living and gift-giving; The LAB in Costa Mesa, Calif., for its “anti-mall” statement and support of local artists; and Paxton Gate for its commitment to nature and design. What stands out in each of these examples is their consistent focus on creating customized experiences for their unique and specific target markets – they know what their customers want, and they deliver.
Watson Kennedy in Seattle
After all this, it’s important to note that being local does not have to mean being small. Consider what Target has done in the past year with The Shops campaign. By partnering with some of their favorite small retailers from across the U.S., even this gigantic brand sends the message that local matters. When customers connect with that message, they are more likely to connect with the brand that conveys it.
Target describes their promotion with the line, “the shops we fell in love with – collected and curated for you.” The word curated is so critical: they’re saying “we’re making this relevant to you.” Curation is a big part of the luxury industry’s success, but in this case we’re talking about selectivity, not necessarily exclusivity. You can make anything precious if you treat it as such. When retail developers show that they understand what customers care about, and demonstrate that they care too, they’ve taken the first step toward reviving their center, while others are stuck clinging to life support.
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Maureen Boyer is co-leader of Gensler’s global retail centers practice and a senior associate in our San Francisco office with over 25 years of experience in design, project management and construction management. Maureen focuses on reinventing and redeveloping retail environments, with a balanced emphasis between architecture and interior design. Through her continuous research of ever-changing consumer behavior and shopping trends, Maureen executes a uniquely customized, integrated multi-channel solution for her clients and their customers. Contact her at maureen_boyer@gensler.com. |