There’s this misconception that online shopping is countering brick-and-mortar. Disruption does not necessarily spell bad news for retail real estate. Real estate professionals who can embrace and adapt to changes will become market leaders.
While retail is going through vast disruption, with many stores closing, the reality is that shopping in physical stores continues to grow, albeit at a far slower pace than online. According to recent studies, in the US, brick and mortar has still strong foundations as only 11 percent of retail sales are conducted online while 89% are still made in a store. The same studies anticipate than 80% of all retail sales will likely still be done in actual physical stores in 2025.
Retail needs to reinvent itself and adapt to changing technologies and consumer trends. Working on the retail real estate sector presents many exciting opportunities for real estate professionals.
1.Retail real estate is evolving
Delivery and the large variety of products offered to consumers on the internet have been the real game changers. However physical spaces have still their place in the current ecosystem and in many cases, retail owners need to reinvent their approach and to be more experiential in their thinking. Retail real estate owners need to focus on the experiences they can offer to shoppers. Consumers are interested in new and unique shopping experiences. According to specialists and some of the best brand selling their product online and in stores, “retail is not dead but boring retail is dead”.
Many brands are improving the customer experience through digitalization. For instance, Amazon has opened its very first checkout-free grocery store in Seattle, which shows how the company is evolving into a click-and-brick retailer. In the Amazon Go shop, computer vision, machine-learning algorithms, cameras, and sensors track what customers take from the shelves, and charges them as they leave the store. All you need is the Amazon Go app linked to a credit card. You then scan your phone as you enter the store, creating a virtual basket for yourself. Removing the need to check out provides an extremely convenient experience for shoppers.
As well as digitization, brands can improve the customer experience by offering extra services. As a case in point, many Nike stores tailor their products to customers’ needs. This ensures that customers feel taken care of while visiting the store, and satisfied with their purchase when leaving. Retailers that offer a faster, more individually focused service will be able to stay relevant and competitive in this industry. The right combination of experience and environment can result in a unique dynamic between the brand and the consumer.
2.The new landscape of the whole supply chain
It’s interesting to see that some retail businesses also invest in logistics to broaden their investment strategies. Investing in both the retail and logistics sectors allows those investors to operate in the whole supply chain.
For example, Meyer Bergman, a real estate investment management firm, has recently hired senior employees having extensive knowledge and track record in the Logistics sector. It was for them the final step to achieve the full delivery process from a distribution centre to end consumer. Markus Meijer, the CEO of Meyer Bergman, believes that these logistical skills can help “offer new strategies” to clients and “stay relevant in today’s competitive environment”.
3.Opportunities in retail real estate
The retail real estate sector encompasses different asset types such as shopping centres, high street retail, outlets, shops, mixed use properties. Some companies have a pure retail real estate focus whiles some other have a wider asset coverage.
Having a good understanding of the market will enable you to identify a large variety of players that are operating within the retail real estate sector and deploying different investment and asset management strategies.
Professionals will have the choice to work on the client side or the consulting side. The benefit of working on the client side is that assets are owned by the company and you might have the chance to understand the full spectrum of the strategy. You will also manage external consultants or agents. The downside is that some professionals may find working for the same company restrictive.
If you are working on the consulting side you will assist clients to ensure that their strategies support their business plan. The advantage of consulting work is that it offers a large variety of projects, clients and strategies. The disadvantages include a lack of specialisation and low autonomy when compared to client-side.
4.Qualities employers are looking for:
On top of the traditional technical skills, those are some of the qualities you would need If you are considering a position in the retail real estate space:
- A strong interest in technologies
- Perseverance (this is important, especially since disruption to the sector can create many obstacles along the way)
- Inquisitiveness (you should always be looking for feedback and input from clients and customers. It’s crucial to remain curious about how to improve your methods and approaches)
Innovative retail investment companies are thriving and expanding, therefore, the sector offers fantastic opportunities to professionals. Feel free to get in touch with us if you want to hear more about the retail real estate sector and explore opportunities.