Retail Horoscope: CRE Predictions to Influence 2019

What a year it’s been for brands, retailers and their lease-holding landlords. Their main focus has always been establishing stronger connections with consumers. From social impact to reinventing property holdings and exploring new markets for revenue, major players in the retail services sector will need to think outside the box to secure a larger share of the market. I predict three areas will have the most impact on how business is conducted in 2019 starting with real estate investments by digitally native brands, corporate social responsibility and the reinvention of the toy market.

EVERYTHING OLD IS NEW AGAIN

What’s old is new again as digitally native brands come around to the idea of embracing retail’s omnichannel strategies. Experts estimate that over 800 brands with online origins will expand their consumer approach by leveraging wholesale strategies and physical retail stores. The likes of Everlane and Bonobos are filling vacancies in shopping malls and retail corridors, strategically mapping location choices to where their consumers are shopping.

Landlords, eager to refresh their property offerings, are actively negotiating short-term leases with extension options, and in some cases, assisting with remodeling packages. Take BrandBox, a retail concept launched by Macerich in Santa Monica, CA, that provides e-commerce sites with an opportunity to safely test their brands with a mainstream audience. Naadam and Winky Lux—both native to online—debuted mini-stores at the recently reinvented Tysons Corner Center in Washington, D.C. Brands that have experienced success with test-run pop-ups realize the increased revenue potential of providing an offline experience to whet the appetites of their consumers. And the list of potential brands looking to explore brick-and-mortar as a supplementary revenue stream is growing, as highlighted by The Lead, a research management firm that focuses on the intersection of fashion, retail and real estate data.

The idea of pop-ups has inspired innovative thinking by retailers, landlords and city officials, too. Earlier this month the Chicago City Council passed an ordinance requiring pop-ups get licensed to encourage experimentation with retail economic development in corridors throughout the city.

THE SEASON OF GIVING

Implementing a corporate social responsibility strategy has become the norm for companies seeking to boost their brand equity. And with a whopping 87% of consumers seeking companies that support causes they care about, it’s no surprise that brands are stepping up their efforts. Here are just a few highlights of what some retailers are doing to support the causes their consumers care about:

Consumers and retailers revere Barney’s holiday windows, and this year’s partnership with Save the Children does not disappoint. The luxury retailer has dedicated their windows to visually depict the impact of a single coin and how it can create real change in the life of a child. Check out the sentiments behind the #centiments campaign where every penny counts.

BoxLunch has quietly emerged onto the mall scene, with over 100 stores across the country. Coined as “a civic-minded web + brick-and-mortar-based specialty retailer” BoxLunch offers a curated collection of pop culture-themed merchandise with a philanthropic twist. For every $10 worth of merchandise purchased, the company donates a meal to those in need through Feeding America.

Uncommon Goods launched the Better to Give program with the intent to build a better business by connecting customers with select non-profit organizations doing good around the world. With every purchase, Uncommon Goods donates $1 to one of four Better to Give partners, including American Forests, International Rescue Committee, RAINN and 826 National, as pre-selected by its customers.

SO MANY TOYS SO LITTLE TIME

With more than $4 billion in business on the table, Amazon, Target, Walmart and other retailers are looking to fill the toy chasm created by the demise of Toys ‘R Us. A sizeable chunk—about 40% of those purchases—takes place during the holiday season, so a lot is riding on how well these players perform over the next few weeks. I think it’s safe to say that all three retailers will secure a slice of the pie and that Amazon, with the most inventory, is likely to be the strongest contender simply because consumers can find anything on their site.

Earlier in the season, Amazon released its first-ever printed toy catalog (minus prices which fluctuate thanks to the site’s competitive pricing algorithm) to drive online purchases. Target and Walmart, in preparation for the holiday toy rush, remodeled a percentage of their stores with kids in mind adding dedicated areas for books and toys. Barnes and Noble and Kroger are making similar moves; Party City is also throwing its hat into the playpen with pop-up Toy City stores for the season.

Fans of FAO Schwarz filled the iconic toy retailer’s flagship Thanksgiving weekend when it reopened in the heart of Rockefeller Center. The store is one of many to come as its parent, ThreeSixtyBrands, reinvents FAO Schwarz’s distribution strategy. Taking a chapter from new retail, the toy brand plans to create stores within stores at larger retailers as well as explore adding boutiques to airport terminals (a concept Amazon is planning for its Go product). And the luxury toy market is resurging with a little competition from Hamley’s, the world’s oldest toy store in the UK. Reports suggest that the store is cinching a deal to lease a 30,000 square-foot space at 2 Herald Square, across the street from Macy’s HQ in NYC.



What opportunities do you foresee in 2019? Tweet me @anjeesolankiCRE to join the conversation.

Anjee continues to be an insatiable enthusiast of all things retail. She’s a student of culture with a pulse on future shoppers and the fleeting trends constantly changing the retail landscape … driving retailers, landlords and developers crazy!