Q1 2019 | Houston Retail Market Report

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Houston’s retail market seeks balance between bricks and clicks   

Retail Trends
Commentary by Hal P. Colbert, Senior Vice PresidentQ1_2019_Retail_MarketIndicators

The advent of the internet and online shopping created rhetoric about the end of brick and mortar retail and the retail apocalypse was just around the corner as brick and mortar retail’s end was near.

Now years after these predictions, studies show that brick and mortar isn’t going away anytime soon. True, some retailers who either couldn’t or didn’t adapt have failed and fallen by the wayside. Thus bringing us to a new phase of retail where retailers have right-sized, adapted and are thriving, proving that the hysteria over “clicks” will kill “bricks” has not been a valid conclusion; however, the jury remains out as we live in a continually evolving world and the end is not yet in sight.

There have been several studies recently that have all come to the same conclusion, that clicks drive bricks and vice versa. According to a recent ICSC study of over 9,000 adults in 9 countries statistically showing that across all age categories (millennials, Generation X and baby boomers) clicks benefit bricks and sales increase in clicks when a physical store is nearby. ICSC calls this the Halo Effect whereby an impression created in one area affects another. 55% of the global study group thinks a nearby physical store is important to them when making online purchases as they generate brand awareness and trust. The study also found that opening a new store boosts online traffic while store closings decrease online traffic. The industry refers to the modern approach to retail marketing as Omni-Channel. The concept is to catch the consumer’s attention in as many ways as possible, leveraging the daily habits of consumers including social media, online shopping, and physical stores to stay in front of consumers and increase brand engagement. It is not an either/or strategy, but rather an all of the above. Case in point of traditional web-only retailers opening physical stores here in Houston are Amazon, Indochina, Untuckit opening in the Galleria Mall and Warby Parkers new store in Highland Village.

Research further shows that people who order online and pick up instore will purchase more items when picking up their online purchase. Today, online sales account for only 12% of total retail sales. That number will grow over time and the retailers who embrace the all of the above strategy will be the winners in the new retail reality.

The retail industry is reinventing itself and it isn’t just bricks or clicks, but about developing a strategy that works for a shopper using internet connected technology that changes the way they shop, and creative retailers are using the new technologies to innovate and attempt to stay ahead of the curve. So now retailers are going from a clicks to bricks mentality and brick and mortar stores are still as relevant as ever. A new trend is developing as retailers reinvent and seek that balance between clicks and bricks.

Technology is evolving at a faster pace and affects all facets of our lives, how we work, how we shop and how we live. Service and goods providers who adapt and embrace this changing world will succeed, while those who don’t will become a spot in history. The one constant obviously is change.

 
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Q1 2019 | Houston Retail Market Report

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