The Future of Retail Conference was hosted by the Queens Chamber of Commerce Real Estate Committee today. At this event we heard from Jonathan Krivine, Director of Retail Services at Avison Young; Steven Rothman. Director of Operations at Jones LaSalle; Frances Graham, Project Director at Linesight; Paul Daniels, Owner and Operator of Chick-fil-A at Queens Center Mall; and Dustin Rand, Leasing Manager at Macerich Leasing. They discussed several issues confronting the retail industry, but spent much of their time talking about rising vacancy rates and what challenges Queens landlords and retailers will be confronted with over the course of the next 10 to 20 years.
Of particular interest were the patterns of young shoppers. This demographic has always been the target audience for retail as they tend to have the most disposable income and the most free time to spend shopping. Unfortunately, these consumers have embraced online shopping more so than older shoppers. For brick and mortar stores to remain competitive, they have two options. They can either offer more immersive experiences or outfit their stores with technology that makes the shopping experience more seamless.
One of the panelists, Mr. Rand, described the success that his company, Macerich Leasing, had experienced following the first route. Specifically, they converted Tysons Corner Center, a shopping center in Fairfax County, Virginia, from a typical mall to a destination that includes restaurants, a hotel, and entertainment options. In other projects, Macerich has even leased space to educational facilities. As a consequence of such changes, they have seen a surge in activity at their properties.
The second route, meanwhile, is already being taken by national and global brands like CVS, McDonald’s, and Chick-fil-A. Mr. Rothman of Jones LaSalle believes this will begin to trickle down, and that shoppers will soon be able to walk into any store, grab whatever they want, and walk out without having to interact with another person. Consumers’ phones will track and pay for everything without the need for human involvement.
Because of such technology, the panelists expect that as many as 3 million cashier jobs will disappear within the next five years. In the next 10 to 20 years, additional technological advances in 3D printing, dynamic pricing, drone delivery, and driverless cars will have an impact on the retail industry in ways we’re only beginning to understand.
What does this mean for landlords?
Commercial landlords should try to be as flexible as possible when working with potential retail tenants. On the one hand, there are a lot of vacancies, so it really is a tenants’ market. On the other, allowing retailers to convert space into something that is alluring to shoppers will ultimately make them successful. Again, this is because they are providing consumers with memorable experiences and not just commodities.
Finally, landlords will have to cope with how technology is allowing many retailers to do more with less space. A prime example can be seen with banks. Just a few years ago, it was common for a bank to rent out 10,000 square feet for a local branch. Now, new banks are opening branches that are just 3,000 square feet because of the growing capabilities of ATM machines and mobile devices, which have replaced the need for both space and staff.