It seems that every day I read another article predicting the end of retail. With the continuing growth of e-commerce, the popular narrative is that brick-and-mortar shopping is in peril.
I flat out disagree.
While retail is evolving (and will continue to evolve), I believe that the future is bright for those who innovate and invest in the customer experience.
Let’s start with some facts:
National vacancy rates are below 5 percent.
Over the past few years, lease spreads have been in the double digits.
There is minimal new supply coming online, and in the next few years we will see the demolition or repurposing of about 300 lower-tiered malls out of 1,100 total malls.
Finally, let’s remember that companies want physical retail because e-commerce is extremely expensive. With free shipping and average apparel return rates of 38 percent, e-commerce margins suffer, and brick and mortar is an outright bargain.
While retail fundamentals are strong, continued success will require a focus on the “experience economy.” Humans are social beings, and shopping is fundamentally a social experience. Many retailers and landlords are already capitalizing on this, finding ways to provide experiences you can’t get on the web.
Take Athleta, an athletic apparel store owned by Gap Inc. Its Flatiron District store in Manhattan has a fitness studio offering free yoga…