Watch for These 3 Big Retail Trends in 2017
Recent innovations in technology have changed how we live and work. Who thought in 1999 that self-driving cars would be on the roads, that some companies would exist entirely online, or that you could purchase a piece of technology that would automatically track your steps and your sleep patterns?
These technological changes have also extended to how consumers shop, and while there were many changes in 2016, this year is shaping up to be just as innovative. Here, we point out three key trends that may change the retail landscape in 2017 and ultimately affect Retail Real Estate.
Smart Brick-and-Mortar Stores
In order to stay competitive, most retailers now offer either next-day or same day delivery for many products. Amazon was a frontrunner in adopting this method of delivery, and is now leading the way when it comes to incorporating technology into brick-and-mortar retail stores.
Amazon Go is scheduled to launch in early 2017. This is a new kind of store where no checkout is required. Consumers merely scan their phone upon entering, and technology built into the store shelves tracks what items they take and automatically bills their account. This is a big step-up from self-checkout, and many retailers will likely have to adopt something similar in order to keep customers happy in the future.
In our market, Kroger announced their ClickList service would be available in several Jackson, Mississippi area stores in late 2016. This is a service where customers can order online and pick up in store. This is just one of many ways retailers that operate in our market are modifying their business model to meet the demands of today’s consumer.
Virtual Shopping and Experiential Retail
With the advent of new technology such as Oculus Rift, which allows users to experience virtual 3D simulations of the real world, and more advanced hologram technology, many brands are now integrating these devices into the shopping experience.
One application allows users to “try on” clothes without ever changing outfits. Taking it to a more experiential level, the outdoor retailer, The North Face, has created a display that places customers in the middle of Yosemite Park. In another innovative use of new technology, the home improvement giant, Lowe’s uses Microsoft’s HoloLens to allow homeowners to design their virtual dream kitchen. Many retailers have come to embrace this technology not only for its appeal to customers, but also because relatively little physical space is required to offer these experiences.
The Growth of the Subscription Economy
Consumers’ approach to ownership has changed as the subscription economy has grown. For younger shoppers in particular, more and more are interested in renting products over flat-out ownership. Netflix was one of the first subscription products, which freed many millennials—and their parents—from the hassle of transporting boxes of DVDs from one location to another. This lead to the eventual demise of Blockbuster, but as time goes by all of those locations have been refitted or repurposed into multi-tenant buildings, like the Shoppes at Beauvoir in Biloxi, MS, or a new single tenant user has back filled them.
However, the flexibility of subscription products has only grown in recent years with companies like Car2Go allowing consumers to subscribe to car service on a monthly or by-use basis, while companies like Le Tote allow users to rent clothes and ship them back once they decide they’d like a new wardrobe. The flexibility of these services is their main draw for many, and in 2017 we expect to see this trend expand into new retail verticals.
Even with constant change and innovation in the retail industry, we believe that the Brick-and-Mortar Commercial Real Estate will continue to thrive in 2017 and beyond. Whether you’re looking for new retail space to lease or an out parcel to purchase, we can give you our expert opinion on what layouts and locations are trending with today’s most competitive retailers, connect with our team today.
By Micah McCullough, CCIM
Vice President | NAI UCR Properties