April 20, 2017 by CallisonRTKL

Answering Retail’s SOS: Market Signals Point the Way

Katie Sprague talks finding opportunity in the challenges presented by the ever-evolving retail landscape.

If I had a dollar for every time I’ve heard that the retail world is in turmoil, that the shopping centre is dying, or that online shopping is going to drive bricks and mortar out of business, I’d be a wealthy woman. It’s undeniable that the way we shop is changing in substantial ways, and we’re all looking for innovative ideas to help us navigate these unfamiliar waters. I may not have the life preserver for those choppy waves, but the market is sending out a few key signals that are helping to redirect us on the journey as we design for a new kind of shopping experience.

BRICKS AND CLICKS

I never really understood the rift between online retailers and their bricks and mortar counterparts or the idea that it would ultimately be an either/or proposition. If you examine how anyone under the age of 25 shops, it’s clear that, for most, the choice between online versus in-store is a non-issue. They shop however, whenever, and wherever they choose, and the range of products, places and experiences they seek is broad enough to keep retailers busy for decades to come. “Total Retail,” or the idea of integrating a retail transaction with a memorable experience that encourages consumer spending and loyalty, is a substantial shift from the days when the shopper was at the back end of the supply chain. These days, consumers rule the roost; not only are they endowed with the ability to shop their specific preferences and interests, but they can shop through whatever channel suits them at a particular time.

IN THE MIDST OF A MENAISSANCE

According to a recent report by The Boutique@Ogilvy, men are outspending women for the first time ever by a margin of 13%. The corresponding sea change in shopping patterns, behaviours and attitudes has given retailers strong incentive to figure out what it is that men want. The answer? A little entertainment, self-care (think personal grooming), sartorial saviors, art, the latest tech gadgets or even food and beverage alongside merchandise displays.

ATHENA’S SPENDING POWER

Who’s Athena? Boston Consulting Group dubs her the confident, financially independent career woman. Even more important, she is on the rise around the world and is poised to control 75% of the global discretionary spending by 2028. Needless to say, she’s a force with which to reckon.

‘VASTIGE’ IS KEY

That’s “Value Prestige” as coined by London-based business management consultant The Future Laboratory. It points to consumer preference for value, luxury, and not much in between. In the US, more than 50 new outlet centres have been built since 2006, with just two new regional shopping centres developed in that same time span. In the UK, the “squeezed middle” class regularly shops according to a high/low strategy, a trend that helped discount supermarkets Aldi and Lidl expand rapidly.

FOOD IS FUEL

In addition to keeping our bodies going, food and beverage represent a new source of growth for shopping centres too. In 2015, people in the United States spent more money on dining out than on groceries for the first time ever, an inclination that shows no signs of letting up. Shopping centres are responding by adding high-end restaurants, healthy dining options, local cuisine and pick-up for online orders as well as farmer’s markets and community gardens. The trend is materializing in places like Pusateri’s Food Hall, a 25,000-square-foot addition to Saks Fifth Avenue and Toronto’s first food hall in half a century.

THE FUTURE IS HERE

As recently as a handful of years ago, ideas like drone delivery, on-demand manufacturing and robot parking were relegated only to the imagination. Today, retailers from Melbourne to LA are delivering on these ideas. Michael Fox, CEO of Australia’s Shoes of Prey, predicts that on-demand retail will dominate the market in 10-20 years with a focus on delivering “ultra-bespoke” products with minimal wait time.

There’s truth to the notion that change is hard to predict, challenging to understand and difficult to plan for. But the new retail climate is offering chances to refresh and renew our businesses in exciting ways that we may never have thought of otherwise. There’s always room for optimism when we see challenges like these as opportunities to get creative.

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CallisonRTKL

For more than five decades, Callison and RTKL have created some of the world’s most memorable and successful environments for developers, retailers, investors, institutions and public entities. In 2015, our two practices came together under the Arcadis umbrella, expanding our sphere of influence and the depth and breadth of our resources. Our team is comprised of nearly 2,000 creative, innovative professionals throughout the world who are committed to advancing our client’s businesses and enhancing quality of life.