Oh, how consumers’ shopping behaviors have changed. Before, people would drive an extra 10 minutes to save $15. Now, they’ll spend $15 to save 10 minutes, Evergreen Commercial Realty president Lilly Golden said at the National Association of Real Estate Editors annual conference this week.

It’s about lifestyle these days, not just price, and so retailers are changing their approach to appeal to shoppers: experiential locations, activations like Instagram star meet-and-greets, and omnichannel. And property owners are focusing on placemaking, using grocers as anchors, and adding uses, particularly multifamily and medtail.

“The pandemic changed how we lived, but I don’t think it changed how we want to engage with ‘place,’ Cooper Carry principal Nicolia Robinson said on another NAREE panel. “If anything, it reinforced and accelerated the need to create places that people want to be in.”

Retailers also are using advanced data and technology to decide where to set up shop. Golden noted that today’s retailers are looking at smaller footprints. “Developers are more likely to focus on buying existing properties [to repurpose] than building new,” she said. “When you build malls that are too big, they look great at first, but soon they become eyesores.”

Still, Trademark founder and CEO Terry Montesi said department stores, a mall mainstay, are not going away. “I don’t think we’ll eventually have as many department stores as we do today, but we won't have zero. There will be fewer, and they won’t cannibalize each other. They will have to reinvent themselves. This has not been the retail apocalypse that some predicted early on in the pandemic. It’s more of a revelation.”

Omnichannel and Experience

Omnichannel retail synchronizes the customer experience across all points of access for the customer. The goal is to make purchasing as convenient as possible and fulfillment as fast as possible. Indeed, modern consumers want fast delivery and multiple fulfillment options, according to the NAREE retail panel.

Retailers are using back-of-store space for distribution and front-of-store for returns and customer service, including online ordering and in-store pickup. Montesi said the combination of distribution and sales shows that retail does not have to be “all or nothing” —all brick-and-mortar or all e-commerce. “The pandemic gave us omnichannel retail,” Montesi said, adding that “taking returns in the store is a spur to more purchases.”

Thus, said, CBRE senior managing director Brad Sanders, global project management leader for the retail and multisite sector, retailers are spending their capital on retooling their spaces, not growing their store counts. “Omnichanneling is big,” he said. “This is a major change for the industry.” Sanders also pointed out that online ordering and pickup has been popular for food-and-beverage providers, too.

Golden said it’s all about generating foot traffic back to the stores and marketplaces. Enticements include beer and wine while shopping, allowing dogs in stores, electric vehicle charging stations, free Wi-Fi and tree-lined areas and shady spots to create gathering places.

Montesi said Instagram personalities and local stars can attract fans who will pay a fee to wind through a well-decorated area and meet the stars. “We’re actually making a little bit of money on this,” said Montesi, who outsources the effort to bring on celebrities to centers. Golden cited Dick’s Sporting Goods House of Sport stores for the in-store experience, calling them, “a place to gather and learn.” Pop-ups are another option for adding experience. Golden said they offer something new for shoppers. Montesi also suggested local food truck operators introducing their products in centers’ food courts.

Adding Multifamily and Office Uses

Montesi said some jurisdictions are tighter than others when it comes to adding housing to retail components. Trademark analyzed 19 mall redevelopments and found an average residential entitlement of 4,100 units. For one development, he said, the locals wanted so much to keep their mall that they didn’t balk at all about the mall adding 150 to 200 apartments.

He said Macy’s owns about 17 or 18 lots and is reducing its stores to 25,000 to 30,000 square feet. It’s looking to use space that creates for residential and other uses, such as medtail.

He added that office spaces are working to create placemaking, too, and on another panel, JLL managing director Brooke Dewey noted that office tenants are choosing to locate where their employees want to be after work.

Site Selection

Sanders said retailers are getting much better at pinpointing ideal locations for their stores.

There are looking not just at demographic and psychographic information but also predicted revenue based on their customers and the location, he said. They can determine, for example, whether an area’s customer type has changed from locals to tourists. And they can decide what corner they should be on, based on, say, whether the traffic coming to a given location is turning left or turning right into the property.

Another set of questions revolves around signage: How visible would it be, when will it be seen by cars driving by, what height does it need to be, how legible is it to drivers from how far away?

Such data is in use not just by high-end retailers but now for all retailers. “The questions are the same every time, but you should allow for the answer to be different every time,” Sanders said. “It’s research’s job to find the underlying real estate’s value.”