Shoppers still love to look, browse and touch before making some purchasing decisions.The world of eCommerce continues to grow, and it’s only going to get bigger. That leads to concerns that brick-and-mortar retail will eventually become a thing of the past, and some observers feel we’re on our way to seeing that happen. Not so fast, say other industry insiders, including one of the most respected names in the world of real estate. That would be CBRE group chief executive Robert Sulentic, who recently spoke with the Los Angeles Times for a wide-ranging interview.
Sulentic touched on some topics during his chat, but his thoughts on eCommerce stood out. He acknowledges the growth of the online sector, but he views it as just one more piece of the larger retail puzzle.
“About 12% of all retail sales are only online, so a massive amount of product is still bought in stores. Well-located malls and high-street retailers in places like L.A. are doing quite well — retail rents grew faster than office rents last year,” he said. “B and C-level malls are under pressure, however, and where retailers overbuilt, there is going to be a day of reckoning independent of e-commerce.”
As for why he’s not too concerned about online shopping, Sulentic touches on what continues to help innovative brick-and-mortar retailers stand out from their online counterparts: experience. Shoppers still love to look, browse and feel before making some purchasing decisions, and to be able to do that in a welcoming center that’s chock full of other goodies makes the experience all the better.
“There isn’t a single baseball game that will be played in the big leagues that you couldn’t watch better on your couch, but 75 million people will go to the ballpark this year because people want an experience, want to be with other people,” Sulentic continued. “Imagine being a millennial in a favored place like downtown or Hollywood. If I said to you, “By the way, there is no retail,” would you go live there? You would not, and neither would they.”
That’s a pretty prescient take from Sulentic, as a staggering number of millennial-themed developments in the planning stages come with a substantial retail component.
“That’s why retail is not going away. We do think e-commerce is a big deal. We just don’t think e-commerce is going to run retail off,” he added.