We recently attended a fascinating JLL event in Downtown Container Park, Las Vegas, as part of the ICSC RECon event.This was all about the future of retail, with a special focus on the current situation concerning the link between bricks and mortar retail and the digital experience.
The introduction was made by ICSC moderator Jesse Tron. He warmed up the attendees by explaining that ICSC see the “convergence of those two models” of physical and online retail as being a vital area. This is because they don’t see e-commerce as replacing bricks and mortar sales. Instead, they believe that combining the two in an omni-channel approach is vital.
Jesse went on to say that there is “an evolution” taking place in the industry. He said that the image of the industry not being progressive enough “has changed drastically over the last 5 years” with a lot of new technology making its appearance in that time and a new type of tenant mix coming to the fore as well.
What Still Gets Sold in Malls?Next up was James Cook, who is the Director of Retail Research at JJL. He introduced a document covering a variety of different retail trends that the company’s marketing department has been looking into.
He started off by talking about the impact that the appearance of the internet had on malls across the US. After this, he pointed out that a very high percentage of the total sales made these days still happen in malls, despite the press continually reporting on a “retail apocalypse”.
James then explained to us how it is possible to see what type of thing will still be sold in malls in the future and what sort of product is more likely to be bought online. His example centered around the fact that people enjoy time-saving automation in grocery stores but not in the likes of drugstores.
Basically, he says that the more important our need is for something (as in the cases of security and health) the more important we view the need for human interaction in the transaction. He moved on to talk about the current boom in physical vinyl record sales. In this case he said that it is people’s need for esteem and to feel cool that is behind this trend.
Therefore, he summed up by saying that “anything that meets higher level needs is going to be occurring physically in person” and is “much less likely to be automated or sold online”. The current time was described as a “time of unprecedented change”, but it was pointed out that having physical stores in malls is still a vastly important part of any good retail strategy. A fascinating conversation then ensued, as it was pointed out that many of the vinyl record buyers are millennials, rather than the nostalgic baby boomers we might expect.
While the “tremendous amount of investment” in new technology hasn’t always been profitable for retailers, it was pointed out that retailers understand that consumers want and expect it. The feeling is that retailers in particularly tough sectors are “scrambling to be current”.
In the example of woman’s wear, we heard that only 19% of the retailers have a profitable omni-channel business, with free shipping and returns among the issues making it so difficult.
A Massive RevolutionAnother point that was covered in depth was the fact that premise size and usage has undergone changes in the recent times too. In some cases stores are used to distribute orders and in other cases stores are shrinking.
We also heard the opinion that retailers are “in the midst of a massive revolution in their industry.” One of the big issues is how to get back the customers that are being lost to e-commerce.
Interestingly, we heard that today the front door of any store is the internet, with a “seamless process” leading from the internet to the store being an essential part of the business.
We also heard about the how stores can give consumers the “experience of finding a thing” when they go shopping. This is the kind of idea that gives something extra to customers and that helps retailers to win.
Another point that was touched on is that “e-commerce is about education” and how it is about teaching customers when they will save money and when they will spend more. A great statistic we were told is that 60-70% of consumers use their phone while they are standing in a mall or store. This lets them do research while they are out shopping.
With so many different retailers spending so much money on their e-commerce solutions it was suggested that “the consumer is the winner”. However, the question was then asked as to “where does it stop?”
In answer, we heard a number of opinions and it was pointed out that when a store closes the company tends to make fewer online sales in that region from then on.
A Joint EffortGreg Maloney is the President and CEO of Retail at JJL. He talked to the audience about the “partnership” between the retailer and the landlord, who need to make a “joint effort” to get the experience back for consumers.
Greg said that they need to make it exciting for people to go back to malls again. He stated that things need to be changed, even from the way that they were done just 5 years ago.
Naveen Jaggi is the President of Retail Brokerage and Capital Markets at JJL. She then took her turn to give us details of the campaigns they have created to help retailers show customers why mall shopping is still so popular.
This has resulted in a series of ad campaigns about people connecting in malls. These will be getting “rolled out in the coming months” and the company expects them to receive a positive response from shoppers. One of the key points covered is that 92.5% of shopping still takes place in stores and malls. This leads to the Let’s Go Shopping slogan that is used heavily in the campaigns.
Overall, this interesting event let us see a good insight into what the future could hold for malls and what challenges are waiting for retailers and mall owners.