Looking at current affairs in commercial real estate (CRE), you will quickly note a lot of ink is being spilled over retail and its impending death. As a digital marketer and tech enthusiast, I am keenly interested in the conversation surrounding the state of retail. Daily headlines announcing the closure of various retail outlets and a never-ending barrage of articles on the growth of Amazon has probably convinced many that the death knell is indeed ringing for retail.
And it’s not just retail. We are seeing this type of disruption across many industries. Technological disruptions, including automation, are bringing about drastic changes across many industries. Obviously, in some instances, industries will die. Broader reading, however, illuminates us to the probability of significant change in retail rather than outright death.
NAI Platformretail specialist and associate real estate broker Peter Korunkiewich explains, “Many in the retail sector are finding it necessary to redesign their approach to the bricks and mortar ways of the past. The convenience of shopping and delivery of goods by Amazon and other online retailers has forced retail groups both small and large to find ways to cut cost to compete. The big box stores are shrinking in floorspace and increasing warehousing and distribution, even shuttering stores as seen recently with Sam’s Club, who has announced the closing of 63 stores. Ten of these locations are slated to become e-commerce distribution centers. The local shop owners unfortunately don’t have the financial strength to always make such adjustments and are closing their doors completely. Change is never easy but in the world of retail it will be a continuing trend as the Amazon effect continues.”
As Peter points out, many retailers can, and will survive if they are creative enough and can afford to respond quickly to market pressures. Those that can not adapt will struggle and may eventually perish.
Another retail expert at NAI Platform, associate real estate broker James “Jay” Verro, CCIM adds, “Amazon’s effect on small mom & pop businesses varies by the type of business being discussed. It’s impossible to make a blanket statement that Amazon has either hurt or helped all small businesses. A specific case of it hurting a small business in our market is a local wilderness and survival specialty shop. This retailer provided additional services and survival classes to differentiate itself. Recently they have found customers were coming in to look at and see their merchandise, only to have a high percentage utter the same reply ‘I’m going to think about it and will come back.’ Sadly, the majority didn’t come back, to which the shop owner attributed to seeing most of those folks on their phones while in the shop. While it’s the shop owner’s theory that those customers were checking prices and ordering from Amazon, the result was the need to sublet their space to another retail user.”
If you’ve been in business of any kind for long, you know differentiation is an integral aspect of remaining viable and competitive. Businesses need to continually ask themselves how their goods and services are unique and valuable to their clients or customers. One way of becoming valuable and help ensure your retail business survives the waves of change is to focus on the customer experience.
A common trend in marketing and sales, especially as millennials become a more powerful force in the market, is the concept of the wholistic customer experience. Consumers are valuing experiences over more tangible rewards and that likely extends to the retail market as well. At the very least it will be a determining factor in where consumers spend money, even when physical goods are being purchased.
Our brokers at NAI Platform possess extensive knowledge and experience of the industry’s intricate nuances, with a singular focus of working diligently to help our clients meet and surpass their goals. As part of this diligence, we are also dedicated to ensuring our clients have an unparalleled experience throughout the entire process with us as they seek solutions within commercial real estate.
For more information and expert guidance on your commercial real estate needs, please give us a call at NAI Platform or visit our website at www.naiplatform.com.
Levi Steier, Marketing Director
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Albany, NY 12211
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