As Milrose wraps up our first tradeshow of 2024 year, we reflect on highlights and hurdles many of the attendees of ICSC@RED RIVER shared with Masterplan Managing Director Wes Hoblit. Masterplan, Milrose's Texas-based permitting partner, kicked off our 2024 conference schedule by attending ICSC@Red River, in Dallas, Texas. Read on for the top ten takeaways Masterplan Managing Director Wes Hoblit took away on the state of the retail industry.
Through conversations during the show, Wes unveiled exciting opportunities in the upcoming development year and potential pitfalls to look out for when navigating this ever-evolving terrain. This blog presents the top 10 learnings from ICSC, offering insights to propel your strategies forward.
1. Changing Tenants
The retail landscape is undergoing a significant transformation with the emergence of non-traditional tenants. Mixed-use developments are becoming increasingly popular, integrating a blend of retail, entertainment, dining, and even residential components. This trend enhances the shopping experience and diversifies revenue streams for property owners. From coworking spaces and healthcare clinics to experiential stores and pop-up shops, the influx of diverse tenants is reshaping traditional shopping centers into vibrant community hubs.
2. Smaller Lease Terms:
The shift towards shorter lease terms reflects the need for agility in today's fast-paced retail environment. With consumer preferences and market dynamics evolving rapidly, tenants seek flexibility to adapt their business strategies accordingly. Shorter lease agreements allow retailers to test new concepts, respond to changing trends, and negotiate more favorable terms.
3. Experiential Use:
The rise of experiential retail is revolutionizing how consumers interact with physical spaces. Beyond traditional shopping, consumers crave immersive experiences. Retailers are responding by incorporating experiential elements such as interactive displays, live events, and themed environments. By offering more than just products, retailers can foster deeper connections with customers, drive brand loyalty, and differentiate themselves in a crowded marketplace. Examples of experiential use include active spaces like Top Golf, Dave and Busters, The VOID, and Pin Stack.
4. Increase in the number of exercise tenants:
Gyms and fitness centers are capitalizing on the health and wellness trend by occupying larger spaces in prime locations. By repurposing vacant department stores or grocery spaces, fitness tenants can leverage existing infrastructure and benefit from high foot traffic in retail hubs. This convergence of fitness and retail caters to consumer preferences for convenience and contributes to the overall well-being of communities.
5. Smaller footprints (less square footage):
Urbanization and shifting demographics are driving the demand for smaller retail formats that maximize efficiency and accessibility. Compact storefronts allow retailers to establish a presence in densely populated areas where space is at a premium. Moreover, smaller footprints reduce overhead costs, making it easier for startups and niche retailers to enter the market. By focusing on curated selections and personalized experiences, smaller retailers can compete effectively against larger chains while catering to the unique needs of local communities.
6. Increase in drive-thru addition for food/drink services:
The growth of on-the-go lifestyles has catered to the popularity of drive-thru food and beverage services. Quick-service restaurants, coffee shops, and fast-casual eateries are capitalizing on this by integrating drive-thru lanes into their operations. In addition to providing convenience, drive-thru facilities enable retailers to capture impulse purchases and accommodate busy schedules.
7. Stand-alone stores:
As retailers seek greater autonomy and control over their brand identity, stand-alone stores are gaining traction as preferred development options. By owning the property outright, retailers can customize their facilities to align with their brand aesthetic and operational needs. Stand-alone stores offer greater visibility and branding opportunities, particularly on high-traffic thoroughfares or destination shopping districts. With complete control over the site layout and customer experience, retailers can create immersive environments that reinforce brand loyalty and drive foot traffic.
8. Increase in remodeling over new builds:
Rather than embarking on costly new construction projects, many retailers are opting to remodel existing properties to adapt to changing market conditions. Remodeling offers several advantages, including cost savings, faster turnaround times, and reduced environmental impact. By refreshing outdated storefronts, modernizing interior layouts, and incorporating innovative design elements, retailers can revitalize their brand image and enhance the customer experience.
9. Digital integration:
The rapid expansion of e-commerce has reshaped consumer shopping habits and expectations, prompting retailers to embrace the digital world. Seamless channel integration, such as mobile orders and in-store pickups, has become essential to the success of retailers. By leveraging technology, retailers can personalize the shopping journey, collect valuable customer data, and optimize inventory management.
10. Sustainability Initiatives:
With growing awareness of environmental issues, sustainability has become a critical consideration in the retail industry. Consumers increasingly prioritize eco-friendly products and sustainable practices, prompting retailers to adopt green initiatives. From reducing carbon emissions and minimizing waste to sourcing ethically produced goods, retailers are aligning their business strategies with sustainability goals.
If you're seeking assistance in navigating the evolving retail landscape, reach out to Wes Hoblit of Masterplan for tailored guidance and support for your upcoming retail projects.
