SAN DIEGO—The decision to buy may not be 100% done in the store, but having the store is an essential part of the marketing and sale process, Cisterra Development project principal Jason Wood tells GlobeSt.com. Wood will be speaking at RealShare San Diego on Nov. 15 here on the panel titled “Retail: The Next Chapter.”
The panel will cover how the San Diego retail market is showing signs of continuous growth, with vacancy rates reaching a record low in 2017 and fierce competition among tenants for limited space. Availability rates are dipping slightly, and development of luxury and upscale retail concepts is having a positive impact on the market. The session will tackle how experts in the retail industry are viewing the way tenants can cope with the rise of e-commerce, the new and expanding tenant categories (craft beer, fitness studios and fast-casual restaurants, to name a few) and trends for the future of retail.
Wood tells us retail fundamentals in this market seem strong, without an excess of supply and with good solid demand. He says specialty retail is finding strength as a concept in this market: “People know what they want and are going to where they can get it.”
To cope with the rise of e-commerce, Wood says San Diego retail tenants are becoming a showcase. “Buyers may buy online, but they will still want to touch and feel in the store.” In this way, the brick-and-mortar store is still a crucial element in the total retail picture.
In fact, as we recently reported, brick-and-mortar retailers with an online presence are outperforming e-commerce retailers. According to research from CBRE, the impacts of e-commerce sales are “vastly overrated.”
The report shoes that 90% of retail sales occur in physical stores, and when it comes to ecommerce sales, 50% are from brick-and-mortar brands. E-commerce sales today account for only 9% of total sales, and in the next five years, ecommerce sales won't count for more than 15% of overall sales.
As CBRE senior managing director Jeff Moore told us, for online players, “brick-and-mortar locations provide a way to reach a wider consumer base and limit the cost of online returns as consumers can return in-store.” He said at brick-and-mortar locations, retailers also have the ability to “upsell,” which can result in a higher transaction spend than online.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
