Retailers Go Big As They Invest In Experiences for Shoppers

Retail executives have long known that foot traffic increases when they can provide an “experience” for the customer, such as by adding gathering places or dining venues.

Retailers are now taking that a step further by featuring in-store experiences such as nail and eyelash salons, coffee shops, repair stations, super-sized TVs, and enhanced digital shopping options while walking the store, according to a story this week in The Wall Street Journal. 

Some retailers, especially in the fashion industry, are downsizing the number of stores in their portfolios and investing more in the ones they are keeping open, WSJ reported.

“By turning their stores into destinations that shoppers actively seek out and spend time in—a model that Apple honed with its roomy, landmark stores filled with usable gadgets—the fashion retailers are redefining the clothing store for the digital age,” according to WSJ.

But this trend can be seen in tenants of all types, experts interviewed by GlobeSt.com report.

“Good tenants understand the importance of reinvesting in their stores, especially in supply-constrained markets,” Jeff Mooallem, EVP and Chief Operating Officer of Urban Edge Properties, tells GlobeSt.com

“Most of our properties are in the first ring suburbs of cities like New York and Boston, where sales are strong, new supply is severely limited and relocation is tough to justify economically. So, we often get unsolicited calls from tenants with several years remaining on their lease looking to extend the term and invest their own capital into a refresh.”

Vicky Hammond, Managing Principal at Coreland Companies, reports a similar trend. “Re-invention is central to a retailer’s growth, thus the uptick we have seen in leasing activity and investment,” she tells GlobeSt.com.

“Not only have most of our tenants with expiring leases renewed this year but there has been a strong emphasis on improvements.

“Today’s consumer demands quality and experience, making investments in store locations and shopping experiences a must. To some tenants, this has meant keeping the location looking fresh, but to other national brands, this means constantly improving technology to enhance in-store experiences and cross-platform sales.”

“You see the differences in smaller and larger retailers alike – less merchandise on the floor; the ‘spotlighting’ of other brands like Sephora within Kohl’s; and a more holistic approach to shopping with a café, lounge or other service such Dick’s batting cage.”

Ultimately, retailer expansion and reinvestment programs are driven by return-on-investment analysis, David Greensfelder, Managing Principal, Greensfelder Commercial Real Estate, tells GlobeSt.com.

“There have been significant demographic shifts as the so-called X-Y-Z generations continue to go through lifecycle evolution. Retailers positioned to capitalize on these lifecycle shifts will be more inclined to invest in new stores, and in renovating existing stores to provide more compelling merchandise mixes and presentations.

“It goes without saying that the longer a shopper lingers in a store, the more they’re likely to spend,” he said, ”so reinvestment that targets customer identity and linger-time are key to increasing sales per square foot. These goals alone merit reinvestment in stores, and identity-driven reinvestments, especially those that create a more compelling shopping environment, will result in greater sell-through, and by extension a greater ROI for the retailer.”