Brick and Mortar Makes a Resurgence, ICSC Panelists Say
Brick and mortar is back, baby.
Love it or hate it, physical stores are “more relevant than ever before,” especially in dense suburban communities, said Dana Telsey, the CEO and chief research officer of Telsey Advisory Group at a Wednesday panel at the Innovating Commerce Serving Communities (ICSC) New York conference.
“More companies are looking to get into the physical format, and that’s what’s exciting to me about 2023,” Telsey said.
While retail brokers bemoaned the death of in-person shopping amid a wave of pandemic-caused bankruptcies in 2020, remote work could bolster retail sales in more residential neighborhoods since residents are commuting less to offices in urban districts, said Anjee Solanki, Colliers’ head of U.S. retail.
“I find it really fascinating to see how work from home has actually shifted how we shop,” Solanki said. “If I’m sitting at home working eight hours a day, I have a little more flexibility to run out and grab something for that night’s meal, or if I’m going to go pick up my kids from school I can make a stop at the grocery store.”
U.S. grocery and pharmacy-anchored suburban retail centers saw 12 to 15 percent more foot traffic in 2022 compared to 2019, Solanki said. Plus, U.S. neighborhood and strip centers saw the highest rent growth, at 5 percent, out of all other retail destinations in the third quarter of 2022 compared to the same period last year, according to a JLL report.
But online shopping is by no means disappearing, and e-commerce companies continue to open in-person outposts to better connect with customers, and their wallets, Holly Rome, executive vice president of retail for JLL (JLL), said.
“In the past, you were online or you were in brick and mortar,” Rome said. “And now what we’re looking for is seamless communication. The customer wants that seamless experience. They want you to be engaged with them.”
Retail brands big and small are looking to get in on in-person shopping. Just this year, Amazon announced its first in-store apparel shop in California, the popular sneaker seller Allbirds inked an 8,000-square-foot deal for its flagship U.S. location at 120 Fifth Avenue, and Macy’s resurrected the Toys ‘R’ Us brand within all of Macy’s outposts.
Which makes sense, since consumers who buy online but pick up their merchandise in person tend to spend an extra $130 to $160 per visit on average, said Stephanie Cegielski, vice president of public relations and research at ICSC, who moderated the panel.
While a recession and inflation could put pressure on retailers next year, Rome, Solanki and Telsey all anticipated a strong 2023.
“I’m cautiously optimistic,” Rome said. “We still have to see what happens, but our consumer is out there. We have great products and we are still in that recovery phase from 2020.”
Celia Young can be reached at firstname.lastname@example.org.