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Remember the three things needed to be successful in retailing - location, location, location?
And remember how that was upended by the internet? (In fact, that's what drove much of the talk of a "retail apocolypse;" it really was a "retail real estateapocolypse." Retailing – selling to the ultimate consumer – still was happening.)
Nevertheless, retail leasing patterns can offer some useful insights to retailers.
For instance, this new study* by JLL Retail Research documents how retail leasing activity has shifted towards experience-based tenants. It notes that 51% of the retail space leased in January–November, 2024 was for service-based tenants. And that trend is expected to accelerate in 2025.
"In 2025, service-based tenants are projected to lease more retail space than goods-based tenants, marking a historic shift in the retail property sector.Key service sectors driving this change include food & beverage (F&B), fitness, and healthcare."
In our view, any analysis of a potential store location must include the adjacencies.
That is, what businesses operate nearby that space?
Do they serve and attract a similar customer to yours?
And more important, what are the major traffic generators?
Maybe it’s time to take a fresh look outside your stores.
Who or what are the adjacencies?
How have they changed since you signed your lease?
How might they change this coming year?
Are you seeing an influx of restaurants or coffee shops? Or fitness centers? How about dental offices or medical clinics? Or…? Or…?
The mix and timing of shoppers coming to your area is always changing, as the population in your market changes. But as service businesses increasingly occupy street-front spaces, that will have an impact on your stores.
Now’s the time to get out in front of those changes. Just saying…
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*Food, fun & wellbeing – leasing activity shifts towards experience-based tenants. Keisha Virtue, JLL Retail Research. February 20, 2025.
Heads up. You can take a grim situation and turn it into an advantage. Universally, there is a shortage of "good employees." While many will use that as an excuse, it can be a great opportunity for those who seize it. That's why we paid particular attention to this commentary by Ty West in The Playbook*.
And therein lies the opportunity.
photo: Greg Gilbert/Seattle Times
Recently we read of a "bookshop on wheels" launched by a college English instructor. While certainly not the first retail variation on a food truck, this one has gained praise for its authenticity. "What’s most surprising when you walk into Blue Kettle Books for the first time is how cozy and, well, bookstore-ish the tiny space feels."*
As we approach April of 2021, the question for retailers is "Now what?" Having survived 2020, in many cases on guts and guile, we must now focus on how best to survive 2021 and beyond. As having one foot on the dock and one foot in the boat, the future of retailers in that Red Zone is not a pretty picture. Granted, there is much talk about the expectation that "convenience" will become a major factor for shoppers going forward. And we don't disagree.
Here's the deal: We see that this has brought heightened awareness of two different retail strategies: Convenience Retailing versus Destination Retailing.
The constant challenge for retailers is to anticipate what their customers really want. And this year, there seem to be plenty of choices available.
It is all part of the on-going challenge of retail; the art and craft of being a merchant. Then there are the customers who are reacting to the constant drumbeat of news about supply chain issues, merchandise shortages, and looming price increases by starting their shopping early.
Adding to this stampede, some major chains were launching their Black Friday specials before Halloween!
Throughout the pandemic, millions of shoppers – including the older Baby Boomers – discovered the benefits of online shopping. Then, as brick-n-mortar retailers scrambled to survive, the increased availability of delivery, curbside pickup, BOPIS (Buy Online, Pickup In Store) and BORIS (Buy Online, Return In Store) was well received by a broad swath of consumers. We see that this has brought heightened awareness of two different retail strategies: Convenience Retailing versus Destination Retailing.
And here's the deal: retailers now must choose either one or the other of those two strategies. You cannot have one foot on the dock and one foot in the boat. You DO have to decide!
There's little that any of us can do to address the public health crisis of the pandemic. Its impact on people and businesses is a widespread and major jolt, akin to the shocks of 9/11 and the 2008-09 economic meltdown. Even as painful and disruptive as the pandemic is at this moment, we must remind ourselves that it will subside. It's not whether it will subside, just when. But all of us are going to have to deal with the ensuing economic situation, and its effects on our sales, our customers, our employees. These are difficult times for us all. Retailing in particular is under enormous stress. Many feel like there are no good choices. But, there are good decisions. And The ROI is dedicated to helping you be able to make those good decisions for yourself.
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