With Toys “R” Us, Payless, and Radio Shack shutting down, is it safe to say brick and mortar retail has lost its leverage?
Shoppers are becoming more independent; however offline operations still elicit extremely viable footholds. Forbes reports 92 percent of shoppers prefer stores that offer mobile experiences, while 65 percent desire “location-aware” coupons. And according to a Forrester Report, $1.26 trillion worth of offline sales have been influenced by digital media. This piggybacking (between online and traditional means) will continue over the next three years, with in-store purchases relishing an anticipated apex of $1.4 trillion. [1]
“Humans are hard-wired to prioritize ‘seeking’ over ‘finding,’ so the searching and waiting for something wonderful to buy is often more rewarding than actually buying it,” says Dan Clay and John Marshall, members of Lippincott and authors of The Happiness Halo. [2].
Clay and Marshall say, multi-chain retailers, who continue to have skin in the game, capitalize on these three qualifiers:
• Tease – What can your brand hide to build excitement during anticipation?
• Tempt – What can your brand offer to give customers something to look forward to?
• Treat – What moments of your brand experience might be a limited-time treat for customers, and how can you frame them that way?
Otherwise known as the “Treasure Hunt Model,” popular bargain basement conglomerates defy the singular grip of e-commerce. With some of the big players, TJX (TJMAXX, HomeGoods, and Marshalls), Old Navy, and Dollar General and Dollar Tree, planning national store expansions. And online kingpin, Amazon, reviving the grocery industry and opening bookstores.
With high-end retail and niche outlets dwindling, what contenders should real estate investors pay special heed to?
#1 – Marketing to Millennials
In the U.S., 70 percent of Millennials prefer shopping in store than online. This allows them to inspect items more closely especially fresh food, furniture, and appliances. [3]
#2 – Building a Blended Model
Retailers offering a “click and collect” option allows consumers to search, select, and pay for a product online and pick-up at the physical location. The added bonus: up to 69 percent of shoppers had bought additional items when they stepped inside the store. [3]
#3 – Harnessing a Triple Threat
Physical storefronts act as ground zero “makeshift” warehouses. Every retail location can be a fulfillment center in support of online orders. Stores also pinch pennies in that they reduce costs regarding the hassle of shipping and returns. Lastly, cutting-edge brands using data analytics to track in-store shoppers provides leeway for customized deals, and therefore, happier patrons. [3]
“I see this momentum emerging – the Treasure Hunt Model – which stands to compete with Amazon,” says Jeffrey Sica, President of Circle Squared Alternative Investments. “Playing to the psychology of the consumer with new, limited-time inventory and accessible price points makes the thrill of the hunt that much more euphoric and materializes frequent visits back to the store.”
Curious about the retail landscape and its ubiquitous investment potential? Circle Squared Alternative Investments has experience in this arena – both its volatility and viability.
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Sources:
[1] (Grosman, Forbes, 2018)
[2] (Danziger, Forbes 2017)
[3] (Bloomberg QuickTake, Bloomberg 2018)