A Positive Trajectory: Key Trends Shape the Brick-and-Mortar Resurgence
Open-air shopping centers along main retail corridors here in the Northeast and other regions across the U.S. have had a good two years – illustrated by fewer vacant storefronts and an array of new brands side-by-side with established favorites. For the first time since 2017, retailers opened more physical stores than they closed nationwide in 2021, an achievement trade association ICSC reports is on course for a repeat in 2022.
The industry’s notable post-pandemic momentum is, of course, not without challenges. Retailers are facing rising inflation, ongoing labor shortages and continued, though easing, supply chain issues. But through that, they remain focused on responding to shifting consumer priorities and expectations. Within that context, some trends worth noting have emerged that will continue to shape the industry’s landscape in the coming year.
Diversity is Key
National brands and franchisees – including discount retail, grocers and home furnishings stores – are expanding their footprints. Fast-casual concepts like Raising Cane’s Chicken Fingers, Jersey Mike’s Subs and Popeye’s Louisiana Kitchen are also among the most active on the expansion front. At the same time, momentum among independent retailers speaks to an influx of start-ups as well as established concepts expanding operations or moving to improve location. From boutiques and jewelry stores to martial arts studios and pet supply shops, these specialties add flavor and distinction to a shopping center’s mix.
Personal care and services concepts also represent a bright spot in the leasing landscape. While some forms of beauty retail have always been a staple of shopping centers (think nail salons) many today are adapting and diversifying. By offering consumers additional spa-like services such as facial treatments and massage under one roof, neighborhood nail salons are creating an experiential atmosphere. At the same time beauty retailing is blossoming under this new demand, becoming more flexible to meet consumers’ needs and shopping preferences.
An Immersive Experience
Experiential concepts are leasing spaces of all sizes. These tenants bring added value to a retail property by providing consumers of all ages with the opportunity to shop and have fun in one convenient location. Trampoline parks and children’s indoor playgrounds are creating family-friendly destinations, while fitness concepts of all sizes (from national gyms to spin studios) are driving traffic and new business for entire properties.
To stay competitive, retailers are integrating in-store and online experiences. Physical stores have become integral in fulfilling e-commerce orders, as last-mile distribution hubs, and places where shoppers can pick up and return online purchases. Even essential, Internet-resistant retail categories are evolving to serve changing consumer shopping preferences. Supermarkets are a notable example of how changes made out of necessity during the pandemic – such as delivery service, curbside pickup and “click and collect” – are being kept by these retailers as best practices.
People ultimately like the experience of shopping in physical stores and that will never change, as evidenced by retail’s post-pandemic resurgence. And despite ongoing challenges and lingering uncertainties, retail is on a positive trajectory – one that landlords are responding to by embracing evolving category mixes and the ways tenants are using retail space. Time and again, brick-and-mortar properties have proven an ability to adapt and serve in any market climate. This benefits retailers as well as the shopping centers that house them.