Look for major store closures and bankruptcies over the next 12 months (especially apparel and department stores). More than 10% of U.S. retail space, or nearly 1 billion square feet, may be closed, converted to other uses or renegotiated for lower rent in coming years. The latter is already happening in Manhattan where retail rents fell 18% in the third quarter.
But there are some bright spots, especially related to food and experience retail:
- Cushman & Wakefield recently ranked Eataly the #1 national concept for malls. Eataly is becoming a mall anchor, and it’s all about backfilling spaces with something that is pertinent and draws a crowd.
SMALL FOOD HALL PROJECTS ARE EXPLODING
- Every developer of a large project in an urban area is looking for something that will be the ultimate amenity, and food halls are the hottest area of growth right now.
THE LONGTERM POP-UP
- This is a global trend with pop ups showing up in Europe, the US and Canada.
- Pop up leases are now longer term e.g. the aerie pop up in Soho will remain open for an entire year – all the way thru 2017!
- With swaths of empty retail space all over the country, landlords will be eager to work out deals with both big and small brands.
Read on below for more on how healthcare and medical facilities are coming to the mall, niche driven retail and the shrinking head office as companies become increasingly digitized.
HEALTHCARE COMES TO THE MALL (Source: Retail Dive)
Full-scale medical facilities are moving into more traditional malls e.g. the Cedars-Sinai Health System in Los Angeles, Prime Healthcare in Philadelphia, UCLA Health in Woodland Hills, CA and Vanderbilt University Medical Group in Nashville have all become tenants in major malls.
Discounters, off-priced apparel and warehouse stores are all expanding:
- Macy’s Backstage pop-ups are becoming full-line department stores.
- Nordstrom Rack is accounting for most of Nordstrom’s growth.
- Dollar stores opened about 7,000 units in the last five years. Equates to a new dollar store opening in the U.S. every six hours for five years straight. That’s a lot of dollar stores.
Grocery is also niche-driven:
- Urban grocery is hot
- Small concepts are hot – whether it’s organic, ethnic or discount.
GROWN UP CLOTHES VS. MILLENNIAL WEAR: Most retailers are missing this trend!!
Big shoutout to Anthom – wore one of their dresses this weekend and got so many compliments! And note: this is Ashley Turchin, above, the owner of Anthom, wearing my favorite dress on the left.
So I’m not talking about grown-up boring. Instead, I am on the hunt for stylish, comfortable-to-wear clothes that are created specifically for grown-up bodies – at a reasonable price. The only two places where I routinely find these kind of clothes are Anthom and COS. Can’t believe how all these other retailers and brands don’t get demographic shifts.
FEWER, SMARTER PEOPLE WILL WORK AT A SHRINKING HEAD OFFICE (Source: Oliver Wyman)
The new business model will depend on crunching vast quantities of data to understand consumers and suggest solutions. That means digitizing the corporation in a way that empowers managers to make quick decisions and drive rapid product development. Retailers will abolish the physical head office entirely, distributing small agile teams around the business.