RETAIL 2020: Future Ready – Innovate to Succeed
In late June, members of the local and national retail community convened at Goulston & Storrs’ Boston office to participate in an interactive panel discussion billed as RETAIL 2020: Future Ready. Panelists included Ben Fischman, the Executive Director of M. Gemi, a designer and retailer of Italian hand-made footwear; Nicki Hines, a Partner at GCD Consultants, a retail real estate consulting firm; and Mark Roberts, the Senior Vice President of Leasing for WS Development, a developer and manager of shopping centers and mixed-use developments. David Rabinowitz of Goulston & Storrs moderated the panel discussion.
The discussion touched on four main topics: (1) trends in e-commerce and omnichannel marketing; (2) struggling and disappearing department stores; (3) the future of shopping malls; and (4) the influence of Millennials. Omnichannel received the most airtime and generated an animated discussion. Mr. Fischman emphasized the “need to be where the customers are.” He argued that if retailers are innovative and customer-centric, they can succeed in either the brick & mortar or e-commerce environment. Ms. Hines said that teams need to work together to achieve a “click & mortar” model and that “it is all about customer experience.” From the landlord perspective, Mr. Roberts observed that landlords can help retailers to succeed by providing complementary support, such as social media promotions and unique physical environments that include food and entertainment together with other retail stores.
The discussion then shifted to the ongoing debate between landlords and tenants regarding the metrics used to calculate percentage rent charged for physical retail locations. As more and more sales shift on-line, it becomes more difficult to connect those sales to a shopper’s use of particular retail locations even though such sales often result directly from visiting a store. With regard to setting percentage rent formulas, Ms. Hines noted that all of the metrics are changing and that brick & mortar and on-line sales need to be combined, with lessons from one environment being applied to the other.
As the panelists worked their way through the remaining topics, they kept returning to the same core theme: innovation is the key to success in retail. Shoppers have the power, and it is essential to create a retail experience that appeals to their needs and desires. Retailers that continually innovate to meet evolving customer demands will be able to succeed, while those that do not keep pace will likely fail. Thus, just as not all department stores and shopping malls are doomed, not all e-commerce sites will thrive. It is a matter of adjusting to the demands of Millennials and other customers.