Retail of the moment: Experiential - by Carol Todreas

The recent Supreme Court ruling allowing states to tax goods sold by on-line retailers will not necessarily pave the way for no-brainer, same old brick and mortar retailing. While sales taxes will reduce one advantage of e-retailers, innovative technology, rapid delivery, easy return policies and enormous inventory will still be highly attractive on-line features.

This is especially true since most stores are still averse to investing in well-trained human sales staff and curated inventory. Thus, although brick and mortar is here to stay and is actually preferred by consumers, simply lining a space with shelves and racks of discounted merchandise has had its moment. 

Now enter: Experiential Retail.

Experiential retail is brick and mortar’s survival kit, the retail of the moment as the industry re-imagines a world where merchandise and price only complement the next big thing.

Experiential retail provides customers with memorable experiences that cannot be duplicated on-line. Experiential retail not only offers entertainment, restaurants and cinemas, personal services (nail /hair/face salons and spas) and classes, such yoga, painting, wine making, but also includes art galleries, pop-up boutiques and any other store that highlights interactive experiences. Think samples, tastings, sofas and coffee tables in inviting spaces, and stores with exceptional levels of trained staff to assist individual shoppers…. all are considered experiential.

What does this mean for property owners and developers? There is not an easy answer as concepts are evolving non-stop as are store size, configuration, and layout. Add to this that Millennials and Gen Xers are unpredictable consumers continually rethinking what they want and how they want it provided. All of which poses great challenges for retail real estate, especially in planning tenant mix. But retail development is dynamic and a few basics have emerged for those who are moving forward:

• Create the place the community wants with each decision, lease and contract.

• Know the market: meet in person and on-line by every means possible. Become an active participant in community activities.

• Analyze prospective tenants for market fit: specialized concept, edited merchandise, interesting design, staff expertise, and unified brick and mortar/e-commerce experience.

• Approach local companies and start-ups.

• Create flexible design elements and spaces

• Approach leasing with flexibility and consider generous tenant improvement assistance.

• Limit retail to the very best.

• Modify parking and operating hours to reflect changes in lifestyle and shopping habits.

Finally, find the right balance between local and national tenants and with the nationals make certain they have found their own smaller format since this is the wave of the future.

Carol Todreas is a principal at Todreas Hanley Associates, Cambridge, Mass.