Shopping Center Business

DEC 2017

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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ONLINE RETAIL 128 • SHOPPING CENTER BUSINESS • December 2017 L ooking for reasons to feel optimis- tic? Countless numbers of retailers, employees, developers, investors, lenders and brokers have an interest in brick-and-mortar — even a love for the world of brick and mortar. And they're asking: Are there ways to take hope amid the juggernaut of e-commerce? Online sales now stand as a $400 bil- lion business in the United States – and it's growing at a rate of some 15 percent annually. The U.S. Census Bureau says e-commerce sales had comprised 8.5 percent of total American retail sales by the first quarter of 2017. Among the so- called GAFO categories — General Mer- chandise, Apparel and Accessories, Fur- niture and Other Sales — the percentage gets closer to 30 percent. And Cushman & Wakefield recently reported that shopping mall traffic had declined by 50 percent between 2010 and 2013. So, where is the hope? Where is the love? Well, we can identify at least one reason for optimism, and that's in the emerging clicks-to-bricks trend: A new generation of formerly online-only brands has come to embrace the addition of phys- ical storefronts as central to their long- term growth. What are the motivators? One is pop- ular demand. Taking advantage of ubiq- uitous comment pages, many customers have simply advised retailers that they still long for physical contact with a product. The flipside of this powerful motivator is the retailer's own desire to showcase quality. A physical presence directly builds brand awareness. Dovetailing with this, storefronts can also indirectly reinforce brand quality — while benefiting from pos- itive, multi-product shadow effects thanks to co-tenancy in the market. Brands bene- fit by being physically proximate to other brands with that shoppers identify. Stores also deliver practical, consum- er-friendly benefits essentially unavailable online, such as same-day sales. Similarly, customer returns are easier than with e-commerce. Some online returns with- hold payment back to a credit card for up to 45 days. This can discourage shoppers from buying online. They'd rather buy in a store — and return to a store. Clicks To Bricks Holds Promise For Brokers Study where, how and why online retailers are setting up brick- and-mortar shops to make the most of this pivotal opportunity. Michael Azarian Online retailer Birchbox opened a physical location on Broadway in New York City in 2014. Birchbox started as a subscription-based, online beauty product company sending female customers a monthly product sampler box before opening a brick-and-mortar location in SoHo.

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