Shopping Center Business

MAY 2018

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

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RETAIL TRENDS 140 • SHOPPING CENTER BUSINESS • May 2018 up those assets at a lower-than-market price, do the re-tenanting or redevelop- ment themselves, and make it a well func- tioning asset in a B market. For example, taking a strip mall in a B minus market, removing apparel retailers and turning it into medical retail, for example. So you'd have a grocery store, drug store and may- be an urgent care. In that case, you're pos- sibly elevating the credit worthiness of the tenants, generating good traffic and creat- ing good synergy between the tenants. I think we'll see these plays more and more in B markets as an alternative to what the tenant mix used to be. Some people look at these centers and think there's no more retail demand, therefore there's no opportunity here. In nontraditional retail uses, such as medical retail and education, there are a lot of returns that can be made. SCB : There seem to be more experien- tial retailers as well. Some stores don't have any product but are more like show- rooms. Are you seeing that kind of trend coming to malls? CORDERO : Yes. I think the showrooming is part of a wider trend, which is experi- mentation. Retailers are trying to figure out what omni-channel retail looks like. It's going to look different for an apparel retailer versus a shoe retailer; high end versus lower end. They need to invest in new concepts and even in diversification of those concepts. So the copy-paste mod- el of rolling out the same version of a store across the country isn't going to work anymore. One retailer may need to have three different store concepts. Perhaps they have an urban showroom concept, a big box concept and a mall storefront — however they decide to play it, I think we're seeing an experimentation of differ- ent concepts as they try to figure out what works and what customers want from that brand. And that trend links back to the popup trend because it's hard to sign a 10-year lease for an experiment. It's very risky. So popups and shorter-term leases afford retailers the opportunity to exper- iment in this way — to try a showroom. SCB : We've also been noticing that some department stores have a smaller foot- print with merchandise that is very tai- lored to its market. CORDERO : Customization is another thing retailers are having to do. That diversifica- tion of store concept has to appeal to a Millennial living in Manhattan and a sub- urban parent outside Detroit. If you think about it, the internet has created that kind of tailored merchandising. What you re- ceive as a result of a search is different than what I would receive because everything is customized. We're getting used to that. So going into a store and seeing products that are everything for everybody isn't as appealing to the consumer as it once was. SCB : Breaking down the categories, what continues to do well in general? CORDERO : I think home goods and fur- nishings do pretty well. We've seen that category grow quite a bit. Health and beauty also fares well in terms of growth. Those two categories are the standout performers. Other than that, every cat- egory is still working out the right om- ni-channel mix for its particular category. What sells better online versus in-store is not the same for each category. So it's all a game of figuring out how each category is going to be served. SCB Retailers are trying to figure out what omni-channel retail looks like. It's going to look different for an apparel retailer versus a shoe retailer; high end versus lower end. They need to invest in new concepts and even in diversification of those concepts. So the copy-paste model of rolling out the same version of a store across the country isn't going to work anymore.

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