Is Online Shopping Affecting Retail Spaces?

Posted by on Jul 6, 2016 in Blog - Commercial Investment Properties | 0 comments

Is Online Shopping Affecting Retail Spaces?

Is Online Shopping Affecting Retail Spaces?

For the most part online shopping has made our lives a heck of a lot easier. We no longer have to wait in line or succumb to on-site availability for the products we need. We have a whole world full of global competitors at literally our fingertips which provides us the best prices and selection like never before.

Contrary to popular belief however, “real-life” shopping isn’t dead. In fact many successful stores have expanded their business by selling products online and on-site. This doesn’t mean the landscape of retail spaces isn’t changing however. If you’re planning on investing into commercial retail property, are you buying into a dying landscape?

Retail Stores are Optimizing Their Space

Sometimes when a big box store like Musicland or Hollywood Videos closes down it’s because their product becomes all but extinct thanks to technological advances. In examples such as Circuit City or Linens N Things however it’s because their business model no longer supported their client needs. In the case of these two stores, it meant big huge buildings with dozens of employees wandering around which was a sinking ship. In order to survive with a physical retail store in the e-commerce age, people need to optimize their space. Maybe they’ll make some products available online-only or maybe they’ll devote a larger portion of their store to warehousing. It’s something every business needs to evaluate.

Some Retail Markets Are Indeed Softening

There’s no doubt that there is some softening in B and C level brands in regards to retail purchases. An A-level tenant such as the Nike Factory Store will almost always be successful but you may run into trouble renting out to a Payless Shoe Source.

Stores Can Succeed If They Shift Towards the “Experience” and Not Just the “Product”

Smart business owners know that products are available to purchase online with the swipe of a finger on a Smart phone. The way they keep drawing people back to their store is with the experience. We’re not necessarily just talking about free cheese samples or a live Mariachi band on the premises. Today people want to be able to use their phones to scan an item and get information. They want seamless scan self check-outs but friendly knowledgeable sales staff. They’d like to pick-up their online purchases in-person if possible.

Shopping online is a convenience, but most people still prefer the ability to touch or try-on an item in person. Retail stores still need to cater to physical shoppers because they’re likely to buy more items than they intended in person. Walking the fine line between retail and e-commerce is how businesses stay thriving.

When One Retail Door Closes…

As a property investor you need to know that a defunct shopping center is not a sign of a failed industry, it’s an opportunity for future innovation. Health care treatment centers such as dentists, optometrists, or physical therapists are finding old retail spaces the perfect place to practice their trades for example. Fitness franchises like Soul Cycle may not be your conventional retail tenant, but they fit what we like to call a ͞new niche.͟If anything, e-commerce has eased some stress on commercial property investors. Instead of driving by your building and seeing an empty parking lot which could have you worrying about this months rent check – the tenant could actually be having one of their busiest sales days ever behind the closed doors of the Internet.

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