Flightpath May 30, 2024
KPOV
Storefront Real Estate Booms: A Decade-High Trend in Store Openings
The retail real estate market is experiencing a significant resurgence, as evidenced by Cushman & Wakefield's latest headline. Store openings are outpacing closures at a rate not seen in a decade. If this trend continues, we are on track for the most substantial net growth in years.
Discount and Fashion Retailers Lead the Charge
According to CoreSight Research, the retail sector's expansion is being driven largely by the discount sector, which accounts for over a third of new store openings. Fashion brands follow closely behind with 27% of the new openings, while grocery and convenience stores make up 22%.
Consumer Services Drive Leasing Demand
A notable trend is the robust demand for consumer services, which include food services, health and wellness, beauty treatments, and fitness—sectors that are not easily replaced by online alternatives. These services are driving nearly 50% of leasing activity, surpassing the 46% average seen between 2011 and 2019.
Open Air Malls and Strip Centers in High Demand
Open air malls are experiencing the greatest demand, reflecting the strength of outlet sales and off-price strip centers. There has been a significant increase in demand for retail spaces under 2,500 square feet and those over 25,000 square feet. More than half of the 725 Bed Bath & Beyond locations have been leased, with off-price retailers like Burlington leading the way.
Physical Stores: Crucial for Brand Growth
Despite the rise of e-commerce, physical stores remain the most profitable and critical component of a brand’s growth strategy. Smaller, strategically located stores provide key brand touch points and serve as essential distribution points. Interestingly, while most companies thrive with physical locations, Amazon continues to struggle with its brick-and-mortar strategy. Will they eventually get it right?
Conclusion
The current trends in storefront real estate highlight the enduring importance of physical stores in the retail ecosystem. With robust growth across various sectors and increased demand for diverse store sizes, the future looks bright for brick-and-mortar retail.
TECH TALK
Harnessing Technology for Optimal Retail Inventory Management
Retailers and brands face significant challenges in planning and forecasting sales and inventory down to the SKU level. Traditional methods, such as Excel, are being replaced by advanced AI-based platforms like Toolio. These tools streamline the planning process, offering greater precision and efficiency.
The Importance of Accurate Inventory Management
Accurately knowing your store’s on-hand inventory is crucial. Without advanced technologies like RFID, inventory inaccuracies range between 27-32%. To compensate, retailers typically carry 30% more inventory than necessary to prevent the top reason customers leave without making a purchase: not finding their size. Implementing RFID can improve inventory accuracy up to 95%, enabling retailers to reduce in-store inventory by at least 20%—a significant cost-saving measure across multiple stores.
RFID Platforms: Revolutionizing Inventory Accuracy
RFID platforms like RADAR, which utilize ceiling-mounted scanners, provide continuous scanning and alert store personnel when items are misplaced or unavailable on the floor but present in the store (such as in windows, fitting rooms, or stockrooms). Additionally, RADAR’s ability to record stolen items allows retailers to replenish stock immediately, instead of waiting for a cycle count.
Video Analytics: Reducing Fraud and Enhancing Security
Platforms like Deep North offer video analytics by leveraging in-store security cameras. This technology helps determine if customers are paying for all items in their basket or cart, significantly reducing fraud at self-checkout stations.
FEATURED PARTNER
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With the recent launch of the Autonomous Marketing Platform, which harnesses the power of AI to streamline and automate how marketers build, optimize, and report on their customer experiences to drive revenue, Wunderkind will empower marketers in a new way.
The first application of the Autonomous Marketing Platform, Studio, is now available. Studio empowers Wunderkind clients and services teams with efficiency, streamlining the creative process and providing self-service capabilities. Brands such as Harley-Davidson, Perry Ellis and Shoe Carnival partner with Wunderkind to drive top-line revenue through their guaranteed results.
THE RETAIL PILOT PODCAST
Our latest flights of The Retail Pilot - Leaders & Legends feature Danielle Bernstein & return guest, Chris Burch.
Danielle Bernstein is a native New Yorker and fashion influencer turned business mogul. She has a dedicated fan base of over 3.3 million followers and counting across her social media platforms. Danielle started her internationally recognized blog in 2010 as a daily dose of outfit inspiration for women everywhere, before growing the platform into an aspirational yet relatable home for all things coveted. Danielle has since launched her brand, Shop WeWoreWhat, a direct to consumer and wholesale business with millions of customers worldwide.
Chris Burch is the visionary Founder of Burch Creative Capital. Ken reconnects with Chris to discuss his latest ventures and innovations over the past year. From the luxurious NIHI resort to the health-focused GreenLane salads, the pioneering LabNine prefab housing developments, and the stylish STAUD fashion brand, Chris Burch continues to lead with creativity, purpose, innovation, and rigor. Listen up as Ken explores how Chris is transforming industries and setting new standards in luxury, wellness, housing, and fashion.
