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Sustainability – The Future of Retail
Sustainability – The Future of Retail 1440 428 ASG

The June 2021 PwC Global Consumer Insights Pulse Survey of more than 8,600 consumers in 22 territories revealed that 59% are more price-oriented and 50% are more eco-friendly. Sustainability can be exemplified in many ways, but retail sits at the juxtaposition between manufacturer and consumer and has a powerful seat at the table when it comes to driving the kind of change consumers expect, making it a perfect time to be a sustainability leader. 

As consumers seek products that cause minimal environmental harm and bring about positive social impact, and as awareness of supply chain impact grows, retailers must embrace sustainability. Given their unique position in the supply chain between upstream suppliers and downstream consumers, retailers are key to a circular economy in which products at the initial end-of-life stage are returned to the supply chain for continued use. By serving as a connection between suppliers and consumers, retail initiatives can help to reduce, reuse, and recycle. –Science Direct

The problem? Less than half of all retailers have sustainability goals, and a full 35% have no supply chain sustainability goals whatsoever according to an MIT study.


Consumers Are Paying Attention

Companies are now evaluated not only by the scope and quality of its products or services, but by how it gives back and what it’s doing to make the world a better place. If your retail or e-commerce business isn’t on board, you’re all but sure to be overshadowed by environmentally conscious competitors. – Inc.com

Documentaries, like The Blue Planet have awakened consumer awareness about plastics, and climate change awareness has escalated the level of concern from consumers to the point where this is no turning back for retailers. Sustainability must be part of your business model going forward. From food to fashion, ecommerce to brick and mortar, consumers are watching you.


You Will Lose Customers If You Don’t Act

In a recent McKinsey survey, 67% of respondents say that sustainability impacts their buying decisions in fashion retail. And in a Kerry survey of more than 14,000 consumers, 49% took sustainability into consideration when buying food and drinks. 

Sustainability in retail is here to stay, but such a commitment must be more than just words on a page. A genuine commitment to the environment needs to be reflected in every part of your supply chain and the decisions you make regarding how and from where you are sourcing ingredients, who you’re hiring to make your clothing, and how you’re treating people and the environment along the way. Consumers want to see not just a goal to be carbon neutral by 2035 but the steps you’re taking to ensure you can achieve that.


Tips for Improving Sustainability in Retail

Improving sustainability requires a willingness to do business differently. You need to examine every business element, from where you’re locating your brick-and-mortar stores to green shipping options. Eradicate plastic. Reward consumers for ‘going green’ (pick-up vs. shipping; digital receipt vs. printed). Use raw materials whenever possible. Partner with recycling companies to eliminate food and product waste. And embrace the longstanding mantra to recycle, reuse, and repurpose as much as you can. 


5 Retailers Getting it Right

Consumers are looking for measurable changes. Some retailers are ahead of the game and others are starting to see the light. These retailers are delivering:

  • PriceChopper has partnered with Invafresh to prevent 20 tons of fresh food from being wasted each week.
  • Levi’s is a leader in reducing chemical and water use in products – and they’re sharing those techniques with others in the industry. (Forbes)
  • Rothy’s is a retailer designed with sustainability and equity in mind. They say business “starts by putting the planet and its people first.”
  • Tentree plants ten trees for every item purchased. “Tentree’s clothing is made from ethically sourced and sustainable materials including cork, coconut, and recycled polyester and produced in ethical factories.”  (Forbes)

True sustainability practices are not just about sourced materials but rather a dedication to an initiative that goes beyond business objectives. There’s no time to delay in establishing your sustainability objectives and taking action to achieve them.


So, How Do We Redefine Retail for the Consumer?

The obvious answer is that consumers are the ones redefining retail, and we just need to listen. But I think it begins by redefining retail priorities. And this is where the combined power of ASG + Chute really shines. Not only do you need to understand how consumers are shopping more in their own neighborhoods, but you need to understand that the store you design and the holistic experience you deliver can’t be driven off the flagship store you build in NYC. You need flexible store designs that can be modified to meet the local need – sometimes bigger, sometimes smaller, and always with a local feel. And you can’t invest as much in the up-front design process. Instead, you must embrace an iterative process where you get it out there, learn, and refine.

Retail Location Strategy & Consumer Connection
Retail Location Strategy & Consumer Connection 1440 428 ASG

I have talked about the importance of retailers connecting with their customers – meeting them where they are, understanding how they’ve changed, and refining what is offered to better serve them. But this idea of connection goes further. Retailers are finding new ways to engage authentically with their customers, and there is an opportunity for retailers to provide space, purpose, and reason for people to reconnect with each other. But even as retailers seek to reengage with consumers, many people are finding that – for at least a couple of reasons – reconnecting isn’t as easy as they thought it would be.


They Don’t Remember How

As areas of the world come out of the most stringent lockdowns of the pandemic, many people have been saying the same thing: they don’t remember how to relate to other people. It’s become an almost-painful joke that underscores the extreme isolation of the last year. People are struggling with figuring out how to reconnect and be with others. 


Many are Experiencing Profound Loneliness

In and among all the parents struggling to work from home while supporting their children doing online school while never having a moment of quiet, there have been even more people struggling to simply survive the loneliness of the pandemic. Self-isolating and social distancing as a family is much different than self-isolating and social distancing for someone who lives alone. 


Retail Provides Opportunities – and Excuses – to Connect Again

I think this is one of the most understated purposes of brick-and-mortar retail. Beyond ordering something online, which is a one-to-one experience rather than an immersive experience, retail becomes part of the social fabric. I believe that this affords many opportunities for retail to explore different dimensions to socialization.  Whether it’s connecting with a friend in a newly re-opened café, shopping with friends for wardrobe updates, or enjoying a mani-pedi session with a family member that you haven’t seen in six months, retail of all kinds opens doors to connecting people. And as retailers consider the consumer desire to connect, it will impact the way they locate and design their stores.

As we observed in a recent Chute Gerdeman article:

People are actively seeking out communities to find support and belonging. Consumers are finding strength in numbers, and it’s clear that it’s impacting retail. No matter how big or small, brands are re-assessing their efforts to bring a sense of community into their offering. For some it’s sparked an entirely new format strategy, while others have created outlets that bring communities together.


Retail Location Strategies that Bring Communities Together

Retailers should meet and connect with consumers where they want to be. These days, it’s more than just at a mall. A great example of the future of retail location strategy is the opening of Bloomie’s in Fairfax, Virginia, this summer. The store will be roughly 10% the size of a traditional Bloomingdale’s department store. The store will “serve as a hub for experiences, with a focus on fashion, and feature Colada Shop, a restaurant serving coffee, Caribbean-inspired small bites and cocktails into the evening.”

Rather than locating in a shopping mall, Bloomie’s will be located in the Mosaic District shopping center – a mixed-use development with retailers, apartments, offices, town homes, a grocery store, and a movie theater. 

This approach by Macy’s (owner of Bloomingdale’s and Bloomie’s) is precisely where retail location strategy and consumer-centric retail converge: in the neighborhood, in a more focused space, with the goal of giving people a place not just to shop but to gather, socialize, and connect.

The Golden Opportunity for Retail
The Golden Opportunity for Retail 1440 428 ASG

Over the last 10-12 years, DTC brands became a force to be reckoned with, as more customers turned to the convenience and cost-effectiveness of try-before-you-buy and automated subscription models. Traditional retailers and brands that were already shifting their retail strategies to compete with digitally native DTCs ramped it up during the pandemic. And consumers, seeking comfort in a time of uncertainty, sought out familiarity with the brands they already knew and loved. 


Consumer Trust in Traditional Retailers and Brands Increased During the Past Year

According to a Scalefast report, consumers ranked digitally native DTC brands as the most reliable category of retailers prior to 2020; 15 months later, traditional retailers and brands have taken a lesson from the DTC playbook, and 41% of consumers now consider traditional retailers most reliable. In fact, digitally native DTC brands are losing favor with consumers because of their inability to deliver on the consumer expectation of fast deliveries and a seamless experience.


Where Digitally Native DTC Went Wrong

Digitally native DTC brands were singularly focused on acquiring customers. As disruptors to the market, the focus was on peeling customers away from traditional retail and brands. They spent all their VC funding on ads to attract new consumers. And it worked. But along the way, the digitally native DTC market became saturated. To be heard and seen in a way that would attract a new customer required more and more money pouring into digital advertising, which drove up the cost of ads and visibility.

This was summed up nicely in an article about the fall of the DTC on Marker at the beginning of the pandemic: 

The investors bankrolling these companies are discovering one thing in common — that most of their money is going to expensive and ever-rising customer acquisition costs (CAC) via Google, Facebook, and Instagram. As one DTC investor has put it starkly before: ‘CAC is the new rent.’ And even after these startups get on the treadmill of paying digital rent, they are then finding themselves also paying actual rent. After all, the most effective billboard is an outdoor L.A. luxury mall or an expensive SoHo storefront, which can cost some $60,000 a month.


Growing a Customer Base from Scratch Is Costly and Difficult

Digitally native DTCs drove up the cost of customer acquisition without investing in any way to retain the customers they acquired, or to meet the needs they promised their customers and their VCs. DTCs were great at landing customers onto their websites to make a single purchase, but retention rates were so low that the cost of CAC became astronomical – and only grew higher due to the increasing costs of digital advertising. More and more money was required to get the same number of eyes on an ad – to the point where CAC was costing more than the LTV of each customer. In fact, that seemed to be the entire focus of some DTCs: Buy up enough media ads to divert people to the website for a quick sale with no plan for how to keep them. And for some DTCs, retention wasn’t even a solution. How often do consumers replace their mattresses or their luggage, for example?


Traditional Retailers and Brands Have Lower Customer Acquisition Costs

As the pandemic drove consumers back into the arms of recognized and cherished brands, and just as traditional retailers and brands were kicking omnichannel and integrated retail into high gear, the opportunity became clear. Adding DTC doesn’t require the same type of investment from an existing brand or retailer as it does from a digitally native DTC. And consumers don’t care where you started. A third of American consumers see no difference between digitally native DTCs and traditional retailers. All they want is to get what they want, where they want it, when they want it.


Digitally Native DTCs Are Not Sustainable without Brick-and-Mortar Locations

Digitally native DTCs are struggling, more so since the pandemic. The ones that are surviving are partnering with traditional retailers (becoming brand manufacturers or wholesalers) or are opening locations (becoming traditional retailers). This substantiates what I’ve always said: pureplay is not sustainable. Digitally native DTCs are opening retail shops and pop-ups or are getting placed on the shelves of traditional retailers. Omnichannel, or more accurately, integrated retail, is the only cost-effective business model for the long run in most cases. Retail Dive outlined the major movements in these two directions, all driven by the difficulty in acquiring new customers in an affordable way: 

Target brought in brands ranging from Casper to beauty brand Versed. Nordstrom formed partnerships with Glossier, Away, Bonobos and Kim Kardashian West’s Skims shapewear brand, among others. And Crate and Barrel launched an exclusive, limited-run collection with Parachute to sell online and in 65 of its retail stores.

Other brands opted for pop-ups or permanent locations of their own. In 2018, Casper announced plans to open 200 stores across North America, while Adore Me around the same time said it had plans to open 200 to 300 locations over the next five years. Commercial real estate firm JLL previously anticipated digitally native brands could open some 850 stores by 2023.


Why Traditional Retailers and Brands Should Consider DTC

Consumers expect to be able to find the products they want and need anywhere they happen to be shopping, whether that’s online, on their phones, in an app, or in your store. Moving into DTC only makes sense for traditional retailers, especially given the past year in which most retailers survived by already taking those first steps. A comment from Peter Smith on Retail Wire reminds us (the emphasis is mine):

What can sometimes get lost in the DTC conversation is the need for an integrated and seamless experience for the customer. They shop where and when they want – and that clearly works both online to bricks and bricks to online. So the only thing better than a great online experience is a consistent online and bricks experience. What should never get lost, however, is the significant advantage for brands executing DTC to control the brand experience for the end-consumer. It is no accident that more brands are reclaiming that right (critical to survival) in the face of indifferent end-user experiences with many bricks partners.


Benefits Beyond Brand Control

For traditional retailers and brands, there are major advantages of going direct to consumers, beyond just controlling the brands from start to finish. These benefits include:


Consumer Data

We all agree that staying in business requires delivering an exceptional customer experience every time. While having integrated retail solutions makes that more likely, knowing your customer better does, too – and DTC lets you learn things about your customers that you wouldn’t learn otherwise.


CAC and Other Cost Reductions

Controlling the entire supply chain process can allow you to achieve economic factors not otherwise available and gives you more control over the kind of service your customers get.


Personalization

Success in retail today requires a degree of personalization you can’t offer without incorporating DTC.


Customer Satisfaction

It’s a numbers game you can’t afford not to play. Eighty-four percent of consumers say they won’t go back to a brand after a bad delivery experience. Forty-two percent of Americans would purchase directly from a branded manufacturer over a third-party seller if they promised free and fast shipping.


It’s About the Customer

To achieve sustainable customer acquisition costs, traditional retailers and brands will have to adapt and restructure. DTC will help traditional retailers and brands deliver value to the customer at every touchpoint along the customer’s journey. 

The Convenience Store Playbook
The Convenience Store Playbook 1440 428 ASG

Convenience stores (C-stores) have always held space in retail, but today’s convenience store is almost nothing like its predecessors. A place that was once known for questionable hot dogs, 32-ounce cups of soda, and burned coffee is now a leader in delivering the experiences sought after by today’s consumers. 

How C-Stores Met Consumer Need During the Pandemic

Throughout the pandemic, the convenience store became a source of connection. C-stores are local; the people who work in them are often the familiar faces of neighbors. C-stores became even more important during the pandemic because of several things:

  1. They are neighborhood stores. Conveniently located, C-stores kept people from having to wander too far from home or step foot inside large, crowded supermarkets. 
  2. They carry all the basics, from hot dogs, soda, and coffee to toilet paper and other essentials.
  3. C-store chains operate with a relatively low overhead, and because they are located within neighborhoods, with their pulse on local needs, they’ve been able to quickly respond to the changing demands of their local consumers.


C-Store Success Stores

C-stores are everywhere, in every neighborhood. The design, story, and experience of the new C-store is elevating the industry and bringing dignity back to a commodity. It’s no longer just a place to shop because it’s convenient – it’s a place that consumers are choosing to go.


C-Store Success Stores

7-Eleven is transforming their locations from simple convenience stores to neighborhood experiences. Locations around the country are offering restaurant experiences with Raise the Roost® Chicken and Biscuits or Parlor Pizza restaurants. The newest location in Manassas, Virginia has both. In addition, certain 7-Eleven locations feature customized drinks, wine cellars, and a store brand called Sips + Snacks.

7-Eleven Executive Vice President and COO Chris Tanco said in a recent press release, “Today’s opportunity is in the QSR space, and we are responding by aggressively rolling out our restaurants across the country – both in Evolution Stores and beyond. Our plan is to open nearly 150 restaurants in 2021.”

7-Eleven is betting on the C-store evolution in a serious way, having just completed the purchase of 3,800 Speedway stores. 


MAPCO

MAPCO Express is one of the largest C-store chains in the United States, headquartered in Franklin, Tennessee. They turned to Chute Gerdeman and worked with them for over a year to develop a refreshing new store design that communicated not only convenience and freshness but also a modernized C-store experience. What does that look like? Free Wi-Fi, fresh food and grocery items, smoothies, bean-to-cup coffee, and a beer cave were all part of the new store design. Have a look.


Choice Market

“We’re entering an era where C-stores are a choice not just a convenient option,” explains Chute Gerdeman. Choice Market, with the help of Chute Gerdeman, designed the C-store of the future, combining grocery and restaurant services in a C-store format. At Choice Market, you can grab groceries, order meals made to order from locally sourced foods, and relax.


C-Stores: Right Place, Right Time

Being close to home gave convenience stores a leg up during the pandemic, but to remain relevant, as vaccine rates increase and more people step out of their homes, this focus on delivering customers an experience and providing higher-quality merchandise in a clean, safe, and consumer-oriented environment is what will keep them returning.

For the future of C-stores, shopping will be about accessibility, product offer, and personalization. The door is open for disruption, but a one-size-fits-all approach won’t satisfy demands. Forward-thinking strategies will help retailers gain an edge against competition and beyond traditional norms of convenience. – Chute Gerdeman

Around the world, C-store leaders are making pivotal changes to increase their relevancy, from loyalty programs to free coffee for healthcare workers.

No, It’s STILL Not a Retail Apocalypse
No, It’s STILL Not a Retail Apocalypse 1440 428 ASG

I become frustrated with the persistent notion that the sky is falling and that retail has reached its endgame. Yes, the pandemic exacerbated a situation that was largely already in progress – consumer habits were changing, some brands weren’t paying attention to shifts in consumer behavior, and everyone had too little cash and too much inventory. Not enough effort was being made on a regular basis to evaluate locations and location strategy. For those brands and retailers that had not been future proofing with scalable technology and total integration among all channels, the pandemic was even more painful. 


The Changes Forced by the Pandemic Were Already Coming

There was already competition to own the last mile in ecommerce. There was already a shift away from homogenous, flagship-driven store designs that looked the same whether you were in Santa Fe or Boise or Albany. This has all been accelerated as a result of the pandemic, but it was coming anyway. So, I disagree with all the apocalyptic naysayers who claim that retail is dead. As I did before the pandemic, I’m seeing hope for a more mindful, more strategic, and more localized retail strategy going forward. The pandemic just forced everyone’s hand. The three trends in retail that I’m watching are DTC, DEI, and Experience.

The retail industry was struggling even pre-Covid. It was homogenized, and often, clients had no clue how many stores they actually needed and where they should go and what to present. For a company to be connected strategically – it’s more iterative and flexible than ever before. – from my interview with Chute Gerdeman


DTC

There is enormous opportunity in brick and mortar – and many retailers who were solely ecommerce are now opening stores. According to Chute Gerdeman, 

Although we live in a world infatuated with digital, consumers still crave activity. An online presence can help brands establish themselves, but it’s the experience that builds relationships. 81% of Gen Z consumers state that they’d rather shop in-store than interact with brands digitally. As we brace for a world with no restrictions once again, brands are seizing the opportunity and going directly to the consumer.

The shift to DTC was already well under way when the pandemic started. That it’s more accelerated now just means that the opportunity we predicted would exist is here. And the truth is, consumers don’t care. One in three see no difference between buying from a DTC company versus a traditional retailer – a number that doubled from just a year ago. Big brands are making the transition:

  • Adidas plans for DTC to make up 50% of sales by 2025
  • Thirty-five percent of Nike’s revenue now comes from DTC sales

Accounting for 40% of its sales, Levi’s is now considered a DTC powerhouse


DEI

Consumers are paying attention, not just to whether or not your company embraces sustainability practices but also where you stand socially and civically. Diversity, equity, and inclusion – DEI – aren’t just terms for HR anymore. Consumers want their brands to demonstrate that same inclusion in an authentic way, beyond their hiring practices. Representation matters. Social justice, diversity, and inclusion are more than just buzz words. 

You can’t just rename your brand or add diverse people to your advertising images if you aren’t following through in systemic ways. Consumers are paying attention to where your brand is putting its political dollars, how you’re working in your community to improve lives, and what you stand for. And there’s no remaining above the fray and not taking a stand. Silence is a stance, too. ImpactPlus sites the 11 most effective inclusive marketing campaigns by brands – but the marketing only works when the philosophy of the company matches the message.


Experience

The future of retail is experience. Consumers are ready to shop. Thirty-three percent of consumers expect to do more in-store shopping. The fear that was keeping shoppers at home is subsiding as vaccine rates increase. But consumers will not let go of the convenience they’ve enjoyed with transactional shopping, either. If it’s a practical, repeated, or mundane item, it may always be something they order online and have delivered. So, if you’re trying to pull people into your store, what are you going to do to get them there, keep them there, and get them to spend? Here are some thoughts I have about how every retailer can do this: 

  1. Recognize that even your most loyal customers have gone through a significant, and likely permanent, change in priorities. You need to get to know them all over again. Your old data is useless. Consumers as a whole are leaning local, and they are keenly aware of not only your social impact but your efforts at safety. Make changes to your retail locations to better meet your customers’ needs – and redesign your locations to allow for more personalization, improved safety, and product showcasing. Combine that with more choice – from how to buy to how to get the product home.
  2. Shoppers do not differentiate between your app, your store, your website, or your social media platforms – and you shouldn’t either. Information about your customer’s journey, their ability to contact you regardless of platform, and your access to information about what they want and what they’ve already communicated should be transparent across every system.
  3. Listen to your customers and to your employees on the floor. They’ll often tell you what they need and how they need you to meet their needs, if you will provide them with the means to do so. From self-checkout options to personal shoppers, listen first, then act.
  4. Flexibility is key. The agility the retail industry embraced during the pandemic must continue. Needs will continue to change. Technology will continue to accelerate. Responsiveness will be critical. 

For all that’s changed, so much is still the same. Care for your customers and make sure they know that you do care. Provide quality products. Be consistent and be authentic. Meet your customers where they are. And develop a retail strategy that embraces these goals.

Retail, One Year Later
Retail, One Year Later 1440 428 ASG

March 13; a Friday the 13th, ironically enough: That’s the day most people point to in 2020 as the moment when everything changed. Up until that day, it was business as usual, with just a few conversations surfacing from the background about a new SARS virus. And then suddenly, the pandemic enveloped us. Schools closed. Retailers put up signs indicating that they were temporarily closed. No one knew then that we would endure 12 full months of turmoil before the light at the end of the tunnel stopped looking like a freight train headed straight for us.


The Biggest Disruption to Retail

We’re always talking about innovation and technology disrupting the status quo – Uber, Netflix, and others are typified as brands that have changed the face of their industries. But the pandemic has been the biggest disruptor to retail ever. The short-term goal to survive this disruption was shoring up liquidity. Then came the realization that there was no quick fix in sight – which forced most retailers to take actions that would have otherwise taken years to implement – curbside pickup, online ordering, app development, and the employing of AR. These measures were the hardest to navigate for those brick-and-mortar retailers that hadn’t at least started building the framework for technology’s role in retail – and many of them did not survive. For a while, there was pure panic – and a lot of number crunching. And we had no one to help us. 


Lack of Representation for Retail

In Episode Four of CBUS Retail’s COVID Chronicles, we reflected on those first few days. We worked with Alvarez & Marsal and put out an invite for retail leaders to jump on a call; overnight we had 100 C-suite retail executives and even some landlords on the phone. It was then that we realized how significant of an event the pandemic really was, and what we heard on that call was that no one could pay rent and still have the cashflow they needed to try to survive. Without a strong, unified, central voice on Capitol Hill to lobby for aid, we decided to use that call to brainstorm–not just for individual retailers but for the retail ecosystem as a whole–what was essential to survive, including relief to landlords. Congress still does not place the importance it should on retail, given the impact it has on the overall US economy.


Take A Breath, but Don’t Stop

A year later, we’ve finally reached a point where we can take a breath. Vaccine rollout is going strong. More than 90 million Americans have received stimulus payments. And those payments were expanded to include all dependents, not just those under age 17. The new administration is pushing for vaccines to be available to all adults by May, and they’ve started testing vaccine safety on teens. By mid-summer, there is an expectation – maybe not for a return to “normal” – but at least for a return to in-person events and experiences.


Where Does Specialty Retail Fit in This Future?

Excitingly enough, the answer is everywhere. Not just physically, although we’ll be talking more about the need to reevaluate the future of retail location strategy. But specialty retail fits everywhere consumers are – in malls, in neighborhoods, in popups at events, in their living rooms, on their phones – everywhere. People have money, they feel safer, and they’re ready to shop. They’re tired of staring at screens; they’re tired of transactional interactions. They want to touch, feel, and experience the inside of a store again.

What we saw during the worst days of the pandemic was that retailers are tough. When things were at their worst, they figured it out. They adapted, pivoted, and quickly implemented the changes that would let them continue to take care of their customers and maintain some source of revenue. And they did it without long-term studies and budget meetings and RFPs. They just took action.

If we take anything from this pandemic, hopefully it’s the knowledge that in a time of crisis, the retail industry can act swiftly, think long-term, and take care of more than just their own bottom line. This is, to us, the greatest source of hope for the future of retail.

Redefining Retail
Redefining Retail 1440 428 ASG

I’ve been spending a lot of time these days thinking about the future of retail. And what I think about most is how much opportunity there is. How much opportunity?  Well, I’m so confident in retail and what retail means to consumers, that even in the midst of a pandemic, we have acquired and merged with one of the most respected retail design organizations.

Even as we grieve the unimaginable losses this country has endured over the last year – and I do grieve – as a business leader, I must recognize that the pandemic has also allowed us to see our world, our roles in it, and the future with new perspective. We have all been changed. And that has a significant impact on redefining retail. 


Covid-19 Forced a Reckoning

The shift in the world has been palpable. People suddenly realized that they could work from home and, despite a few Zoom mishaps, business would go on. People are spending more time with their families, more time on creative pursuits, and more time envisioning a future that embraces humanism and sustainability – and their loyalty will be to those brands that are aligned with this vision of the future. They crave something new – something different – something human. The idea that you wouldn’t know it wasn’t local is the driving force. They care if your products are sustainably and ethically sourced, if your people are paid a living wage, and if you contribute positively to their neighborhoods, towns, and regions. They want a holistic experience in which they can access those brands without regard for where or how the interaction takes place. 


Online Only Still Doesn’t Work

Before we give in to the few short-sighted analysts who point to a perfect future of online-only retail, let me just say right now – online only doesn’t work. It has not worked in the past, and it is especially clear that it won’t work in the future. Amazon and our existing infrastructure offer the best examples of pinch points in an already flawed system which causes deep strains on everything. Yet, shopping malls are still not back to normal and some question whether they ever will be. If anything, consumers are more ready than ever to get back inside the shops. But the look, feel, and delivery will all be different. And if you were on the fence about needing to provide a seamless experience to your consumers, and if you’re still in business, then you can no longer wait.


Huge Opportunity for New Brands

According to the current administration, by this summer, every adult who wants to be vaccinated will have the ability to do so. This means that we should already be knee-deep in planning for the summer, for we are going to see herd immunity, the economy, and that deep pandemic restlessness all converge on retail. There’s a lot up for grabs for new brands that can come into the existing retail landscape with a new approach – one that is wholly focused on consumers and their changing needs. And consumers have changed.


How to Reach Tomorrow’s Consumer

We’ve been talking for a long time about consumer-centric retail strategy. But what does the customer experience mean to the consumer? Technology? Good feelings? Consumers are getting screen fatigue and they’re lonely. They’re ready to shop. But their priorities have changed. They’ve discovered new needs and wants. They’ve realized what they can live without. Consumers know they can place an order from their living room at 3 a.m. and pick it up curbside at 10 a.m. But they still miss the pure tactile pleasure of walking the aisles, trying on clothing, and being cared for. At the same time, they are still hesitant about how safe it is to do any of this.


So, How Do We Redefine Retail for the Consumer?

The obvious answer is that consumers are the ones redefining retail, and we just need to listen. But I think it begins by redefining retail priorities. And this is where the combined power of ASG + Chute really shines. Not only do you need to understand how consumers are shopping more in their own neighborhoods, but you need to understand that the store you design and the holistic experience you deliver can’t be driven off the flagship store you build in NYC. You need flexible store designs that can be modified to meet the local need – sometimes bigger, sometimes smaller, and always with a local feel. And you can’t invest as much in the up-front design process. Instead, you must embrace an iterative process where you get it out there, learn, and refine.

The Landlord-Tenant Partnership to Save Retail
The Landlord-Tenant Partnership to Save Retail 1440 428 ASG

The loss of specialty retailers, such as Jos. A. Bank, J.Crew, Lord & Taylor, and Pier 1, didn’t just impact the companies themselves. The ripple effect ran through the malls in which they were tenants and indirectly impacted the other mall tenants that relied on their presence as a draw. Many tenants had anchor store requirements that allowed them to renegotiate or even cancel their leases. Unfortunately, landlords are often caught in a tough spot, between tenants who are also trying to survive and must use every leverage point they can, and mortgagers, who require a minimum level of revenue to avoid foreclosure.


Landlords and Tenants Can Work Together to Save Retail

The worst situation for all parties involved would be foreclosure. Landlords and tenants are going to need to find ways to work together. The retail real estate industry must assume a collaborative stand with tenants through these unprecedented times. That doesn’t mean just agreeing to what the tenant wants. Understanding how a tenant makes money and what they can afford to pay is incredibly important. So owners, view your tenants’ requests for assistance as opportunities to strengthen the non-financial aspects of a lease. Reduce co-tenancy requirements, shorten terms, and remove exclusives or other cumbersome items that limit a landlord’s flexibility.


Anchor Stores Need to Change

The downfall and demise of the traditional department store means that anchor stores must change. Given the focus on consumer experience, it makes sense that the anchor stores should be experiential. From hotels and restaurants to gyms and theaters, reimagining retail space is a way forward that can benefit both the landlord and the tenants.

As e-commerce continues to grow, retail investors and tenants are being forced to reconsider what consumers gain from the brick-and-mortar shopping experience. Traditionally, landlord and tenant relationships were ultimately transactional. Today, the sides are teaming up, realizing that together, they can achieve a shopping experience worthy of drawing consumers away from their smart phones and devices. – CBRE


The Future of Mall Space Can Be Exciting and Functional

Elizabeth A. Whitman takes a deep dive into what can be done with retail space in malls that is no longer being taken up by department stores. Temporary options include becoming a vaccination site or converting to warehouse space for last-mile delivery. But long-term solutions are even more exciting in the potential they offer. One mall is transforming its now-empty Sears location into a fitness center with a pool. Another has converted boutique shops into micro-apartments for single tenants. The one common element of all of the reimagined uses of the space is that it recenters the mall as the place where people congregate to live, shop, and have fun – and that’s the key.

We use phrases like ‘omnichannel’ to describe scenarios as though every consumer wants to move seamlessly across everything a retailer, for example, has to offer. However, we have to turn that idea inside out and remember that for consumers it’s all about experience, and always has been. A consumer will choose the experience they want, based on the service or goods they are buying, and then the channel. The businesses that will be rewarded with brand loyalty are those delivering great experiences in stores and online.


Where Do We Go from Here?

Two truths on which we need to remain hyper-focused have come out of this year: One, tenant representation is essential – tenants who had someone capable of navigating, renegotiating, and changing lease terms were more capable of being flexible in meeting their customers’ needs; and two, the adversarial nature of the tenant-landlord relationship needs to transform into a partnership that keeps them all in business. If these things are not achieved, then banks are going to end up owning a lot of empty malls.

A Consumer-Centric Retail Strategy
A Consumer-Centric Retail Strategy 1440 428 ASG

We’ve talked before about how the pandemic isn’t to blame for everything going on in retail. A consumer-centric retail strategy has been needed for a long while. A lot of the writing was already on the wall for those brands that were slow to embrace the ever-evolving nature of retail that is required to remain viable. The pandemic simply accelerated the tipping point for many – including department stores like Macy’s, that made the department store loser list.


The Holidays Revealed Retail Strengths and Weaknesses

Overall retail holiday sales were up by 3%, ecommerce was up 49%, according to Mastercard SpendingPulse™. However, even with the slight gain in sales over the holidays, total retail sales in department stores dropped 10%. Yet these weaknesses in department stores sales were only accelerated by – not caused by – COVID-19. Macy’s is representative of dinosaur retail. Evolution was – and is – well underway.


eCommerce and In-Store Were Already Merging

A consumer-centric retail strategy requires a seamless experience. This merge was accelerated rapidly during the pandemic. Customers see ecommerce and instore retail as two sides of the same coin. Any brand that was, in the past, viewing ecommerce as a threat to in-store was forced to quickly realize how integral the two were to each other. This trend shows no signs of slowing. According to destination CRM,

In the modern retail landscape, digital is no longer a threat to the in-store shopping experience. In fact, smart retailers have come to see e-commerce as a tool to boost in-store foot traffic. This represents a new phenomenon called ROPO (research online, purchase offline), where consumers start their shopping journeys online but complete them in-store.


Stop Thinking Omnichannel and Start Thinking Consumer-Centric Retail Strategy

The wake-up call has been issued to retail. Already, those least prepared for change have not survived and more will falter. To survive in 2021 and beyond, decisions about retail strategy must be made through the lens of consumer experience. JRNI CEO John Federman said this:

We use phrases like ‘omnichannel’ to describe scenarios as though every consumer wants to move seamlessly across everything a retailer, for example, has to offer. However, we have to turn that idea inside out and remember that for consumers it’s all about experience, and always has been. A consumer will choose the experience they want, based on the service or goods they are buying, and then the channel. The businesses that will be rewarded with brand loyalty are those delivering great experiences in stores and online.


Future Expectations: It’s All About the Customer

While we’ve been preaching a customer-centric retail strategy for some time (forever), it’s becoming quite clear that 2021 will be another year of refining retail based on meeting consumer expectations. Says Stacey Widlitz for Forbes, citing Target as the successful culmination of this effort:

Consumers also adapted their behavior at an accelerated pace and will be more fluid in their transitions between online and offline in 2021 and beyond. With elevated expectations for a seamless shopping experience, consumers now demand flexible fulfillment, personalization, safety, and sustainability as the price of entry into their wallet.

It’s no longer about having the biggest inventory or the deepest sales. Consumers want to feel safe; they want flexibility about how, when, and where they shop.


The Way Forward

As consumers change, you need to relearn their needs. And as trends shift, everything – from shifts in purchasing to footprint to labor – will need to be analyzed to determine your go-forward strategy.

As the leading provider of outsourced real estate services for wholesalers and retailers, ASG is here to help you. From emerging to established brands, we help our clients optimize their real estate investments through our practices in Analytics and Strategy, Tenant Representation, Store Design and Construction, Lease Administration / Rent Accounting / Audit, and Real Estate Technology. Founded in 2002, we have worked with over 100 brands, and we’re at the forefront of redefining the future of retail in a post-pandemic world.

Reinventing Retail Post-Pandemic
Reinventing Retail Post-Pandemic 1440 428 ASG

The uncertainty of 2020 has resulted in two basic approaches to navigating the ambiguity of retail during the course of the pandemic: the “deer-in-the-headlight” approach – those retailers who panicked, froze in place, and have quietly filed for bankruptcy; and the “what if we try this” approach – those retailers who were able to nimbly adjust how and where they met their customers’ needs, even if those needs changed every week. What has been demonstrated over the past several months is that which we have always known to be true for retail – that agility is key. It’s just that now, instead of measuring business success in terms of profit and rate of growth, business survival becomes the means of determining success. Reinventing retail is the key to success – and survival.


Reinventing the Customer Experience

What happens when your livelihood and your very life are threatened, and you’re forced to live without the comforts to which you’ve become accustomed? First, you must begin to reevaluate what’s important. As time goes on, you become keenly aware of the things you miss most – and you start being willing to make the necessary accommodations (wearing masks, making appointments in advance, scheduling delivery and curbside pickups) to have the things you want. And the retailers who survive are those who are making customers feel safe and are providing them with alternatives for obtaining what they want or need. 


Reinventing the Shopping Experience

There is a significant shift from omnichannel to unified commerce – a seamless experience for your customers regardless of where or how they purchase from you. The flexibility of unified commerce allows retailers to stay as agile as possible, adjusting accordingly to our rapidly changing retail environment. What does this mean for retailers? Take a look at Chute Gerdeman’s excellent insights in the article, “Shopping Goes Automatic,” which explores how brands such as Starbucks, Nike, and even Amazon are making changes to make the shopping experience easier. 


Reinventing Brand Loyalty

Consumers may have been loyal to specific brands in the past, but the pandemic and social crises of 2020 have wiped the slate clean. Building brand loyalty comes down to two things: Do you make your customers feel safe enough that they still want your stuff, and is your brand aligned with their social and political ideologies in sufficient levels to make you worthy of their dollars? According to a study by EY, “Brands must stand for something, have a purpose, and share their expertise with consumers.”


Reinventing Engagement

Retailers are making adjustments to accommodate the ongoing pandemic, but with a vaccine on the horizon, there also needs to be preparation for the return of customers who are eager to be back in stores. Chute Gerdeman explores what that might look like in the months to come. 

The way forward begins with a strong retail strategy, in-depth analytics, and partners with their pulse on the retail industry. We’re here to help.

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