In many respects, commercial real estate trends relate to the needs and buying behaviors of consumers. This is especially evident in the retail asset class, such as shopping centers. As demographics shift, technology advances, and consumer behaviors evolve, trends in retail real estate begin to change in order to keep up with consumer demands.

If retailers want to gain a competitive edge and drive long-term business growth of their real estate properties, they need to stay up-to-date with these trends.

In particular, and in response to the “Amazon effect”, retailers have focused on transforming their retail spaces to provide an experience to to the consumer that is beyond just shopping. These retailers then couple an online storefront, along with social and other marketing channels, for an omnichannel model. Below, we’ll talk a little bit more about the future of retail real estate and how changing customer needs and new technologies will transform the way that consumers shop, and ultimately, the way that brands use their retail space to sell.

Why You Need to Provide a Better Customer Experience

Consumers can purchase clothing through two primary channels: physical stores, such as what you would find at any shopping mall across the country, or online storefronts, be it the retailer’s website or through a marketplace like Amazon. In both cases, finding the right size can be a challenge, especially for consumers that are little smaller or larger than the norm. That problem is one that companies like MTailor, a custom clothing app, have solved, as it allows customers to choose the style of their shirt, suit, or jeans, and then use their phone camera to get accurate measurements for the perfect fit.

Not only is fit a customization that is available, but style is too. For example, companies like Quero allow customers to design their own custom shoes online using a simple web interface that allows the customer can choose the size, width, material, patterns, and other details to create a shoe that is uniquely their own. And the big boys are catching up to the nimble startups, as sport shoe giant Nike recently unveiled NikeiD, a digital platform that allows customers to create their own signature shoe by choosing the style, colors, and logo.

Many think it’s just a matter of time before 3D printing technology will allow clothing to be created almost instantly, designed specifically to the consumer’s specifications. Does this mean that stores will no longer need to keep inventory of all of the various shapes and sizes, but rather just a sample of the product? Does that mean that retailers will shrink the footprint of their stores? If so, what replaces that empty space? These are the types of questions retail brokers like Josh Rodstein from NAI Global are pondering. As retail evolves to the digital age, the smart brokers that service those clients are already thinking about the future.

Customization is not just for clothing and shoe retailers. For example, Bed Bath and Beyond has recently started to integrate the digital and in-person shopping experiences to provide more personalized purchasing options. The company has plans to map customer interactions that take place both in the store and through digital channels so that they can more accurately anticipate customer needs. The store also plans to launch a series of curated merchandise collections that allow customers to shop different personalized looks.

This is the future of retail – a tailored experience (no pun intended) that enhances comfort and convenience for consumers. Technological advances like the Internet of Things and 3D printing are making it easier for retailers to provide better service to their customers through personalized shopping services. Retailers who do not change their selling models to accommodate consumers’ growing demand for convenience and customization may find themselves unable to compete in this new marketplace.

How Technology Can Help You Use Your Location More Effectively

Though there are many ways that technology can help improve the consumer’s buying experience, you may be wondering how technology will help brands maximize their retail location. Since the first open air market was established ages ago, retailers have been considering how to more effectively and efficiently use their retail space. The more sales that can be made in the smallest amount of space, the better the return on investment for retailers operating out of a brick and mortar store.

In recent years, the solution to this challenge seems to be smaller store sizes with limited or no inventory. This is the approach that Nordstrom Local has taken in one of their new locations in California. Consumers are able to browse in-person and work with a personal stylist at a local store and have their purchases shipped directly to their home within a few days or less. Retailers have already mastered the logistics of sending merchandise to their customers overnight, and completely customized products tailored to the customer’s specifications seem to be only a few years away. This retail model that integrates technology with the physical store location allows retailers to achieve higher sales volumes and deliver better customer service while optimizing their physical location space and hiring fewer employees.

The same is true for service-oriented businesses as well. Restaurants are now allowing customers to order ahead of time, get the meal delivered right to their table, and process their payment from their smartphone or other connected device. Banks are no longer popping up on every corner as consumers are using their smart phones and ATMs to manage their accounts and make deposits and withdrawals.

Though many may think that technology is eliminating the need for brick and mortar retail locations, the truth is that with the integration of technological resources, shopping has now become an experience that many look forward to. Shopping at a physical location allows consumers a chance to socialize and get a first-hand look at the latest and greatest retail trends. Whether it’s seeing a newly released movie, dining at the hottest new restaurant, enjoying a massage, or testing a brand-new fragrance or makeup line, shopping is still an enjoyable experience for consumers.

Sometimes shopping even becomes an exclusive experience, which is evident in the new pop-up store trend. Celebrities and other big names in clothing and cosmetics are opening up shops in temporary locations for a limited time to offer consumers an exciting and exclusive experience. Some examples include DJ Tiesto’s pop-up shop in Miami, which offers apparel and luxury goods, as well as

Kylie Jenner’s cosmetic line pop-up in NYC. The trend also extends to restaurants like the Cheetos-inspired pop-up restaurant in New York, which featured a three-course menu from celebrity chef Anne Burrell. These pop-up stores appeal to those who enjoy an exclusive experience that is only available for a limited time.

In the end, as consumer demand shifts, retailers and other service-oriented businesses need to change their retail models to meet these growing customer demands. Rather than a purely digital or a purely in-person experience, retailers and service providers need to use both technology and their physical retail space to provide a compelling and satisfying shopping experience for consumers.

Final Takeaways

Retail models are changing as consumers continue to demand more personalized and convenient shopping experiences. Brands that do not work to meet these changing demands may find themselves unable to compete in the marketplace of the future. As one of the biggest factors driving change in retail, technological advances can help retailers provide a better shopping experience for their customers while also allowing them to use their retail spaces more effectively and efficiently.

This blog post was co-authored by Josh Rodstein, Executive Director of NAI Miami and Josh Young, CEO of Raisal