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Brick-and-Mortar Still Alive, Boost in Consumer Spending This Year

Several retailers are opening more stores this year and next year, but many have also said goodbye. If so many retailers are closing stores, what is replacing them? People often miss the implication that once something goes out, another comes in—meaning that other tenants will come in these shopping centers and change the retail landscape.

Closures Can Actually Be a Good Thing?

In contrast to retailers, store closures can actually benefit mall owners and landlords. Pushing “weak” retailers out and bringing “stronger” ones in benefit not only landlords and investors but also shoppers. Landlords can increase rents gradually, and having new and “stronger” tenants could pique interest; so what’s the outcome? Foot traffic increases, and consumers will have new and fresh options. Shoppers have big money to spend, especially during holiday season, and now that their beloved stores are closed, they must look elsewhere. That could mean online, but if they’re frequent mall shoppers, they’ll wander and find a new store they’ll love.

Analysts believe that investors should look at newer retailers because many are up-to-date with consumer trends. Recently, landlords have sought out “underground brands,” AKA lesser-known retailers. These retailers are often innovative, fresh, and have a ton of potential!

Despite all the closures, more retailers are actually opening stores in 2017 than closing. We can predict that this trend will follow in 2018.  It’s been noted that fashion is less important in brick-and-mortar stores, so stores that offer a more tailored and unique customer experience will fare best in these vacant spaces. New restaurants are also potential tenants. Dining experiences and convenient fast food entice customers, so it’s likely that malls will see higher conversions.

Experience Is a Key Driver

People value fun shopping experiences that are often like a scavenger hunt. Shopping at IKEA, Target, Lush, or a car dealership is an involved experience for the consumer and the employee. These experiences are typically fun and sometimes spontaneous! They give customers a reason to come to the store. Sure, it’s easy to shop online for furniture, but it’s a unique experience to test these items out in stores and get second opinions. Shopping for bath and beauty products often requires you to feel and smell them—that’s why beauty retailers are growing because they offer a unique shopping experience that involves interaction with the employees! Plus, it includes a memorable shopping experience. People love valuable human interaction, so stores similar to retailers like IKEA, Lush, and Sephora will be great tenants.

Consumer Spending Is Up, Boost in Sales

Despite what some may think, consumer spending is increasing. They’re willing to pay a premium price for quality clothing, memorable dining experience, and more. There is also often a sense of urgency when it comes to shopping in a physical store, so this can also boost consumer spending. In October, retail sales increased by 0.2%, which reflects that retail isn’t totally dead. The car and gas sector has seen growth, and restaurants and bars saw a 0.8% last month too. The sporting goods sector experienced the largest growth last month at a 1.5% increase.

Retail is still a vibrant landscape globally, despite the many closures. There are consumers who prefer shopping in a store to online, and the employees who work at these stores are often the ones who bring the customers back in. There’s an emphasis on the importance of flagship stores and larger spaces for physical stores. While brick-and-mortar retail has slowed down in the last couple of years, retailers and investors are overall still optimistic about the future.



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