PERSPECTIVES

Now More Than Ever, Adjacencies Matter

Remember the three things needed to be successful in retailing - location, location, location? 

And remember how that was upended by the internet? (In fact, that's what drove much of the talk of a "retail apocolypse;" it really was a "retail real estateapocolypse." Retailing – selling to the ultimate consumer – still was happening.)

Nevertheless, retail leasing patterns can offer some useful insights to retailers. 

For instance, this new study* by JLL Retail Research documents how retail leasing activity has shifted towards experience-based tenants. It notes that 51% of the retail space leased in January–November, 2024 was for service-based tenants. And that trend is expected to accelerate in 2025.

Have you noticed? There sure seem to be lots of new businesses opening up. 

Well, turns out there are some stats that can substantiate this. 

According to an analysis of Census Bureau records by NerdWallet, new business applications through April 2024 have settled into a 12-month average of 455,000 per month. This is a significant 48% increase over the average of 293,000 applications per month in 2019 (pre-pandemic.)

• Indeed, as reported by Andy Medici in The Business Journals, “the United States has seen a small business boom that shows no signs of letting up. A record-breaking 5.5 million new business applications were filed in 2023 alone. That's the strongest year on record.” 

Who Are These New Owners?

Compared to before the pandemic, new business founders have changed substantially.

“There are a bazillion possible Starbucks orders – and it’s killing the company!”

That is the provocative title of an interesting New York Times Guest Essay* by Bill Saporito, editor-at-large at Inc.

• "Starbucks says there are more than 170,000 possible drink combinations available, but outside estimates have put the number at more than 300 billion. And,” he laments, “the person in front of you always seems to be ordering 100 million of them.”
• "Companies have always had to deal with choice and customization versus the complexity that comes with it. But we know that too much choice can be paralyzing," Saporito writes.

Saporito’s message is very relevant as the Holiday Season approach. To reduce the paralyzing effects of too much choice, now is the time to finalize your merchandising strategies.

"Consumer confidence rises to five month high."

That headline from Chain Store Age* brings smiles to retailers.

Consumer confidence is a key indicator of retail sales, and this increasing confidence as we head into the holiday season is very welcome indeed. 

• “Concerns about inflation dissipated further in September—prompted largely by declining prices at the gas pump—and are now at their lowest level since the start of the year,” according to Lynn Franco, senior director of economic indicators at The Conference Board.
   
• "Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022," added Franco.

But of course, there is no one-size-fits-all upside here. 

More Spending on Necessities

photo: Greg Gilbert/Seattle Times

Recently we read of a "bookshop on wheels" launched by a college English instructor. While certainly not the first retail variation on a food truck, this one has gained praise for its authenticity. 

"What’s most surprising when you walk into Blue Kettle Books for the first time is how cozy and, well, bookstore-ish the tiny space feels."*

👀 New Respect for Brick-n-Mortar Retailers

Retail IS detail. And some of those pesky details are increasingly cropping up to torment online sellers. 

For example, there's the matter of managing returns. As Chris Jarvis wrote in DMM/ShoppingCenters.com*:

• "We return roughly 30% of all online purchases compared to only 10% from brick-and-mortar."
• "In 2021 retail returns jumped to an average of 16.6% versus 10.6% a year ago."
• "Research suggests that a single online return can cost two-thirds the original price to handle when we include labor, transportation, and warehousing costs." 

Meanwhile, the pure-play online retailers are confronting the ever-demanding customer expectations. 

Just this morning we saw yet another article speculating about the staying power of online shopping, in this instance, grocery shopping. 

• "Right now, the direction is … unclear," admitted the reporter.* "I have been scouring data on online grocery shopping in the U.S., and I will be humble and say that I don’t have a clear picture."
• "My wishy-washy analysis is that Americans haven’t fallen head over heels for buying bananas over the internet, but we aren’t rejecting it, either."

Of course, it's not just media pundits who are looking for answers to this question about online versus in-store shopping. Retailers are living with this issue, and they have to make decisions. 

"And the award goes to..."

No, Not About People This Time 
While we typically think of people as recipients of recognition – and we trust you already are doing that, right? –  this is a different challenge.

Ready? Here we go! Of your merchandise, which products are Award Winners?!