10 Key Trends Re-shaping the Retail Industry
JLL have identified 10 Key Trends influencing the Retail Industry worldwide and looked at how this may impact on the local retail landscape.
With ecommerce growing faster than any other retail sector, the opportunity for brick-and-mortar retailers isn't extinct; it's just shifting.
The good news is, the pace of change within retail is remarkable and this shows no sign of slowing down. The retail industry has reached tipping point whereby what happens outside the physical space is becoming as important as what happens within. The future looks bright, and the survival of the physical retail space is dependent upon retailers embracing the change and adapting to the new world order.
JLL, one of Irelands leading retail advisory and leasing companies have identified 10 KEY TRENDS within the changing face of retail:
1. Urbanisation and population growth: the pace at which the global population is increasing, and the staggering rate of urbanisation is underpinning radical change
2. Multi-speed economic growth: the multi-speed economic recovery is driving industry movements and strategies
3. Ecommerce = Everywhere commerce: consumers want to access products wherever, however and whenever they want
4. Information explosion: the amount of information available (and sought) is leading to super-informed, knowledgeable consumers
5. Harnessing big data: effective use of 'Big Data' will enable retailers to truly understand customers, what will attract them to a shop or retail space
6. Consumer ethics vs. consumer desire: consumers' ethical and environmental idealisms are seemingly at odds with the technology-driven desire to own the next 'best thing', and 'now'
7. Power switch: propelled by technology and data, the super-informed consumer is increasingly taking control of the retailing process
8. Pace of change: for retailers, the pace of competition and innovation has intensified, not just at a corporate level but also at a product level
9. Redefining space: the role of the store is fundamentally changing, and what happens in the virtual world is increasingly influencing how we use physical space
10. Time is the new commodity: time is the new commodity for consumers. Shopper expectations are now profoundly different from a few years ago
In looking at how these overall and global macro trends impact on the Irish retail market (comprised of shopping centres, retail parks and high streets countrywide), the following are JLL's 2018 predictions for change:
- Active Demand: for the best Regional centres, High streets and Retail parks will modestly edge up rental levels.
- Restaurants / F&B: a continued dominant theme and competitive sector, but not a one size fits all sector and rapidly rising rents will moderate.
- Closures: whilst most of the Examinership candidates are completed over recent years expect to see more stores choosing simply not to renew leases on expiry in secondary locations.
- Tenant Indifference: the store chains who expanded to protect their patch and cannibalise their trade in the boom years, no longer feel they must locate in as many outlets per capita, as online gives a model that needs less bricks & Mortar square footage.
- Innovation: with vacancy of fitted stores, lease term flexibility a more footloose pop up culture may generate an interesting mix of uses.
- Leisure and Experiential Retailing: cinemas leisure are not the only options in creating a point of difference to compete with on-line. Emerging examples of experiential retailing are the likes of an IKEA sleepover using beds mattresses etc for 100 winners of a competition on Facebook, Vans creating concrete mini ramps for skaters and farfetched pioneering augmented reality mirrors to help try on clothes in store. The objective of the majority of these initiatives is to be interactive, original, connected and unexpected in the fight to interest and retain a new breed of informed and fickle customers.
Commenting on the report, Anna Kelly, of JLL Ireland's Retail team said:
"Once these trends have played out, the physical space of retail will be used in a different, more enriched way. By identifying and acknowledging the key trends, retailers and consumers can be more optimistic about the future function of the physical retail space. Challenges will remain however, and further churn is inevitable and unfortunately not all retail will survive. Ultimately, this will come down to retailers taking action, standing still is not an option".