The refrain of doomsday headlines is endless: “Retail Is Dead,” “Inside The Retail Apocalypse,” “Is Retail Coming Back From The Dead?” “The Retail Bloodbath Continues” and our favorite, “Retail Is F*cked.” To be sure, brick-and-mortar retail is in the throes of a seismic shift fueled by the rise of e-commerce and the changing needs of modern shoppers who demand a fresh experience — and need a very good reason to power down their computers.
There have been winners and losers during the sea change, as evidenced by the 300-plus retail bankruptcies filed this year. The Limited’s stores are gone. Payless is closing hundreds of locations. HhGregg is gone. RadioShack may take its final breath this year. But is retail dead? Dying? Doomed? It depends on how you look at it. We spoke to 28 commercial real estate leaders across North America to ask them a simple question: Is retail really f*cked? Here are their answers:
NAME: Ron Cohen
TITLE: Chief Sales Officer
COMPANY: The Besen Group
CITY: New York
The media is promulgating the notion that retail is doomed, and adding to anxiety on the subject. While there’s no denying retail is facing serious challenges, I would argue that it is a time of reinvention. From our vantage point, selling vacant retail property at a projected 4 percent cap isn’t happening right now. We have witnessed disruptors in many industries, like taxi transport, music, media — and perhaps shopping is the biggest of all. E-commerce has clearly taken a large bite out of consumer spending, and rents have reached higher heights. Middle-of-the-road chains with stale, undifferentiated concepts are losing their place. Experiential tenants are growing in popularity. Everyone has to embrace the omnichannel approach, and now there are case studies of clicks-to-bricks models in companies like Warby Parker, Bonobos and now even Amazon. Guess what? J. Crew started out as purely a mail order catalogue. It does feel like Amazon is taking over the world. There is an aspect of time will tell, as Amazon announced a $13B acquisition of Whole Foods and Walmart is playing catch up with recent acquisitions of jet.com and Bonobos. It boils down to everyone has to step up their game. Landlords need to calibrate rents so retailers can survive, and retailers themselves have to ensure their products, service and experience make it worth the trip. Fundamentals like site selection are even more critical as there’s less margin for error. The game is changing, but it isn’t game over.
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Ronald H. Cohen