Retail Trends for 2022 and Beyond

As the Christmas shopping season continues and New Year’s is not far behind, our thoughts turn to the what’s next.  What is the future of retail?  The question is still on everyone’s mind and no one has answered it adequately.  That’s because we are not fortunetellers, but we try very hard to predict the future, in spite of our shortcomings.

This week I listened to a podcast from Dana Telsey, a retail expert I greatly admire.  She always says things that I think, “Gee, I wish I had said that, and so eloquently.”  She talked about the three Ps in understanding and predicting change in the retail marketplace:

1. Process
2. Purpose
3. Profit

I keep thinking about these words and continue to develop insights that are essential for an understanding of the future of retail.  Try it. Just think about the words and the application to your particular product, location, experience or store.  You will find you are a brilliant prognosticator!

Just for fun, I came up with my own “10 Trends for Retail” that are practical and may help you plan.  They are as follows:

1. Consolidations, bankruptcies and other market adjustments will continue until retail product, market supply and demand are equalized.  They are good for the industry as a whole, however painful they may be for affected entities.  The U.S. had too much unproductive space before the pandemic.
2. E-commerce and omni-channel selling of goods and services will continue.  These formats work hand in hand with stores.  They supply avenues to sell more goods!  In this realm, the consumer is king.  They have spoken loudly about their preference for convenience and choice. Things like BOPIS, curbside pickup, warehousing and other trends will continue because they are popular and help sell.
3. Retail THEATER and EXPERENTIAL RETAIL will drive successful locations.  It is time we stopped being lazy about our shopping experiences.
4. Great locations will continue to thrive.  A-mall location will evolve into even more mixed-use destinations.
5. The opportunity for development and deepening of our outdoor/lifestyle formats has never been stronger. We must recognize and acknowledge the essential change in post-pandemic behavior.  Consumers require more space indoors and have a preference for being outdoors if possible.
6. Discounters and “Dollar” stores provide the biggest growth opportunity currently.  This is not permanent. These types of retailers always thrive in a recession.  (Yes, we are in a recession!)
7. Cause and purpose are missions to always keep in mind in retail.  Millennials prefer products that offer some good to the world.
8. “Value” is another concept to understand and build into your mission.  It does not mean cheap; it means giving the consumer something she treasurers as she shops.
9. Exurban and suburban locations supply the best opportunities for growth.  Keep this in mind as you develop and expand.
10. Shifting demographics and the concomitant shifts in Process, Purpose and Profit will drive retail development.

Keep these prognostications in mind as you move along with your day, today and tomorrow.  Here’s hoping they will help you bring joy and success to you!

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Revealing National Retail Trends

Recently, I participated in a round table discussion with other retail experts in Southern California.  Shopping Center Business just published the following article about that discussion entitled “Revealing National Trends.”

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Feature Article, May 2010 – Shopping Center Business

“Revealing National Trends”

Southern California Roundtable leads to discussion of trends that can be applied nationally.
Roundtable moderated by Jerrold France and Randall Shearin

Shopping Center Business held a retail roundtable hosted by Holland & Knight at the City Club on Bunker Hill in Los Angeles.

Shopping Center Business recently held a retail roundtable in Los Angeles, hosted by the law firm of Holland & Knight at the City Club on Bunker Hill. Attendees of the roundtable were Pat Donahue, Donahue Schriber; Sandy Sigal, Newmark Merrill; Jill Bensley, JB Research Co.; Jeff Kreshek, CIM Group; Bill Stone, Excel Realty; Jeff Green, Jeff Green Partners; Mark Schurgin, The Festival Companies; Greg Lyon, Nadel Architects; Julie Brinkerhoff-Jacobs, Lifescapes International; Tamsen Plume, Holland & Knight; Karl Lott, Holland & Knight; and Susan Booth, Holland & Knight.

SCB: Southern California is an important market as a lot of retail trends are created here. What do you get as an overall sense of the market here?

Donahue

Donahue: We are better off than we were a year ago. There were relatively no transactions last year. Things are starting to thaw out. We have exposure to four states and Southern California held up much better than Northern California, Arizona, Nevada and Oregon. Our occupancy in Southern California is even with a year ago, where our portfolio is off 400 basis points. Our rents in Southern California year over year are flat to plus two, versus a portfolio that was negative 11. Out of our entire portfolio, 80 percent is in California.

Stone: Our concentration is in the Southeast [United States]. The Southeast has been better; we have a number of centers there at 100 percent occupancy. When you go to the centers, not only are the parking lots full, but there restaurants are full. There are not as many people shopping out west. The whole country has been waiting for the other shoe to drop. In California, everyone is worried about the state. There has been some hesitation here on the part of people to go out and spend. People are holding their money.

Bensley: I looked at the personal savings rates back to the 1960s. This year, the savings rate is 3.3 percent, and that is down, which is good for the shopping center industry because consumer spending is two-thirds of our economy. Last year, it was about 5 percent. In 1991, during the last recession, the savings rate was at 7 percent. In the 1980s, it was at 10 percent. It just shows you the transition of what we’ve done in taking out money from our homes. That is where all that money came from. It was the spending of cash that was then all lost with the value of our houses.

Donahue: We, as a country, took on more debt in the last 7 years than in the previous 40 years combined.

Bensley: It is astounding. It is bad for retail when people save more, but at some point we have to even out.

Donahue: If we go to what we were doing, we will all be out of business. We have to have a positive savings rate. The idea that you are supposed to live above your means is not good. I’m thrilled we’ve shifted to a positive savings rate. It is going to wreak havoc on our business, there’s no question, but it is going to weed out the people who shouldn’t be in this business. Circuit City, Linens ‘N Things and Mervyn’s only lasted 12 months in the downturn. These aren’t retailers who weathered the storm. They shouldn’t have been in business when they were. This recession is weeding those players out. At the end of the day you will come back with a much stronger economy, a much stronger country, and consumers who are doing the right things. We can’t be leveraging ourselves into this.

(Left to right) Stone, Schurgin and Sigal.

Sigal: A lot of the retail failures were a function of the credit markets shutting themselves off. We are seeing a return of some financing to the marketplace. There are the haves and have nots — there are tenants who have access to the capital markets and the REITs who have access. The have nots are just holding on for dear life. If their debt gets called they are done. California is such a large market, you can’t say ‘California is recovering.’ We have centers in the inner city, denser communities. That customer has continued to visit because there is nowhere else to go. Our tenants are the 99 Cents Only and the discounters. In this kind of environment, their marketplace has grown. They have the base who has no one else to go and they have a new group of shoppers. A lot of people will discover retailers like Walmart, K-Mart and Target, and once they discover it, they will keep going. Our L.A. region has seen no increase in vacancy. We are still at 95 percent. In San Diego, we’ve been affected; we are 400 basis points worse there, just around 90 percent. It is a function of high rents and it is dependent on the housing market. The Colorado market has been our best market. It has been steady…

Click Here to read the rest of the article at Shopping Center Business.

How Target Saved My Birthday

As a corollary to my last blog, I am thrilled to provide a recent real world and personal example of a first class retail experience I had with the group that owns the “Cheap Chic” category.  Of course, I am talking about Target.  My husband, older son, and I were on my birthday trip to Truckee to visit my youngest son.  We weren’t leaving until 9PM because of family scheduling nightmares.  We decided to split the 10-hour trip from Ojai, in Southern California, to Truckee in Northern California into two legs.  For the first leg, we would drive about three hours to stay in San Luis Obispo (SLO), made famous by a recent episode of “The Bachelor.”  (Don’t lie; you watch it just to see how awful Vienna will be, what slutty and inappropriate thing she will say, and how much she will embarrass herself when Jake isn’t looking.)

We took off at 9PM on a Thursday evening.  I had two bags packed – one with my essentials (make-up, shades and meds) and one with my clothes.  I always count on my husband to pack the car.  (That’s the man’s job, right?)

So we took off and spent a lovely first night in a SLO hotel where I only brought in my “essential” bag.  The next morning, after a good night’s sleep and an early start, we went out to the car to begin the next day of our journey.  We put all the bags in the back of the 4Runner and I noticed we were short one bag.

“Did you pack my red rolling bag?” I queried Charley, my husband.

“No, I thought you had everything in the ‘essentials bag’!”

“Are you kidding me!??”  Has he met me? I am extremely high maintenance.  When I travel, especially to a cold place, I bring along coordinated outfits including no fewer than three pairs of shoes, no matter how short the trip.  And I am not one of those people who can do black, white (or tan), and one additional color.  Oh no, I need the pink shirt, the red sweater, a couple of jackets, etc, etc.

There I was, on my birthday trip, with no clothes!  And I was wearing ratty old sweats (for the drive), and a pink sweater and jacket from Sears!  (Remember my last blog about Sears?  This is what I bought along with a pair of red sandals that I, incidentally, didn’t bring to the snow.  Oy vey!)

So I stressed for a few minutes and then decided what the hell – there was nothing to be done, another excuse for retail therapy!

Now realize – I had no clean underwear, no socks, no sweaters, and nothing dressy for my birthday dinner… nothing but what was in my essentials bag.  And we were traveling on I-5 through the Central Valley of California, not really a stopping mecca.  Not a Nordstrom to be found along the way – not in Stockton, not in Modesto, not in Sacramento, nowhere!

“Why don’t we look for a Wal-Mart?” suggested Charley.  “We can have lunch and you can get what you need.”

Again – have we met?

But then I got the bright idea.  “Let’s look for a Target!”  They are my favorite when I go ‘cheap shopping,’ which is a bunch more often since the recession hit.

So we looked for the distinctive logo (which up until then I didn’t realize was a real target!).  When we found one, I was thrilled.  I was on a mission to get a whole trip wardrobe for under $150.

What would I need? Underwear, jeans, black tops, and a pair of black sweat pants.  Remember, I had jackets and shoes, so I was good in those areas!  While the boys went to get lunch at the Starbucks in the Target, I picked out two pairs of jeans, a black tank, a black paper-thin long sleeve tee, a black cotton V-neck sweater, three pairs of undies, and a new comfy pair of black sweats.  All fashionable, all reasonably well fitting, and none of them cheap looking!  I am thrilled to say, I wore all the pieces for five days on the trip, even to my fancy birthday dinner!

And so here’s to you Target, for saving my birthday trip, and being the best in class. Oh, and by the way, I had a ball with my husband and two boys, a trip to remember, uninterrupted by a forgotten suitcase.

Shopping, Sears and Me

I love to shop. I’m talking about reason to live, first thing you think about in the morning, when can I go again love! I guess that is why I have been a retail analyst most of my adult life. So I consider shopping, retail, the shopping ambiance, the retail experience, whatever we call it these days since the recession, I consider these my avocation and my vocation. I am an expert!

My mother imparted this love to me, as is the case with most girls. It is imprinted on us like little ducks from an early age, this need to gather, to get the prettiest, most current, loveliest shoes, sweaters, pants, skirts, purses, that we can afford. And as a corollary, there are certain shopping rules, again imparted by our mothers. For example, my childhood in an upper middle class suburb of Chicago, taught me that there were only a few department stores where we were allowed to shop for clothes: Marshall Fields and Carson Pirie Scott. WE WERE NOT ALLOWED TO STEP FOOT INTO SEARS! Now I know this is deathly un-PC and there were not a boatload of clothes to be had at Sears back then, no “softer side of Sears,” still we were not allowed to step foot into the store on a girls shopping trip.

When I became a retail analyst, that had to change, but I still have the “No Sears” song in my head.  As most of us know, Sears has done quite a bit in the last ten years to deserve my scorn. They have made many decisions, none of them based on being a great retailer. Considering the ruthless competitive landscape in retail, it’s a miracle that Kmart (who now owns Sears) has survived. Tough rivals in the discount segment abound, including WalMart Stores, Target, and Costco. All three of these behemoths have much stronger brands and customer loyalty than either Sears or Kmart. And regardless of whether hedge fund manager and Sears chairman Eddie Lampert is involved — his mere presence often seems to make some investors consider Sears’ future as a hedge fund, not a retailer — Sears and Kmart both lost their brand luster many years back.

Why am I blogging about Sears today? One thing Sears had going for it way back when was its great brand of appliances, ease of shopping for them, great repair service and service contracts. They were vertically integrated. So all of our appliances are from Sears and they are for the most part, work horses. But when they break, it has been a tear-your-hair-out nightmare to get an appointment for service. We had a minor part break on our refrigerator this summer and it took six visits to get it fixed because they kept sending the wrong part or the service man didn’t show up at the appointed time or they had to cancel or some other excuse that never made sense. It didn’t bother me too much because the refrigerator still worked, although it was very funny to receive a white door for the unit when the refrigerator is stainless steel! (Doors are very big and bulky to mail!)

The last appliance to break was the clothes dryer. I called to schedule an appointment to get it fixed and knew it was going to be a nightmare, but we bought the service contract so we are on the hook with Sears. The agent at the scheduling center told me I had to wait three weeks. I told him that was unacceptable, at which point he pretty much told me to go “F” myself, that I could take it or leave it, that they had no complaint department, he had no supervisor and if he was in my position he would just leave it alone. So I called a local service to fix the problem and sent Sears the bill with a letter of explanation, a very rational letter, and enclosed the repair bill. I fully expected nothing, but I felt better doing it.

Two months later, my husband got a call (in fact now 4 calls) from Sears. He referred the first caller to me. They told me they were extremely sorry for the way I was treated, but they had no control over their repair servicing arm, which of course, they don’t. He told me he would be sending a check for $18.75 for parts (the bill in fact was $100) and that they would be sending me a $50 Sears gift card for my trouble. Will this make me ever consider Sears again for anything? This is called “customer mop-up.”

So here I was with a $50 gift card for a store that I now had multiple reasons not to shop. I tried to force myself into our local store three times before I finally made it. So what was my experience this time, with the 2010 “softer side of Sears?”

I was sad to see that Sears lived down to my expectations. With so many category killers doing a superb job in their niche, they just didn’t do anything well. They didn’t own the “cheap chic” category, they didn’t own the “cheap/inexpensive” category, and oh my god, the quality of the soft goods was abhorrent!

So they have stuck with the warning from my childhood, “NEVER SHOP AT SEARS!” The store carried cheaply made goods (soft and hard), mostly unattractive, AND FOR A PREMIUM PRICE!!!! .

Why would anyone shop at Sears?

Shopping Center Business – Retailers Who Are Moving Ahead

Not everyone’s closing up shop — these retailers and restaurants have made strides in 2009, and are planning expansions in 2010, and beyond.

By Jill Bensley and Erica Barton

As the holidays approach, the retail industry is showing signs of new life. Buoyed by 3.5 percent third-quarter growth of the gross domestic product, the retail sector may have seen the worst.

Always important to the rebound are plans for store expansion. In fact, 2009 shows more than 250 individual retailers who had plans to expand by more than a total 10,000 units. A summary by merchandise class is given below:

Walgreens has the second largest number of stores planned in 2009, second only to McDonalds.

Announced plans for 2010 include more than 49 different retailers with plans for more than 3,500 new locations. While not all of the aforementioned expansions are in the United States, the sheer volume signals better times for the retail sector.

The Top 50 in 2009

A list of the top 50 expanding companies by number of units is shown in Chart 1. As can be seen, the most expansive include McDonalds at 1,000 new units; Walgreens at 554 units; Dollar General at 500; Subway at 484; Zara at 450 (through 2011) ; GameStop at 400;  Family Dollar at 385; Dollar Tree at 235; 7-Eleven at 200; and O’Reilly Automotive at 150. Obviously, the lower end of the retail spectrum is gaining the most in this recession…  (Click Here to read more.)