Clicks-And-Bricks Comes Of Age, Physical Stores Gain Ground

At the beginning of 2018, the retail sector looked to be in a nosedive, but like a ship changing course the industry is gradually turning around for the better.

Retail sales spiked over the summer and retailers that managed to weather the so-called retail apocalypse are bouncing back with gusto. 

Part of the rebound is due to the strong economy, with gross domestic product surging at 4.1% annualized growth in the second quarter. But another important factor is that successful retailers are learning how to adapt to the realities created by online sales, the New York Times reports. 

One strategy: making shopping less of a chore than it used to be by allowing customers to use their technology to shop. 

The NYT cities a number of examples: ordering items via phone and having them brought out to the parking lot; instant returns, merely by dropping items in a box outside a store; and Walmart's "personal shoppers," who select and package groceries to be picked up curbside.

"No matter what the category or value proposition, all brick-and-mortar brands need to think about how customers experience their brand," CBRE said in its Driving Brick and Mortar Success in an Omnichannel World report. "And in nearly all cases, that experience is built into the space of the store."

Retailers that don't seem to get that linkage between physical and virtual (such as Sears) face a bleak future.

Studies show that the strongest retailers span physical, mobile and social platforms. Being omnichannel is particularly important for retailers targeting millennials and younger generations.

Another strategy being pursued by successful physical retailers are shorter-term leases. Commitments of as short as a month, or at most three years, are allowing some retailers to experiment in new or cutting-edge locations without an expensive commitment. With the contraction of the number of retailers, landlords are more open to it.

Since 2016, deals for temporary stores for periods of three years or less have increased significantly, the Wall Street Journal reports, citing CBRE data.

"The obvious positive on the tenant side is that they can test the market,” Michael Slattery, CBRE’s manager of research, told the WSJ. "The benefit for landlords is, if tenants like the location, they will extend their leases."