What Brick-And-Mortar Retailers Must Do To Survive And Grow

While retail may be struggling, those retailers with quality products that set themselves apart through unique experiences, events and use of technology to engage consumers are still finding success.

Spurred by growth in e-commerce and quickly changing consumer tastes, the retail sector is innovating at a faster pace than ever, according to Melina Cordero, CBRE head of Americas Retail Research. E-commerce has raised consumer expectations about shopping speed and convenience, creating an era of “high-maintenance consumers,” she said in a video report on retail.

Convenience is the most-cited reason people shop online, she said, so innovative brick-and-mortar retailers and shopping center owners are implementing technologies that improve or enhance the customer experience both online and offline, such as mobile payment platforms.

“Making shopping easier and more enjoyable for the consumer is critical to retail growth,” Cordero said.

“Some of the most interesting tech initiatives are totally focused on creating a more convenient in-store shopping experience,” CBRE San Diego retail expert Carrie Bobb said. “Inadequate parking and long wait times are the top reasons why consumers avoid the store. Investments in technology like parking sensors that show the number of spaces available in a parking garage and digital mall maps make the shopping experience easier and more enjoyable.”

Caruso Senior Vice President of Technology Rick Gehringer said technologies are being deployed at all Caruso retail properties to enhance the guest experience. Caruso has installed converged networks at retail centers to allow integration of property communications, which enhances public WiFi and provides platforms for event promotions and security video. The network also can support retailer operations and internal communications.

The converged network integrates technologies at different points to manage guest relations, he said. Touch points start with an automated parking garage programmed to interact with mobile apps. The apps provide ways for guests to pay digitally for parking and capture information to reward them for their shopping loyalty.

One app tracks purchases made by members of the center’s rewards program, and when members reach a certain amount, they receive free parking and other rewards, he said. Another app allows guests to make reservations and pay digitally for seasonal services like pictures with Santa or improving the guest experience by eliminating long waits in line, Gehringer said.

“San Diego developers and retailers are doing a great job at creating experiences that complement the SoCal lifestyle,” Bobb said.

Centers are going beyond shopping with programming that gives people a reason to visit often, she said.

Flower Hill Promenade in Del Mar, for example, has embraced a whimsical floral theme with a touch of the unexpected that runs throughout the project featuring landscaping, funky floral displays, art installations, unique pop-ups, and outdoor touches, such as a playground, corn hole and other family-friendly activities, she said.

“This experience-driven property is successful because it continues to transform and provides much more than just shopping, including fun activities like live music, flower arrangement demonstrations, yoga classes and more,” Bobb said.

“Flower Hill Promenade just wrapped up its ‘In Bloom’ event, which featured butterfly sanctuaries, engaging kid spaces and more than 100 events,” she said. “It was over the top, with something for everyone and very well received by the community.”

The Village at Pacific Highlands Ranch hosted Thursday Night Lights throughout June, Bobb said. The weekly event provided live entertainment, along with food and beverage and retail specials. This destination retail center, which provides a gathering place for residents at Pacific Highlands Ranch and the surrounding community, is hosting a summer concert on most Wednesday evenings throughout July and August.

Providing programming like the summer concert series offers families an entertaining evening out and also builds loyalty.

“What’s critical when hosting different events is to be true to your audience and the project’s personality,” Bobb said, noting both Flower Hill and The Village at Pacific Highlands Ranch are doing that.

Cordero said it is important to create a tangible experience unique to a store’s brand, like at off-price giant TJ Maxx, where experience is all about the treasure hunt for deals. For sporting goods or do-it-yourself home repair stores it could be about offering workshops or training classes that contribute to the store’s brand image and are related to the type of products sold.

With e-commerce, today’s consumers have an unlimited amount of choices, so no matter how convenient or unique the store experience, a brand’s goods still must be good, Cordero said. She said people will shop in-store for products and services that offer them a unique value proposition, whether that is through deep discounts or high quality.

Cordero said it is critical for retailers to invest in technology that saves them money or cuts costs to protect and grow retail profit margins over the next five years. For example, fast-food and fast-casual restaurants are leveraging technology to save on rising labor costs, providing digital kiosks and apps for ordering food. Panera has begun installing order kiosks in some of its restaurants.

San Diego’s minimum wage at $11.50 is higher than the state-mandated $10.50 and is putting considerable pressure on profit margins of local restaurants, Bobb said. The Harvest is a great example of a restaurant built out like a full-service restaurant, but customers order at a kiosk when they arrive and a table runner brings the food when it is ready, she said.

“They’ve perfected the speed and cut out the table service in a way the customer still has a great experience," Bobb said. “We’re seeing more and more concepts like this.”

Other technological innovations will provide better supply-chain management and inventory tracking, such as radio-frequency identification for merchandise tracking. This type of technology is key for retailers engaging in omnichannel marketing, Cordero said.

A key opportunity and challenge facing today’s retailers is harnessing the massive and growing amount of data available to help them enhance their business and operations. That entails examining data from various sources, including customer-loyalty programs, mobile phone tracking and online shopping patterns to better predict shopper behavior, Cordero said.

Investing in data such as customer profiles, demographics, store traffic conversion rates and social media metrics can help retailers make smarter, more strategic decisions, she said, but warned this information is useless without the right tools to store, access and analyze it.

“The retail market is in a state of disruption, but the change is good," Bobb said. "Experience is the core competitive advantage that physical retail stores have over online shopping. It is extremely important for brick-and-mortar players to emphasize why their goods are different from the rest, and if they truly are, consumers are excited to shop in-store.”