Reimagining The Future Of Retail: Study Shows In-Person Shopping Is Here To Stay

The pandemic drastically accelerated the shift from in-person shopping to e-commerce as people turned to the internet to buy even the most basic necessities. But while it seemed as though the retail storefront would soon be eclipsed by online delivery services, brick-and-mortar is far from dead.

In fact, Moody’s Analytics has evidence that the events of the past two years have actually inspired a new wave of brick-and-mortar retail. In a study published in Q4 2021, the financial research firm found that “a new set of stores is opening with different objectives and a different product offering.”

Ermengarde Jabir, an economist with Moody’s Analytics, said that during the early days of the pandemic, due to the restrictions on in-person shopping, many people assumed that most storefronts would soon be obsolete. However, she noted, the study indicated this was not the case.

“There have been so many store openings since the onset of the pandemic, certainly more than we anticipated,” Jabir said. “Perhaps the most interesting part is that the type of openings changed as did the factors that influenced those openings.”

Jabir said many people prefer to see a product in-person, and that even if they ultimately make the purchase from their phones, having a physical location where they can interact with the items creates a sense of experience that consumers still crave. Warby Parker, for example, has been expanding its presence during the pandemic so that people can go in and try on glasses before buying them.

“Customers want to go into a store to try on clothes for size or sample beauty products, which is very different from just ordering blindly online and not necessarily knowing if the products ordered are a good fit,” Jabir said. “Also, e-commerce’s share of retail sales have consistently declined quarter after quarter since peaking in the second quarter of 2020 at 15.7%.”

Jabir said the types of retail that have seen the greatest number of openings throughout the pandemic include wireless and telecommunications carriers and convenience stores, whether freestanding or linked to gas stations, making up approximately 7% and 9% of new stores, respectively. Limited-service restaurants such as Domino’s and Chipotle also made gains. The study showed these restaurants accounted for about 13% of emerging businesses, which Jabir attributed to a rise in fast-food takeout orders. 

“Limited-service restaurants were definitely an openings leader, but full-service restaurants also featured quite heavily in openings,” Jabir said. “The latter is likely more due to the fact that so many restaurants closed at the beginning of the pandemic, so there was space in the market for them to reopen.”

Jabir said that having a quality retail center is about bringing in the right mix of tenants and re-evaluating what makes a location more attractive for customers. This may include bringing in a nontraditional tenant, such as a medical office.

“Having the right tenant mix can attract a critical mass that keeps foot traffic flowing well, which leads to sales and keeps the retail center thriving,” Jabir said.

She added that having a diverse array of tenants can also attract more prospective businesses into the space. Landlords would likely have a good stream of income, which they can then use to keep the property updated, a key feature in attracting repeat customers. 

Jabir said that as long as people continue to go to stores, retail spaces are likely to not only be around for the long haul, but will also continue to thrive if they are positioned well, not only in terms of location, but in quality as well.

“While it seems that e-commerce is reverting back to its original growth path, it will continue to grow, not only over the next decade, but beyond that,” Jabir said. “Nonetheless, there is still very much an appetite among consumers for brick-and-mortar shopping.” 

This article was produced in collaboration between Studio B and Moody's Analytics. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.