5 Key Trends Shaping the Future of Retail Real Estate
As we navigate a rapidly changing world, the retail industry consistently showcases its impressive resilience and capacity for innovation. Despite the challenges posed by a global pandemic and shifting market dynamics, the industry’s emphasis on an experiential economy continues to captivate consumer interest.
During our recent webcast, The Pulse of Global Retail: Navigating Key Leasing Trends Cushman & Wakefield’s experts came together to examine what is driving the retail industry—from international brand expansion to experiential concepts—and how that is manifesting around the world.
KEY TRENDS
1- Consumer Behavior and Economic Forces Transform Retail
During the webcast, Rebecca Rockey, Deputy Chief Economist & Global Head of Forecasting, highlights the interplay between consumer behavior and economic growth. The session also explores the experience economy, which includes the retail, hospitality and leisure sectors. As consumers increasingly prioritize experiences, they create demand for innovative real estate concepts. Retailers that align with this shift can unlock new avenues for growth and success.
2-The In-Store Experience Remains Crucial
Brands know the best experience is the in-store experience. To engage consumers, landlords and brands are collaborating to develop experiential components that captivate shoppers. Retailers are elevating the in-store experience by designing immersive environments, enhancing store layouts to promote exploration, offering personalized services based on customer data, and integrating technology like augmented reality.
3- Data and Analytics Lead Retail Expansion Strategies
In today’s competitive retail landscape, data and analytics are critical for guiding brands as they expand into new markets. Retailers leverage insights from consumer demographics, traffic patterns, and competitive analyses to pinpoint optimal store locations. As Barrie Scardina, President of Americas Retail Services, noted, “New market entry and expansion today is really grounded in data and analytics to mitigate risk and ensure that the new store results are optimized.”
4- Retailers Invest in Flagship Ownership
A notable trend among retailers is the increasing acquisition of flagship locations, particularly in the luxury sector. As Robert Travers, Head of EMEA Retail, stated, “There is no real estate sector that is as location sensitive as luxury. So, it makes a lot of sense to take control and own your flagship locations.” Owning prime real estate solidifies brands’ presence in competitive areas with rising rental rates. This strategy is also gaining traction among mass-market retailers, enabling them to enhance market presence and invest confidently in store designs without the uncertainties of lease renewals.
5- Evolving Retail Formats Respond to Regional Preferences
As international brands expand into new markets, specific retail formats are thriving. In Korea, shopping centers are increasingly popular due to their weather resistance, allowing for year-round foot traffic. Glenn Yang, Head of Cross-Border Retail in Korea, noted that these indoor malls offer favorable financial terms, making them a cost-effective option for retailers. In the U.S., outdoor shopping centers have gained traction, experiencing a rebound in foot traffic since the pandemic. This trend underscores the importance of strategic partnerships between brands and real estate owners to secure prime locations that enhance customer experiences.
As the retail landscape continues to evolve, both retailers and investors must stay attuned to these emerging trends to navigate the complexities of the market effectively. Retailers are encouraged to embrace innovative strategies, leveraging data-driven insights and investing in compelling in-store experiences that resonate with consumers. Meanwhile, investors should focus on identifying prime locations and partnering with brands that align with the shifting consumer preferences. By collaborating and sharing insights, both parties can capitalize on new opportunities, foster resilience, and contribute to the sustained growth of the retail sector in an increasingly competitive environment.
Publication Date: 21/10/2024
Updated Date: 04/02/2025
This report is prepared by Cushman & Wakefield. To access the original source, please visit The Pulse of Global Retail: Navigating Key Leasing Trends
