Convenience will continue to be a major driver for the consumer, says Smith.

LAS VEGAS—With all the talk about e-commerce and the shifts it has caused in the marketplace, recently chatted with Gary Smith, SVP of asset management at Passco Cos., on the subject to get his thoughts. How is e-commerce creating significant shifts in the retail marketplace and how are you seeing brick-and-mortar retailers respond to stay competitive?

Gary Smith: E-commerce is changing the way we shop. Some large box retailers are beginning to shift to smaller formats, essentially utilizing their brick-and-mortar stores as showcases for their products. Retailers are aware that consumers are using their stores to inspect merchandise, and then utilizing the internet to compare prices. Can you drill down more on these smaller formats? Are they cutting inventory or showroom space?

Smith: With the smaller formats, retailers are not cutting down on their showroom space but instead, are reducing the amount of inventory they keep on hand. Successful brick-and mortar retailers have embraced technology, instead of trying to combat it.

Tell me more about technology and mobile apps. Are you seeing the successful retailers use more of those tools?

Smith: By using online price matching and mobile apps, as well as allowing customers to make in-store purchases and having the items shipped directly to the customer, brick-and-mortar retailers have been able to reduce their operating costs and remain competitive. Some of the most successful online retailers are in fact brick-and-mortar retailers, including Walmart, Target, Nordstrom and Macy’s. These retailers provide customers with what they want in today’s consumer market—the ability to shop in the privacy of their own home, and yet, still be able to walk into a physical location and make returns/exchanges without having to go through the hassle of shipping items back. In many cases, consumers can go online, look for a specific product and see which of their local retailers have it in stock, even narrowing it down to size and color. Thus, they eliminate the need to call multiple locations or drive all over town. With all the surge of e-commerce, do you think brick-and-mortar retailers will continue to flourish? What kinds of retailers will survive?

Smith: Even with the surge of e-commerce, there will continue to be certain types of brick-and-mortar retailers and shopping centers that will continue to thrive. These retailers include luxury service providers, those offering unique services, grocery-anchored centers, discount and value oriented retailers, and entertainment centers. One area that online retailers haven’t been able to penetrate is the food and entertainment sectors. What will be a continuing driver for the consumer going forward?

Smith: Convenience will continue to be a major driver for the consumer. This is why you are seeing traditional soft goods retailers such as Walmart and Target incorporate grocery stores within their existing footprints. The thought being, if you can attract the consumer to your store by offering discounted grocery items, they are more apt to buy other soft good items in that same trip. This creates an added convenience factor since they are already at the physical location; making it easy to purchase other goods that they might have purchased online otherwise.