LOS ANGELES—Although online retail is growing year over year, certain retail types are thriving in brick-and-mortar retail properties, according to a panel of retail experts at RealShare Los Angeles yesterday. Moderated by Bob Sykes, partner at Cox, Castle and Nicholson, the panel included Steve Jaffe, EVP at BH Properties, Jackie Levy, EVP at Caruso Affiliated and Don MacLellan, senior managing partner at Faris Lee Investments.

For Levy and MacLellan, experiential retail was key to the success of brick-and-mortar retailers. Levy, whose company Caruso Affiliated owns the Grove in L.A. and the Americana at Brand in Glendale, explained the importance of creating an atmosphere environment where people want to go and spend time. Caruso lives by the experience model—their shopping centers have high-end retail shops, quality restaurants and landscaping that create a unique experience that online retailers simply cannot match. MacLellan agreed, pointing to what he deemed “transitional luxury” shops, like J. Crew and Michael Kors, which tend to do very well at providing an in-store experience.

However, retail success isn't limited to experiential retail. The panel noted that gyms and grocers tend to do really well. Sykes pointed out that although there are online grocery delivery platforms, none have been able to really replace grocery-store shopping, due to delivery speeds and costs. Gyms were another stand out for brick-and-mortar retail properties, and they have a huge spectrum. Take for example the Equinox brand of gyms, which are constantly expanding. The brand is able to charge a premium for the high-standard of services they offer, which range from personal training services to spa treatments and laundry. “People will pay for that level of service,” said Levy. MacLellan, on the other hand, noted the Planet Fitness brand of gyms, one that is also expanding. Planet Fitness has low, $10 to $20 per month memberships, but offer no amenities at all other than gym equipment.

Jaffe with BH Properties, a company that focuses on strip malls, said that for high-income demographics, experience is key; however, BH Properties's finds the most success in service-driven retail, like dry cleaners and grocery stores, as well as bargain retail, like Ross. In strip malls, these are the property types that he sees preforming the strongest.

Jaffe also noted the success retailers can have creating an online presence for a portion of their business. He used the example of a Good Will in Florida that sells books and DVDs online at a higher price point than they could in-store. “Good Will saw that customers reselling Good Will's products online at a higher price,” said Jaffe. “They decided to capitalize on that business.”

Caruso Affiliated CEO Rick Caruso also made an appearance at RealShare, talking about the path to success and encouraging people to break a few rules along the way.

Instant Insights /

Gyms and Grocery Thrive in Brick & Mortar Retail

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