SAN DIEGO—Understanding how end users relate to what you have to offer has become more important for retailers, owners and developers than mere demographics, said ICSC chairman Robert Welanetz, global retail real estate advisor for the Blackstone Group, during his “Outlook for Retail Real Estate” presentation at ICSC's Western Division Conference yesterday. Welanetz said there has been a “shift from demographics to psychographics” as bricks-and-mortar shops become more experiential in nature.

Welanetz said the shift began with the recession, which dramatically impacted not only the US economy but other world markets as well. This pointed up the interdependency of the world economy, and now the “balance of international investment is shifting away from the US and into Eastern markets.”

He noted that development has been slow to recover, but this is not necessarily a bad thing. “The slowdown on reckless development is a good thing.” Also, the “acute urbanization” that is going on around the world as Millennials are moving back into the urban cores has caused retail experts to study not just the age and income of consumers, but how they think, how they live and what they want out of the retail experience.

Welanetz also spoke of new retail concepts from around the world, including a grocery store/restaurant in Sydney, Australia, that combines a farm look with live farm animals, and a bank in another foreign city whose interior resembles an Apple store. “What Apple has accomplished—there's no better example of what we're talking about. You never question what brand is in that store. Keep an eye on Apple.”

Internet sales have disintermediated catalog sales in the US, Welanetz also said. While catalogs typically get between 6% and 8% of all retail sales, now that number is approaching 14% thanks to the Internet. “Experts see omni-channel retail as a 1+1=3 concept. The customer who participates in both channels is 150% more valuable than the customer who shops either one.”

Lastly, Welanetz spoke of the warehousing and showrooming of distribution centers and said they will start to converge on how retailers use their physical space. He predicted that distribution centers will begin to show up in and around retail centers to make it easier and faster for customers to pick up the merchandise they want—another example of how online and bricks-and-mortar sales and work in tandem. “We have to look for harmony and balance,” he concluded.