COSTA MESA, CA—Retailers are shaking things up for Thanksgiving and the holiday season. According to Matthews Real Estate Investment Services, an increasing number of retailers, from Neiman Marcus to TJ Maxx, are announcing they will shutter their stores on Thanksgiving—minimizing Black Friday sales—and Target and Barney's rolling out limited-edition “capsule” collections attempting to capitalize on “drop” culture, the holiday shopping season is looming large in the minds of CRE investors. We spoke with Matthews' EVP and national director of shopping-center business El Warner about whether the holidays—once seen as the saving grace of shopping centers—will provide a much-needed booster shot to an industry that is down over 40%, as well as what might draw shoppers and investors back to brick-and-mortar stores and how the Whole Foods buyout will change the grocery sector.

GlobeSt.com: Given some of the tricks retailers have up their sleeves for the holiday season, how will brick-and-mortar stores compete?

Warner: Brick-and-mortar retail locations will continue to attract customers this upcoming holiday season by offering unique, not-found-online merchandise and best price guarantees. Extra incentives like complimentary gift wrapping and overall great customer service will also help them fare well over online competitors.

GlobeSt.com: How will shopping centers fare through the end of the year and into 2018?

Warner: Shopping-center leasing fundamentals have been strong and will continue to be strong through 2017 and into early 2018. Investment-sale velocity has slowed to a more normal rate, but as cap rates start to increase based on adjusting seller expectations, I expect velocity to remain relatively stable. Overall, shopping centers in markets like Southern California are still an attractive investment due to location and the strength of the area's market. Retail centers have a low site coverage, and land in California is valuable, so these assets will remain in demand long term.

GlobeSt.com: What will draw shoppers, and furthermore investors, back to brick and mortar?

Warner: Service and value. Retailers need to retool. As an example, Best Buy will price match anything online and customers will come into the store to understand the product prior to purchase, creating value to brick-and-mortar locations.

Retailers will focus on exclusivity, innovation, and value to get customers into stores. Retailers like Zara and H&M will continue to update merchandise every three months to provide new products that consumers cannot get online.

GlobeSt.com: What does the Whole Foods buyout change, in your opinion?

Warner: It is too early to tell, but I don't believe it will change everything. The biggest change, in my opinion, is that the Amazon acquisition of Whole Foods is reinforcing retailers' needs to have a physical footprint. As Amazon works to pioneer a strategy that provides consumers with a seamless and interactive transaction experience, the perception of what constitutes an anchor is changing. An anchor is no longer necessarily viewed as the largest-square-foot tenant. As a result, many retailers are right-sizing, making way for food, beverage, entertainment and wellness tenants to become the new must-have anchors.

GlobeSt.com: What can struggling centers learn from Southern California's shopping-scene revolution?

Warner: Creating an experience for shoppers based on value, exclusivity, and innovation will offset potential long-term challenges. Landlords and investors need to go back to the basics of understanding the type of retailer that attracts customers versus just signing the highest-rent lease to pad the bottom line. New development should consider different parking allocations and size of units to be able to change strategies along with the changing of the consumer and tenant requirements.

GlobeSt.com: Given some of the tricks retailers have up their sleeves for the holiday season, how will brick-and-mortar stores compete?

GlobeSt.com: How will shopping centers fare through the end of the year and into 2018?

GlobeSt.com: What will draw shoppers, and furthermore investors, back to brick and mortar?

GlobeSt.com: What does the Whole Foods buyout change, in your opinion?

GlobeSt.com: What can struggling centers learn from Southern California's shopping-scene revolution?

Instant Insights /

Will the Holidays Save Brick and Mortar?

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