NEW YORK CITY—With the International Council of Shopping Centers (ICSC) New York Deal Making conference starting on Dec. 5, amidst the holiday season, the CRE buzz is—what's next for retail?

“The days of the snooty salespeople with attitude is over,” says Jedd Nero, principal and executive managing director at Avison Young, in a GlobeSt.com interview. Today retailers need to be at the top of their game. “It's all about the customer,” he adds.

The woes of retail have been highly documented in the news. On April 10, The Atlantic article “What in the World Is Causing the Retail Meltdown of 2017?” points to nine retail bankruptcies that occurred this year. It recaps how J.C. Penney, RadioShack, Macy's, and Sears each closed more than 100 stores.

Nero further points to the Sept. bankruptcy of Toys R Us as just the beginning of what's happening in the landscape of international and national retailers. “Toys R Us was $5 billion in debt,” says Nero. “They had declining sales. They had bad customer service. They paid no attention to e-commerce. Their experience was nothing.”

Those ignoring the impacts of Amazon and internet sales, or shops remaining paralyzed in traditional sales models represent a wider brick-and-mortar problem. But retailers who took the reins from the non-working modes of operations will not only survive but thrive, says Nero.

Store closings have resulted in greater supply than demand of retail property, which created opportunity for food tenants. Landlords previously unwilling to accept food use with cooking needed to fill space, so turned a corner. The phrase became, “If you can vent it, you can rent it,” according to Nero, and food became “the number one use group of deals in New York in 2017 by a long shot.”

However, the food industry is tough. Nero says he gives food operators a tremendous amount of respect and credit because renting space and the cost of running a business in Manhattan is extremely expensive. He observes food is a 24/7 job, which demands love, passion and commitment due to the heightened density of competition.

“If a restaurant doesn't make it in the first three years, they're out,” says Nero. He sees changes on the horizon because today's consumers have higher expectations. That includes for restaurants and food halls.

Nero recalls the days when the Riese brothers spawned the food courts of convenience food. “You had a Friday's and a Pizza Hut, a Dunkin Donuts, and they just piled them all together. That's all we had back then.”

International and national chains can afford the rent and offer the credit that landlords seek. Thus, as tenants, chain stores including fast food can pay market rent and add credit to the landlord's balance sheet with a financeable lease. ”You get a big tenant with a corporate signature, the landlord can walk that lease into a bank and finance off of it,” explains Nero.

However, he advises CRE professionals to keep an eye on the entrepreneurial creativity in food retail due to the ongoing explosion of activity in the sector.

In addition to the larger role of food, Nero predicts intensified use of artificial intelligence, machine learning, deep learning and algorithms in retail.

Google and Facebook already know your name, gender, date of birth, cell phone number, what you search, and what websites you visit. They know when you turn on and off your computer, what games you like, where you eat, where you work, and how you live. Nero acknowledges consumers forsake a lot of privacy and in return receive more streamlined marketing.

Artificial intelligence, which has been around for decades, uses computers to perform tasks previously requiring human intelligence. This includes visual perception, speech recognition and decision making. Machine learning focuses on computers improving their own performance over time with the retrieval and use of information.

Deep learning goes one step even further. These systems ingest vast quantities of data and generate categories related to that data, then produce generalizations. Nero says, as one example, one system has learned to distinguish people's sexual preferences, which could allow for more targeted marketing.

“Creepy or cool?” asks Nero.”There are a lot of cool things. But there are a lot of creepy things out there, too.” He predicts in five to 20 years, marketing will further use technology that the general public cannot even begin to imagine today.

He also describes some less creepy specifics of technology already in use. Augmented reality takes virtual reality one step further, by overlaying the digital world on top of the real world. This allows customers to see different things within their own premises.

For example, Lowe's and IKEA have apps where people can take a picture of a piece of furniture and place it in an image of their room at home to see what it will look like. Nero says this is just scratching the surface of technology in retail marketing.

Nero's interview concluded with his mentioning two significant retail leases: Levi's will move to a larger space at 1535 Broadway in Times Square at the end of 2018. Vans skatewear plans to open a shop at 530 Fifth Ave. in Oct. 2018. Retail watchers will be curious to see what these stores will bring to their new locations, in experiential retail and shopper services technology.

NEW YORK CITY—With the International Council of Shopping Centers (ICSC) New York Deal Making conference starting on Dec. 5, amidst the holiday season, the CRE buzz is—what's next for retail?

However, he advises CRE professionals to keep an eye on the entrepreneurial creativity in food retail due to the ongoing explosion of activity in the sector.

In addition to the larger role of food, Nero predicts intensified use of artificial intelligence, machine learning, deep learning and algorithms in retail.

Instant Insights /

ICSC Preview: The Future Is Food Retail and Technology

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