Excuse me while I step outside of my normal role in this space of focusing solely on the net lease market. Because there is a dynamic impacting all of retail—the general market as well as net leased retail—that needs to be addressed, namely, the myth of a retail apocalypse.
We have heard for years now about the death of brick-and-mortar retail at the hands—or is that the thumbs—of e-commerce. Indeed, according to Business Insider, some 1700 stores are expected to shutter this year. A short list would include Pier 1, which expects to close 450 units; the Gap, which will click off the lights in 230 stores; ditto Chico’s, at 200 of its properties; and Forever 21, which will close 178 stores. This data was also brought out in a recent webinar conducted by the Institute of Real Estate Management on Trends for 2020.
Certainly, the consumer press salivates over such headlines, in the grand old if-it-bleeds-it-leads tradition, and simplistically pointing to our home shopping as the driver. Happily, the business press, GlobeSt.com included, takes a more nuanced view. There are underlying reasons for the ongoing trend of store closures, and yes, while e-commerce has a hand in it, the reasonable response to this apparently dire news would be to ask the follow-up question: Why?
If people are shopping differently today, and they are, it is not to the exclusion of brick-and-mortar venues, but rather to those brands that have not been able to think in an omnichannel strategy of bricks-and-clicks working together. It is to the exclusion of formats that are simply old and tired, and never forget the devastating impact of simple, old school poor management.
If online shopping was killing traditional retail, why then are the likes of the Home Depot and Macy’s—that’s right, Macy’s—typically counted among the nation’s top 10 internet retailers? Because they have jumped that hurdle of how to marry the two shopping trends. (Macy’s is shuttering stores that are non-performing, putting its capital into more robust omnichannel strategies.)
Smart owners are getting into the game as well, and they’re ramping up the immersive experience that shopping can be, extending the definition of shopping by folding in restaurants and other amenities, from Instagram walls to trampoline parks. The American mall is not dead. It is being redefined, as is all of retail, net lease tenants included. Times of redefinition are also times of great upheaval, and the announcements of store closures are but the tip of that transitional iceberg.
And so, the next time you read a headline blaring the closure of this or that iconic brand, take a breath. Step back. And ask: “Why?”