As buyer behavior changes and retail development evolves, the sector looks very different from how it did a few decades ago. The options for shoppers have evolved from an enclosed mall or neighborhood grocery center to include lifestyle centers, mixed-use projects, and omnichannel formats. These are reflections of changing consumer demand, and the way it's driving owners' and investors' decisions.
While retail development slowed dramatically after the 2008 financial crisis, new construction has begun to re-emerge in select markets as retailers push for modern formats and well-located space remains scarce.
That's according to SRS Real Estate Partners' Chris Maguire, CEO, and Garrett Colburn, president, whose perspectives come as the firm marks its 40th year advising retailers through multiple market cycles. And they note that as the market shifts, retailers are leaning on new concepts, data and flexibility to stay competitive.
Retail Footprints Adjust to New Operating Demands
How tenants use space is changing, with stores often serving multiple purposes that extend beyond traditional shopping, including pickup, delivery, and fulfillment.
More experience-driven concepts, including venues that blend food, entertainment, and rotating programming, keep customers returning beyond a traditional shopping trip.
"Retailers are thinking very differently about what's inside that box and how it serves the consumer," says Colburn. He points to Amazon's recent move to dedicate half, or even two-thirds, of some stores to fulfillment and e-commerce support.
That flexibility has become increasingly important as fewer customers rely solely on in-store visits. Additionally, technology and data play a more important role in decision-making.
Maguire explains that retailers are now combining internal sales data with broader consumer insights to figure out store size, format, and location. He believes that retail will likely remain location-driven, but retailers today are much smarter due to the large amount of resources and data available to them.
"Even with better analytics, retail remains fundamentally location-driven, with data helping retailers refine – not replace – core real estate decisions," he says.
Consumer Demand Guides Retail Expansion Plans
Looking ahead, both Maguire and Colburn point to the consumer as the clearest indicator of retail's direction. They explain that spending habits, overall economic growth, inflation, and interest rates influence demand and help determine exactly how much retail supply the market ultimately needs. Maguire also tracks the balance between online and in-store sales. He adds that the digitally native-to-physical retail shift is no longer a novelty, as more online-first brands increasingly view stores as essential to growth, customer acquisition, and returns. Despite the convenience of delivery, physical retail still accounts for the majority of transactions, reinforcing the ongoing role of brick-and-mortar locations.
"It's really easy to buy anything you want anytime online," says Maguire. "And yet the percentage of omnichannel or online shopping over the last decade hasn't really moved that much, and I think we're in the high teens, maybe 20%."
Colburn adds that firms across the industry continue to invest in AI and proprietary systems to better analyze markets and serve customers. "Everyone is focused on their version of what AI means for their business," says Colburn. "We've actually spent a lot of time, energy and capital building a system that's proprietary and specific to our business and our clients."
As the retail industry moves forward, responsiveness will become even more important, and retailers that innovate and use data creatively to stay closely connected to their customers' needs will remain well positioned for continued growth.
For more insights and thought leadership from SRS Real Estate Partners, click here.
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