By 2030, the retail experience will be totally different than it is today. According to research from CBRE’s Future of Retail, 2030 series, tailored customer experiences and seamless integration of online and brick-and-mortar will be pillars of the retail experience by the year 2030. The report outlines several emerging trends, including a proclivity toward pop-up-style retail shops, individualized customer experiences, store automation and a decline in car ownership. To find out more about the changing customer experience and how omni-channel is affecting retail business strategy, we sat down with Melina Cordero, head of retail research for the Americas at CBRE, for an exclusive interview. Here, she gives us some insight into the CBRE research and how retailers are preparing for the future.
GlobeSt.com: How will the customer experience change by 2030?
Melina Cordero: Customer experience is more important than ever before. As we have gotten used to the Internet and we have more choices and more variety than ever before, what we have grown to expect online, we are taking into the store. That puts a tremendous amount of pressure on retailers to meet those expectations. I always refer to us as a high-maintenance consumer, and that isn’t going to change anytime soon. If anything, it is going to get more intense. Retailers have to cater to that. One of the main points of higher expectations is in surprise and new and different. There is an element of surprise of new demands because we have gotten used to the Internet where everything changes every minute, and we don’t want to walk into the same old boring store. In order to drive people in to a retail space, you need to offer something different. That is something that a retailer like TJ Maxx has done well in its treasure hunt and constant-rotating-of-stock approach.
GlobeSt.com: Which retailers are having to adapt the most to the changing customer experience?
Cordero: This especially applies to large retailers, which have a copy-paste model where everything is the same and you rotate merchandise every few months. Pop-ups give retailers an opportunity to offer something new and different and to experiment with new store formats and new product lines. For the big stores, it is a chance to experiment with new products and test new markets before committing to a long-term lease. Pop-ups can also be really popular for smaller up-start brands that can’t commit to a long-term lease. A pop-up gives them entry points into a market and to customers.
GlobeSt.com: Omni-channel retailers are clearly leading market. Are you now seeing retail landlords encouraging retail tenants to adopt an omni-channel experience?
Cordero: That is another really important point of change that we are seeing in omni-channel. The landlord has to play a much more active role in both generating traffic and in working with the retailers. There is recognition that retailers and landlords need to partner more as opposed to have a more traditional tenant-landlord relationship. They are partnering on data initiatives. A simple example is that a landlord is looking to install technologies or creating mobile apps that can assemble retailers or connect consumers to different stores, and digitally create a partnership that together drives sales at the properties. We see landlords investing more in retailers. Landlords need to be more active in trying to generate traffic and reach out to consumers digitally. One of the ways that you see that is in the social media marketing efforts.
GlobeSt.com: How are retailers implementing successful omni-channel strategies?
Cordero: We are all in this world of omni-channel retail, and no one knows the perfect solution. The best way to figure it out is through experimentation. Omni-channel is very expensive. Retailers have this new higher cost and an uncertain future, and the solution at the moment is experimenting. Pop-ups have become a way to collect data on the consumer. This can help inform a retailer’s long-term strategy, and the most savvy and smartest retailers are leveraging pop-ups to collect data.
GlobeSt.com: What technologies should retailers invest in today to prepare for the future of retail?
Cordero: It is hard to say exactly what is going to happen with certain technologies and where you should invest. That is the challenge that the entire industry is facing. Fundamentally, any time you have a period of change and transition like we are going through now with omni-channel, there are always winners and losers We will see retailers fail to keep up and we will see retailers that fill in the gap and adapt really well.
GlobeSt.com: How are retailers signing leases today while preparing for a vastly different retail environment in the next five to 10 years?
Cordero: We are clearly seeing that leases that are signed now are integrating a lot more flexible options and early termination clauses. A lot more flexibility is being built into leases today. That really answers the question of what happens in five years if retail is completely different. The landlord, in many cases, will almost always compromise with a tenant than lose it.