As commercial real estate experts gear up for RECon 2012 in Las Vegas, Gary M. Ralston, CCIM, CPM, SIOR, a managing partner of Coldwell Banker Commercial Saunders Ralston Dantzler Realty LLC in Lakeland, Fla., looks at a top issue facing the retail industry: the Internet’s impact.
“Many analysts fail to appreciate that there is another dimension associated with conventional goods and services,” Ralston says. “These products take up space and thus distribution channels must have certain capacity. Walmart moves more cubic feet of merchandise than all of the home delivery services combined.” Ralston predicts that e-tailing, currently about 6 percent of non-automotive retail sales, will likely never double its current share of retail sales (excluding digitized products) in the U.S.
“The biggest impact is ‘showrooming’ (seeing the product in the store and then ordering online) and price comparison,” he says. “Using your mobile device to check the price of a product while standing in the store will force retailers to price match, resulting in meaningful margin pressure.” With lower sales volume, many retailers will likely seek lower occupancy costs, he adds.
On the other hand, technology is also helping retailers to better manage inventory and maximize sales productivity. “I expect this to translate into higher sales per square foot, which may help to offset some of the margin pressure on rents,” Ralston says. “There is a somewhat negative implication for landlords: many retailers will do more business in less space, seeking to downsize and even to reduce the footprint of their current stores.”
CCIM Tools in Action
As part of the 2012 RECon Academy professional development series, Ralston will lead “Quantifying Market, Site, and Financial Feasibility” on May 21. The course will demonstrate the most current CCIM market analysis tools for retail properties and the CCIM methodology for defining a market area, estimating sales potential, measuring supply, quantifying the gap, and using market feasibility tools to identify desired tenants. Go to www.icsc.org for more information.