Redevelopment Property management CCIM Feature

Brick-and-Mortar's Pathway

The shopping center is not doomed — if owners can adapt.

For the brick-and-mortar retail industry, success begins and ends with the ability to adapt to market changes. In recent years, retailers such as Amazon have completely disrupted how consumers make purchases by creating a one-stop shop, e-commerce channel. With consumers enjoying a convenient way to browse and buy from the comfort of their homes, brick-and-mortar retailers are at a crossroads, having to find new and unique ways of attracting consumers into their stores.  To survive, shopping centers must reinvent how they appeal to consumers by creating a distinctive experience that also caters to a demographic specific to the retailer's location.

One-of-a-Kind Experiences Are Key

As retail trends evolve, shopping center owners are rethinking how they operate. The concept of an anchor store is stale given the online options, but according to a recent report by Numerator, a surprising majority of Americans still prefer to buy from a physical store. To stay relevant, shopping centers need to offer different options and experiences that are unique to their properties.

But before property owners begin trying new tactics, they need to weigh the positives against the negatives. For example, bringing in pop-up shops seems lucrative at first blush - they fill empty space, offer new brands to shoppers, and provide rental income - but these types of tenants are unappealing to shopping center owners because of their instability, despite their appeal to the retailers. Pop-up tenants typically stay open for only a few months and pay a small percentage of sales to owners. These arrangements translate into very little rent for owners and no security in maintaining long-term tenants. From a consumer perspective, it appears that stores are opening and closing all the time - not a message that shopping centers want to send.

The future of the shopping center is only as prosperous as its ability to connect with buyers without disrupting the center's potential for long-term, profitable tenants. Shopping center success will be based largely on strategic partnerships that align a tenant's offerings with the interests of the consumer demographic. 

Shopping centers recently have morphed into community engagement spaces designed to meet the needs not only of millennials, but of consumers of all ages and demographics. The approach to the consumer experience is all-encompassing - meaning the shopping center also serves as a public forum with an appealing ambiance and attractions, such as an art gallery or movie theater.

This experiential approach aims to attract local businesses looking for innovative ways to engage with the community, whether that be a pet adoption event or a religious function. From beautiful landscaping and park-like atmospheres to engaging in-store offerings, retailers can shake up the brick-and-mortar experience to stay relevant through this transformational era. The ultimate goal is for a shopping center to secure its spot as the unofficial heart and soul of the community - a social sanctuary that cannot be replicated by online retailers.

Align With Consumer Demographics 

Owners should carefully tailor their selection of stores to an area's demographics. Successful shopping centers are very strategic in the ratio of retail and food tenants, in addition to making sure that each tenant offers something distinctive. Unique stores may draw a crowd from other market areas, as well, because consumers cannot find what they want in their local neighborhoods. Centers must identify tenants that add synergy and maintain the shopping center's standards.

Owners considering whether to capitalize on retail trends to grow their centers should know that these market developments don't always translate into success. Before pursuing the latest trends, centers should focus on tailoring their marketing and store offerings to the target audience. For example, if located in a middle-class, primarily family neighborhood, a high-end boutique tenant or a vegan restaurant might not be the best fit. The sustainability of shopping centers rests on taking strategic approaches to the types of shops, restaurants, and experiences they offer - not bold, risky moves that don't align with consumer interests. Bottom line: Don't try to be something you're not.

Treat the Shopping Center as a Business

Shopping center owners must learn the changing rules of the brick-and-mortar retail experience. The buyers' market is evolving, forcing owners to abandon a traditional belief system to achieve and measure success.

A comprehensive marketing strategy can help drive the success of shopping centers by focusing the attention of buyers on important and attractive changes, whether that be an upcoming event or the opening of a new store. Work closely with tenants to support their promotional efforts and leverage any marketing opportunities, increasing the chances of a return on investment.

Evolve the Blueprint

The common focus across all shopping centers should be on creating spaces that facilitate sales by recognizing, understanding, and connecting with the consumer in different ways. Successful shopping centers remain true to their original appeal as fun, safe places for a community to gather and enjoy experiences outside the home.

The demise of the traditional shopping center continues to be a part of the retail industry's narrative. But the reality is that many retailers are evolving successfully, and new approaches to shopping centers are receiving positive feedback from consumers. The brick-and-mortar concept is positioned to remain an important part of the retail ecosystem.

For more on this topic, check out CCIM Institute's "Construction: Management and Project Delivery Methods" course. 

Michael Koss

Michael Koss is CEO and chairman of Los Angeles-based Koss Real Estate Investments and owner/operator of  Malibu Country Mart in Malibu, California. Contact him at



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