Take-Aways from the ICSC New York Deal-Making Conference

At the beginning of December, I had the pleasure of attending the International Council of Shopping Center’s (ICSC) New York Deal Making conference, the largest retail real estate event on the East Coast. Focusing specifically on topics and trends influencing retail real estate, thousands of industry leaders gathered together for three days of networking, deal-making, and professional development. Attendees had the opportunity to participate in panel discussions, meet over 500 exhibitors, and sit in on keynote presentations from the best of the best in the business. Take a look at my top takeaways from this year’s conference.

Tenant mixes cater to the millennial consumer

A major takeaway from the conference revolves around the scope of tenants that landlords are currently focusing on. Most recently, landlords have been honing in on retailers that cater to millennials’ needs such as fitness, grocery, and entertainment, and integrating them into their shopping centers. Landlords are looking to emphasize convenience at their centers so younger consumers can experience the ease of one-stop-shopping. This can be easily achieved with the right mix of tenants.

For example, the growth of fitness tenants in shopping centers was talked about at length. In fact, Jeffrey Weinhaus, the president and chief development officer at Equinox, a luxury fitness club, discussed how millennials are a health-conscious consumer. Relative to fitness, they are not just working out to check the box, but are setting longer-term goals of sustaining healthy lifestyles to promote longevity. Weinhaus reports that at Equinox, millennials are spending a premium on membership fees because they want the most well-rounded workout experience. Metro Commercial has seen success at Life Time Athletic as it offers the full package including fitness classes, state-of-the-art workout equipment, spas, and cafes. Looking ahead, those fitness tenants that offer customers the full package at a great value are the ones that will come out on top.

The importance of having tenants that offer entertainment was another focus at ICSC’s New York Deal Making conference. Landlords are placing greater emphasis on cinema and bowling concepts because they draw customers in and give them a reason to stay. At Metro Commercial we have seen entertainment providers such as Dave & Busters and Urban Air perform well at shopping centers. This category is quickly gaining traction and becoming as essential as fitness and grocery.

“Clicks to bricks” comes to life

“Clicks to bricks” was also a hot topic at the conference. Retailers are now understanding they need to have both an online and physical presence in order to thrive in today’s retail environment. As a result, more and more online retailers are setting up a physical storefront.

During the conference, we noticed that many microbrands, or retailers that focus solely on one article of clothing or accessory, are expanding into physical stores. Brands such as Allbirds and Warby Parker, who have been successful online, are now opening up stores in major cities. UNTUCKit, the popular tailored t-shirt retailer, is set to expand from 25 stores in 2017 to 100 in 2022. This further solidifies the success of the “clicks to bricks” movement for native online retailers.

Keynote speaker Doug Stevens on challenges for today’s retailers

Doug Stevens, a retail industry futurist and founder of Retail Prophet, dished out insights on the challenges retailers face today in his keynote presentation. First and foremost, traditional online retailers need to get their goods to consumers even quicker. With two-day shipping and in-store pickup options, consumers are accustomed to receiving their purchases in a short time frame, and they’ll continue to expect speed and convenience. To meet this demand, Amazon Lockers are being installed in cities to not only streamline the delivery service but also create a physical presence.

Stevens also discussed how the way we define “store” is constantly evolving. Conventional stores were once the only place shoppers went to pick up their necessities and browse products. Now, with the internet, customers can achieve this with the click of a button. The purpose of a store is to distribute experiences, not just goods. Still, an omnichannel approach for online and brick-and-mortar retailers is key. Stevens mentioned that over half of e-commerce retailers that participate in multi-channel selling are more successful than ones that participate in either online or in-store only.

Looking towards 2019

From a macro perspective, I think that physical retail will persist in 2019, however, as stated in Stevens’s presentation, the way in which stores are used will continue to change. I predict that emerging retailers will continue to leverage advertising on social media, and e-commerce to grow their brand because it offers a lower barrier to entry than the traditional format. I then foresee these microbrands establishing a physical store for their brand to better engage with their customers.

All in all, this year’s ICSC’s New York Deal Making conference shed a positive light on where retail has been and where it’s headed in 2019. By catering to the younger consumer and welcoming online retailers into the brick-and-mortar realm, it’s safe to say physical retail is not going anywhere anytime soon, it’s simply diversifying with the times.

by Alessandro Randazzo

Copyright 2019 Metro Commercial Real Estate, LLC