Is Your Portfolio Prepared for Omnichannel Retail? 5 questions you need to answer when evaluating property.
It’s a given. Omnichannel is the future of retail. The big question is, is your portfolio ready?
This year, more than ever, saw consumers omnichanneling by buying online and picking up in-store. Over the Thanksgiving Day holiday shopping weekend, multichannelel shoppers demonstrated their value by outspending the single-channel shopper by up to $93 on average, according to the NRF.
Recent reports indicate that while there’s been a lot of noise about the death of the brick and mortar store, 87% of all consumer retail spending in the U.S. still occurs in stores. This is good news for brick and mortar, and astute investors will want to look a little deeper to understand the trend and how it will impact retailing across the board.
While in-store and offline commerce still dominates, digital plays an important role in the consumer’s decision making process. A recent report by BigCommerce showed that when asked about their shopping behaviors prior to making a purchase in a physical retail store, 39% of digital consumers visited a brand’s website, 36% read customer reviews, 33% attempted to price match the product online, with 32% finding the brand on Amazon. More importantly for the retail operator, developer, and landlord is that consumers are expecting a seamless experience across all channels, from mobile to laptop to tablet to in-store.
Operators taking the omnichanneling trend seriously will have to accommodate for the fact that buildings need to perform multiple functions, accommodate for lines specifically for customers who ordered online and are picking up in store, and offer curbside pickup.
Investors need to look beyond the traditional requirements and consider if the buildings they are investing in will able to support the needs of the growing omnichanneling consumer.
Questions to ask as you evaluate new commercial properties for expansion or acquisition:
- Who is the tenant’s target consumer?
- How active is the existing tenant online and is their customer base expecting omnichanneling functionality on the physical site now or in the future?
- How will this structure accommodate omnichanneling?
- Is this location strategically located to optimize opportunity for today and in the next 5 years?
- How will I serve the omnichanneling consumer from location?
To effectively answer these questions, the data you need today is far deeper than before. While evaluating credit risk is essential, evaluating a tenant’s online and digital profile will become increasingly important.
Here’s a sample of retailers and their digital followers.
Nike and Apple have been actively working on their in-store experiences to bring in their digitally-native audience while Walmart, Target, and Kohl’s have been actively working on their omnichanneling capabilities. With their comparatively smaller digital presence and less digitally-friendly consumer base, Dollar Tree and Dollar General have focused on their in-store strategies and are in the early stages of the omnichanneling trend.
Mitigate your downside and maximize your opportunities. Find out how prepared your portfolio is for the omnichanneling trend, contact us for a consultation at:
Matthew May, President Richard Huelsman, Managing Director