Shopping centers and malls are diversifying and getting creative to maintain high foot traffic. The days of legacy tenants such as Bed Bath & Beyond, Filene’s Basement, Modell’s and Party City are long gone. Instead, experiential businesses have taken their place, according to a report by CoStar News.
While experiential businesses have often been associated with nail and hair salons and restaurants, the type of retailers now occupying U.S. shopping centers has diversified to cover any operation that requires an in-person visit. CoStar reports those businesses now include pet groomers and doggy day care spaces, golf simulator clubs and even an IV drip center, all of which ply their trade alongside fast food and grocery stores like Jersey Mike’s, Panda Express and Whole Foods.
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A More Agile Retail Environment
The growing trend in experiential retail centers around wellness, healthcare, fitness, recreational sports, pets, and kids. According to Forbes, at the start of the year, CoStar data showed successful retail centers were able to pivot to embrace new shopping trends. This meant smaller store sizes, experiential retail, and stores that catered to their geographic location, using data to inform site selection.
“There’s a shift to smaller in general – smaller formats, shorter leases, more agile environments,” Melissa Gonzalez, principal at MG2, told Forbes. “What is the point of the store? It’s not about inventory now, especially as consumers are getting more and more comfortable shopping online. We’re reevaluating the point of the store and how much of it needs to be about inventory per square foot versus experience per square foot."
Fitness brands such as Lululemon LULU now include fitness classes and wellness areas in their stores, Forbes reports. Outdoor shoe brand Sorel’s Williamsburg, Brooklyn pop store offered customers an augmented reality experience in which they interacted with different weather conditions.
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A Covid Seachange
The COVID-19 pandemic turned the retail industry on its head. E-commerce shuttered conventional stores, and vacant spaces were filled with stores that fostered the new reality of the American consumer after the traumatizing effects of the pandemic — a greater focus on health and wellness and a place to get the pets homeowners had acquired during lockdown treated and then looked after when hybrid work conditions were imposed, CoStar reports. Equally, ethnic-style food markets, typified by H Mart, have emerged, catering to customers with a sense of culinary adventure who wish to branch out from the usual dishes they prepare at home.
“Coming out of COVID, the breadth and depth of — we don’t even call them retailers anymore, it’s really users — has expanded tremendously,” Doug Healey, Macerich MAC senior executive vice president of leasing, said on a recent earnings call. “So when we talk about leasing, there are the key legacy retailers. They’ll always be a part of our shopping centers. But you’re also looking at digitally native and emerging brands, international brands, food and beverage, restaurant, medical, entertainment, electric vehicles, fitness, home furnishings, groceries. So the uses that we have to choose from are really unprecedented today.”
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New Retail Trends
At the recent International Council of Shopping Centers conference in Las Vegas, a session called “The Next Big Retail Categories” discussed emerging sectors in retail, all of which had an experiential element. These included second-hand thrift-like stores, capitalizing on the appeal of vintage apparel, especially to teens. “Medtail” stores focusing on wellness and medical providers, exemplified by chains such as Restore Hyper Wellness, which offers drips delivering hydration, electrolytes, nutrients, and more. Spas such as Freeze & Float in Chicago offer customers the opportunity to experience hot and cold therapy treatments.
“Healthcare providers are seeking retail locations to improve patient accessibility, with location/ proximity being the second most important factor for patients choosing a provider,” commercial real estate brokerage Jones Lang LaSalle JLL said in a recent report on medtail. “There’s a growing trend in wellness and preventative care services, especially in affluent areas, with concepts like IV drip clinics expanding into retail locations.”
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