The Evolution of the Shopping Experience: Heard at ICSC Dealmaking 2014
Despite a terrible Nor’Easter that hit the first day of the conference, nearly 9,000 attendees – a record-breaking number and 26% increase over 2013 – joined the International Council of Shopping Centers (ICSC) for the 2014 Dealmaking Conference at the new venue, the Jacob K. Javits Center in New York. With a larger, better laid-out conference space and many participants displaying shiny new booths, conference attendees enjoyed the increased networking space and then settled in to hear from industry experts on what trends are impacting the industry.
Donald Trump, the keynote speaker, set up the crowd with the following soundbite that made its rounds on Twitter throughout the conference: “… to be successful in your chosen occupation you need to love what you do.” All it took was one lap around the exhibit hall to see the level of engagement and focus from all participants, including developers, retailers and the myriad of service providers. This year, we came away from ICSC with a few interesting observations, as follows:
A Very Good Year, According to Predictions
The important holiday shopping season, often viewed as an indicator for the upcoming year, trends upward. According to ICSC, the season starts earlier and earlier and is projected this year to hit 4% growth over last year. This year, 35% of shoppers started before Halloween and by Black Friday, 86% of shoppers had completed at least part of their shopping. Analysts believe based on consumer habits, we have nearly returned to pre-recession levels.
There’s also been a resurgence of traffic in leasing in the retail industry; last year’s tire-kicking has moved into next phase of execution as retailers get serious about expansion. During the economic turndown, discounters were typically the only anchor tenants shopping for space. Now, industry analysts are seeing more activity of this nature in the sporting/outdoor/lifestyle category.
The Evolution of the Consumer Experience
It was clear from hallway chatter and panel presentations that we are in the middle of a redefinition of the customer experience. Shoppers are active participants in their experiences, and they are, more than ever, driving some of the change. The retail cycle is changing, and analysts are seeing the typical holiday shopping season extending beyond traditional time boundaries of Black Friday to the end of December. Some retailers are seeing active “holiday” shoppers all the way through mid-January, which means stores will be working at the same pace for several weeks beyond the traditional slowdown to satisfy consumer demands. If this trend continues, shopping centers and their retail and hospitality tenants will need to maintain peak staffing and inventory levels for extended periods of time.
The ever-present debate over brick-and-mortar and e-commerce continued to make its way around the hallways. While it can be an impassioned debate, the consensus now is that technology enhances a shopper’s experience but does not necessarily replace it. Many now believe that the successful retailers will be those who embrace the omni channel experience. Whether it be e-retailers such as Bonobos or Warby Parker who move into the bricks-and-mortar world to enhance their virtual business or bricks-and-mortar retailers, such as discount store Dollar General and off-price clothing and housewares retailer TJ Maxx, who expand their presence online in order to enhance their traditional bricks-and mortar business, it’s all about providing the customer with multiple options to look, buy and strengthen their connection with the brand.
The customer experience does not stop with the retailer, however. Shopping center owners also realize that they must embrace this online experience in order to differentiate their centers from others and remain relevant. This means bringing entertainment and new, trendy restaurants to their properties but it also means investing in marketing technology to enhance the customer experience. Many shopping centers feature holiday e-mail and text campaigns to drive shoppers into the stores and manage various loyalty programs. Mobile apps are being developed to help shoppers navigate around the stores, toward available parking, and point them to flash sales at various stores during their visits.
In the coming year, international brands will continue to expand in the U.S. due to their confidence in the health of the economy and low unemployment numbers. Sears’ recent deal with Primark, a U.K. based department store, is just one of many examples. Under the terms of this deal, Sears will lease more than 500,000 square feet of its current space to Primark to help fuel its expansion into the U.S. Currently, Primark operates in the U.K., Ireland, and France. In addition, Primark will lease on its own the space occupied by former U.S. retailer Filene’s, in downtown Boston, to create its flagship U.S. store.
Other “hot” sectors both domestically and internationally are men’s apparel, fast food, and grocery stores. Analysts have noted that European food store Lidl will copy Germany-based ALDI for its plans to enter the U.S.
What We’ll Be Talking About Next Year
Hopefully next year, we won’t be toting umbrellas and rain boots. Led by conference chair David Firestein, in 2015 we’ll be looking forward to seeing more record-breaking crowds, hearing inspirational keynotes and learning more about how the consumer continues to shape the industry’s future. Please take advantage of the momentum from this year's must-attend event and join us in New York again in December 2015!