2018 Retail Real Estate Outlook


Top Trendictions
(trendiction: noun, a word for predicting trends…
new lingo we predict will be trending sometime in 2018)


1. Experiential Retail
a. Retail-tainment. Vacant retail stores are getting replaced with experiential uses such as theaters, fitness uses, recreation and restaurant/entertainment hybrids. For brick and mortar stores to succeed, retailers need to place less value on products and services and more emphasis on providing authentic, hands-on, omni-channel shopping experiences that will continue to draw shoppers back into their stores.
b. Retailers doing it right: House of Vans, a 30,000 SF building that combines art, music, BMX, street culture and fashion coverage and contains a cinema, cafe, live music venue, art gallery and skate ramp.


2. Diverse Store Formats
a. One size does not fit all in 2018. More and more retailers are taking flexible approaches to store formats that address the needs of different markets and locations. Expect to see traditional, big box stores downsizing (and upsizing in some cases!) and more showroom-style storefronts opening.
b. Retailers doing it right: Nordstrom Local, a 3,000 SF showroom where inventory is replaced with personal stylists, spa services and refreshments.


3. Robots on the rise
a. Domo arigato, Mr. Roboto. Robots are already playing a role in packing and shipping items at fulfillment centers. Expect to see more robots involved in online messaging in the form of chatbots and voice-based personal assistants to interact with customers. Chatbots provide better shopping experiences by assisting in sales nurturing and answering customer service questions all through communication platforms that are simple and save time.
b. Retailers doing it right: Victoria’s Secret, utilizing chatbots to showcase product line.


4. Augmented Reality (AR) and Virtual Reality (not insanity) to augment and virtualize retail’s reality
a. AR technologies are expected to get even more sophisticated and accessible in 2018. Retail giants like Apple, Microsoft, Google, Amazon, eBay and others are already setting the standards and spend on AR technologies, excellerating it’s growth and popularity among consumers. As it grows, it will change the way that retailers create and showcase products. Virtual Reality is also becoming its own entertainment use category– transport parents and kids to a land far away? Yes, please. Content is king here.
b. Retailers doing it right: IKEA Place, a mobile app that allows users to preview how different IKEA products look in their physical environment.  MSC Retail client (shameless plug) The Void creates a virtual reality for men, women and children of all ages– certainly helps when you have the rights to Ghostbusters and Star Wars, among other franchises.


5. Personalized approaches are the only way
a. It’s getting personal. In marketing strategy that is. Retailers are predicted to invest more in personalization efforts than any other area of retail in 2018. Retailers that cater to personalized experiences and preferences will find the most success in influencing individual consumer purchasing habits.
b. Retailers doing it right: Sephora Virtual Artist, a mobile app that uses an “assisted self-service” strategy of allowing shoppers to virtually try on makeup through a smartphone camera.


6. In-home shopping and services
a. Home is where the shopping happens. Less consumers are leaving the house to buy commodities and in turn, more merchants are delivering products, services and consultations right to their doorstep. It’s all about the in-home offerings like home delivery services, auto-renewals, one-tap purchases and same-day delivery.
b. Retailers doing it right: Postmates, an on-demand delivery platform that is now extending its services beyond food delivery


7. Big data is a big deal
a. Sophisticated retail reporting will help retailers collect data and gain actionable insights. As big data and machine learning advance, data’s role in retail decision-making will grow. Forward-thinking retailers should explore avenues to collect and leverage data in their sales, marketing, customer service and operations.
b. Retailers doing it right: Walmart, using machine learning to optimize the delivery routes for their home deliveries


8. Acquisitions will increase
a. More big-deal retail acquisitions on the way. Amazon of Whole Foods, Walmart of Bonobos… 2017 saw plenty of acquisitions and consolidation but competition in the market is still as fierce as ever. Buyouts will continue as retailers consolidate in the market and explore alternative ventures online.
b. Retailers doing it right: PetSmart and Chewy.com, the acquisition allowed PetSmart to seize more online market share without having to rebuild its existing operations and provided Chewy with the financial support to fuel its e-commerce endeavors.