New generations always bring new expectations and behaviours, and millennials are no exception. Beyond the acceleration of different shopping habits, such as e-commerce, as a result of the pandemic, the real estate industry needs to think forward and take this new generation into account.
Millennials are gradually becoming the largest consumer group, which turns them into relevant actors in the retail scene. They prioritize the experience instead of things, they favour innovation, creativity and diversity. Now, people must have a reason to visit your store or your shopping centre. This is definitely not the end of physical retail, but a turning point. With so many incentives and stimuli all around, consumers are no longer interested in just going shopping; they expect a unique experience. Therefore, the retail industry is currently faced with new challenges that call for major changes and transformation.
As we are already witnessing, technologies will drive new retail experiences and combine digital shelves with physical pick-up alternatives. Hence, retailers should expand pick-up options and even start considering AI strategies for product comparisons and suggestions. Shoppers will keep relying on mobile purchases to get items they particularly need, but will resort to physical formats to spend a good time and, most importantly, while looking to be amazed or surprised. Thus, stores will rapidly evolve into showrooms and fulfilment centres.
It is important to understand that this changing landscape involves innovation in real estate alternatives as well. Physical retail formats will continue to shrink as the traditional demand weakens, while the industry will offer modern business models such as short-term leases and pop-up stores. Technology and digitization will also be key for this explosive transition, highlighting the importance of digital transformation in the real estate industry.
Experience is key, so evolution should aim at offering the most comprehensive experience possible. Even though entertainment is usually at the centre of the efforts, a fast-moving and busy era should also take into consideration other needs. In other words, consumers who do not have much free time on their hands also need all-encompassing proposals, where they can shop, eat, meet with other people and, why not, deal with mundane duties such as grocery shopping and work out.
There are two major strategies that are becoming the focus of many successful retailers: External Links and Food Halls. On the one hand, External Links tackle the time issue perfectly, since they are located in spaces like offices, airports, and big-box stores. Laying the brand at the feet of the consumers, literally, can help retailers improve their popularity and be associated with the new trends.
On the other hand, different offerings regarding food and drink have become one of the fastest growing trends in retail today. Many owners even make food a central focus of their projects, which is the case of Food Halls. These particular initiative are perfect for the current landscape, since they are flexible spaces that allow for many innovative opportunities. If consumers are attracted by great dining options, the addition of live entertainment, creative performances, pop-up shops, product launches, and food and music pairings will definitely make a huge difference.
This new era is bringing amazing ideas and trends that should be materialized in the retail real estate landscape. Those who are not willing to embrace innovation will soon disappear.In retail, now change is not an option, but a requirement.