Retail Revolution: Is physical retail dead?

Question

I consistently hear pundits and investors talk about the "retail apocalypse" and how physical retail is dead. Although I do agree that this sector has been hit especially hard by the ascent of Amazon and other online retailers, physical retail is not going away and it will continue to evolve over time. This changing business landscape offers unique opportunities for business owners and investors looking to capitalize on the disruption.

What are your thoughts on the new "retail revolution"?

https://www.forbes.com/sites/stevendennis/2018/03/19/physical-retail-is-not-dead-boring-retail-is-understanding-retails-great-bifurcation/#47ada50d1981

What are your thoughts on the new "retail revolution"?

https://www.forbes.com/sites/stevendennis/2018/03/19/physical-retail-is-not-dead-boring-retail-is-understanding-retails-great-bifurcation/#47ada50d1981

Jameson Sullivan · Answer

I work in retail real estate and it certainly is not dead. As others have said, it's transforming. Retail is moving in an "experience based" direction meaning that the old widget store you used to go to will move online and be replaced with a concept that is experience based - whether that be the dentist or indoor skydiving. Commodities will continue to trade online and retail store front will continue to carry the things that don't translate online. That said, grocers continue to do great numbers and with BOPIS becoming easier and easier to use we will continue to see larger number of people trafficking retail shopping centers, not less

The correct statement is not "Retail is dead" but rather it is "Retail as we knew it is dead." The face of retail is certainly changing and you will continue to see medical and other experience based retil replacing your local widget store for the foreseeable future.

Raphael Collazo · Answer

@Hai Loc

Although I don't disagree that Amazon has disrupted the market, I'm still seeing a sizable amount of retail activity along "high traffic" roadways. Visibility still has value and there will always be businesses that are willing to pay for that kind of exposure.

Not only that, but some "retail" businesses such as nail & beauty salons, bakeries, restaurants, specialty stores and even service businesses (i.e. doctors, dentists, accountants, financial planners, etc.) have been relatively unaffected by the change. Regardless of how large Amazon gets, people will still need to leave their homes to purchase certain goods and services. That's why I believe retail buildings in high-traffic areas with great visibility will still make for solid investment opportunities in the future.

All the best,

Scott McElhaney · Answer

We own many retail properties.

Retail is changing rapidly, but brick & mortar retail will always remain a component of a retailer’s strategy. This is why you see online retailers such as Warby Parker, Tecovas & Untuckit go from strictly online to an online brick & mortar business model. One thing the above mentioned companies have is data, lots of customer data that they methodically collect. They know exactly where customers are ordering from when they make online purchases. This gives them strong intel to pinpoint exactly where to open physical stores. It’s genius if you think about it.

Isaac S. · Answer

Retail is dead? I can't name  a single strip center in a 3 mile radius that isn't 100% occupied, including the infamous second story units. Of course I am in one of the hottest markets in the world, during one of the longest bull markets ever.

It would be more succinct to say, traditional general and some specialty merchandise retail is dead, as we previously knew it.

But as the OP said and as many previous economists have said, we are turning into a service economy. Amazon, can't deliver a hair cut, manicure, tire change, root canal, foot massage, six pack of beer(actually they can, just not as conveniently as the old corner store), Big Gulp, pizza, etc, etc, etc....YET! I am sure if it is profitable, and they can make 10-15% margin just being an intermediary, they are trying to get into it.

Lastly, if retail was dead, why would Amazon acquire Whole Foods?

Retail is already evolving and morphing. A great example is one of the most recent retail apocalypse victims ToysR-US....one of the x-executives is already opening up on a limited basis, smaller refined format toy stores, that are much more "experiential" based retail, where momy and the the little rugrats can really play with the toys and kill a few hours in a climate controlled safe environment, while at the same time load up on all the toys they were just playing with and are not bogged down by outdated oversized overpriced leases. Think of a McDonalds kids play ground or chuck-e-cheese or like the HomeDepot/Lowes free training seminars but with kids toys, combined with a toy retailer. Eventually, I would bet that they add some kind of child day care or complimentary services to add alternate revenue, while at the same time attracting their demographic.

Their are 8 billion humans, if you think retail will die, you don't understand retail or human nature. It will not stay the same, it may not be as profitable or as big, but it will not disappear.

Hai Loc · Answer

Bezos destroyed it. It will be distribution centers and couriers.

I also forsee offices for

Real Estate, Mortgage, Insurance and other kind of sales to be reduced as well and more demand for co-working space.

Retail Revolution: Is physical retail dead?

Most Popular Reply