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Retailers Look to Urban Areas, Online to Capture Today’s Consumer

by Nate Hunter

Las Vegas — Tenants are moving away from the suburbs toward a more urban environment.

Jenny SchuetzLas Vegas — Many retailer experts attending ICSC RECon in Las Vegas on Monday believed the smart stores were moving away from the suburbs and toward a more urban, tech-friendly demographic. This trend seems to have penetrated so deeply that even big box stores were adapting their strategies in the new economy in order to enter these untapped markets.

Jenny Schuetz, an assistant professor and economist with the University of Southern California Lusk Center for Real Estate, argues that urbanization can often result in the perfect marriage between retailer and consumer. Discounters like Ross Dress for Less, Marshalls and T.J. Maxx appeal to the broad spectrum of residents who inhabit urban cores like downtown Los Angeles.

“There is this tier of retailers that really like the urban environment,” says Schuetz. “They have a fairly low price point that attracts students and the younger residents, as well as Latino families.”

Clothing stores like H&M and Urban Outfitters that target young urbanites have also found success in this environment. The latter recently announced plans to convert the 900-seat historic Rialto Theatre in downtown LA’s Broadway district into a new 10,000-square-foot outpost.

“We had been looking at downtown LA for several years, watching what was happening and where,” said John Hauser, Urban Outfitters’ chief officer of brand experience, in a statement. “When we decided the time was right to open an Urban Outfitters, the Rialto Theatre on Broadway was the perfect location.”

While traditional grocers have more or less bypassed downtown LA, it was once again the discounters who saw opportunity. Target recently introduced a 73,000-square-foot City Target at FIGat7th, while Walmart is hoping to penetrate urban areas throughout the U.S. with its Walmart Neighborhood Market concept.

“For the first time, we plan to open a large amount of small format stores,” says Richard Kinnard, vice president of realty dispositions and acquisitions for Walmart, during the Single-Tenant, Triple-Net Leased Retail Real Estate panel at ICSC RECon. “We’ll probably open 80 to 100 this year. Most will be Neighborhood Markets.”

The company is also toying with the concept of Walmart Express, another smaller format store that is aimed at convenience and one-stop shopping. The concept is currently being tested in Chicago, northwest Arkansas and North Carolina. The 12,000- to 15,000-square-foot stores will allow the company to target both the smaller rural communities and the land-locked urban settings.

“The Walmart Express store is a new tool for the company to provide convenience for our customers,” said Randy Galloway, manager of the Princeton, N.C., store, in a statement. “It means residents can take care of their everyday needs, including pharmacy and fuel, without having to drive out of town.”

Retailers Get Aggressive Online

Fast delivery times are drawing consumers online, though bricks-and-mortar retailers can capture a piece of this market by allowing customers to pick up and return merchandise in-store. Walmart has also implemented a program that allows customers to pay online with cash, attracting consumers who either don’t use banks or don’t want to provide their credit card information.

Walmart’s newest strategy is just one of the ways retailers are attempting to beat online retailers at their own game.

“Anybody’s who’s a Walmart watcher better be an Amazon watcher,” says Lori Schafer, executive advisor for retail at the SAS Institute during the Clash of the Titans panel. “Because they are redefining what our world’s going to look like in the next 10 years.”

The panel’s participants agreed that Amazon, Apple, eBay, Facebook and Google (the titans) were having a dramatic effect on the retail industry.

“These five companies are, in many ways, trying to disrupt every other company in our economy,” continues Schafer. “Right now they’re aiming a bull’s eye on retail. They’re all moving into retail in many ways. They’re also moving into media, communications, television and financial services. Soon, they’re going to be into insurance and healthcare, believe it or not.”

Fellow panelist Michelle Crames, vice president at Social Commerce Solutions Revionics, further noted that in order to remain competitive, retailers must stay on top of consumers’ ever-evolving needs. Fortunately, she doesn’t believe the relationship is completely one-sided.

“The consumer is taking control when you think about the choices and the proliferation of buying options,” says Crames. “But it’s also amazing to think about the amount of data these companies with an online presence have on consumers. While I believe control is ultimately resting with the consumer, the data these companies are gathering is allowing them to dictate and anticipate what the customer wants before they even knew they wanted it.”

— Nellie Day

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