A Boom in Retail?
October 16, 2017
One of the more significant business trends in recent years has been the decline of traditional brick and mortar retailers, drowned out by the flood of online shopping. The early casualties include well known names such as Borders Bookstore and Blockbuster Movie Rentals. These particular businesses gradually lost market share to two new household names, Amazon and Netflix, which in turn have become ubiquitous in their own right.
Recently, however, certain retail sectors have done better than the overall retail trends would suggest. These sectors can most accurately be described as “niche retail”, and they represent those parts of the retail economy which do not translate well to online sales. An example of this effect can be seen in in a building that some had taken to calling a monstrosity. Memphis, Tennessee has a once abandoned NBA stadium, the Memphis Pyramid. After years of neglect, and bad press as an architectural eyesore, the stadium was transformed into one of the largest retail stores by physical volume in the world. Perhaps surprisingly the retailer which wrought this transformation is Bass Pro Shops. Local folklore suggests the development of this distinctive building as a retail store came about following a bet made on a fishing trip on the Mississippi River. Whatever the reason, the revival of the Memphis Pyramid is an example of a new approach for retail developers and managers: experiential retail.
Experiential retail can be broken down into two main segments. The first is retail that provides a high level of experience and enjoyment that you simply cannot get online. The second is retail for which there is no comparable online replacement. The Bass Pro Shops in Memphis certainly falls into the former of these segments. For example, it has an indoor lake and lagoon for displaying the latest fishing and speed boats, pistol and archery ranges, and its own branded 100 room 4-star hotel. Maybe this is more theme park than retail store as it provides a glimpse of an outdoor wonderland. The megastore pulls in people who would most likely never wander into one of the chain’s normal outlets. Moreover most “visitors” do end up in the check-out line buying at least some sort of souvenir.
The second main group of experiential retailers are those which offer products and services that do not translate well to online sales. This most directly translates to the food and beverage industry, but also can include neighborhood shops focused on delivering local goods to local customers. These shops tend to be a little smaller than their mass retail cousins, and often provide a better customer experience. Plus the owner is probably a neighbor or friend!
Experiential retail competes by offering something not yet available in an online setting. By being built and managed to a higher standard than their big-box retail cousins, these retailers have forged an advantage in the changing global economy. High quality properties with attractive build-outs in good areas should continue to do well long into the future, despite the overall decline in the physical retail sector.
