On April 19 at a recent meeting of Turnaround Management Association (TMA) and Association of Corporate Growth of New Jersey (ACG NJ) where both business groups celebrated milestone anniversaries, a panel of experts addressed the trends impacting the retail sector.

The number of retail stores world-wide is staggering!  So for those who are feeling sorry for retailers, perhaps concerned that traditional retail is dead – Richard Hauer, President of H3 Consulting Group, reminded us that $5.7 trillion is spent on retail shopping annually and that 8.9% is online while 91.1% is accomplished through in-store shopping. In the United States, we almost seem obsessed with the brick and mortar shopping experience. Many customers like the experience of touching and feeling the products they are going to purchase. While this depends on the demographics of the shopper and the type of product, Simon Properties (the largest owner of retail malls in the U.S) is relying on consumer demands for in-store opportunities. In fact, their occupancy rate reflects their optimism, with their properties boasting about a 95.6% occupancy rate – even with rents increasing by 2.9%.  As such, this country devotes more than 20 square footage % per capita to retail stores. The rest of the world is somewhat behind us, with Canada designating about 8-10 square feet % per capita. Other countries are even more modest with Austria at 11 square feet % per capita, Britain at one-fifth and Germany at one-tenth of a square foot % per capita.

But here we may be reaching a point where we are simply “over retailed”!  In fact, if any changes are on the horizon, the move to fewer stores, smaller stores and less inventory on hand may be the wave of the future. The brick and mortar niche has powerful metrics but the easy and convenient on-line experience modeled after Amazon Prime is expected to continue to gain momentum. And as this occurs, the larger malls will have to be repurposed.  With 600 shopping malls in this country, some are already being refurbished to include entertainment, residential units, exercise facilities and more – creating a ‘town center’ environment that will perhaps be the new platform that leads to a more profitable multi-purpose use of real estate previously devoted to retail malls.

David Stein, Wilentz, Goldman & Spitzer and Amy Valentine, SFERRA participated on the panel along with moderator Steven Agran, Carl Marks Advisors, sharing their own insights and perspectives on the trends in retail, including the fact that food and beverage retailers are growing at twice the pace of other retailers. They also shared the observation that Wal-Mart just announced it is refurbishing its online presence, possibly giving it a unique advantage to combine  brick and mortar with on-line experiences to give shoppers the best of both worlds.

Ultimately it was agreed that the companies that identify exactly what the customer wants and find the ways to serve them most effectively and efficiently will win the top prize!   This is not an easy task as customers grow more demanding and more sophisticated and as technology enables a highly personalized experience shaped and customized around the customer’s preferences.  The old adage in retail used to be “The customer is always right.” Not much has changed!