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warehouses to source from. Looking ahead, strategic delivery is the next frontier for retailers. Strategic delivery is a process to control transportation


costs by working with shippers or vendors to re-engineer packaging to reduce the dimensional weight—that is, the length times width times height—of the carton. Strategic delivery is also about the proximity of the distribution center or store to the transportation hub. And because not every transaction is right, strategic delivery is also about a seamless system for returns. These are only some of the many logistics issues that retailers need to and are addressing today. The retailer winners of tomorrow will need to get that right! The new retail reality is a borderless marketplace in


which the demand chain and the supply chain interact seamlessly. This will lead to the next wave of the cycle— the international retailer that competes across borders with few, if any, physical locations, but a global warehouse network. But even as technology is changing how retailers do


business, technology is also changing how shopping- center owners do their business. Retail-property owners understand that the new shopping center for today is not a retail center, but a consumer center, which serves increasingly more consumer service needs from healthcare to entertainment. And technology is finding more uses in the shopping-center environment whether for locating available parking spaces for the consumer or tracking consumer shopping patterns. Today’s challenge is to better understand how


consumer centers better connect with the consumer, leverage traffic patterns better and find the right tenant mix for tomorrow’s changing consumer needs. The answer increasingly may be that the strip center of today with its average 43% non-retail, non-restaurant tenant mix is more the future of the industry than the average 19% non-retail, non-restaurant tenant mix that is found at super-regional malls. So is there really a new retail paradigm? Hardly. Tomorrow’s consumer centers will be a blend of goods and


Chart 10-1


Services Account for Two-Thirds of Consumer Spending


Source: U.S. Department of Commerce; ICSC Research


services—which is driven by the fact that since the early 1970s, consumer services have accounted for more than half of all expenditures and today that share (see Chart 10-1) has grown to about two-thirds. This trend should not be surprising since it has been in place for 40 years. It is the retailer and landlord that have been slow to embrace that consumer change. But today that is happening more and more and that should be incredibly positive for the industry’s long-term prospects. And keep in mind that the retail industry’s future is not about social media, that is a communication tool. Retailers have transitioned from direct mail and newspaper ads of yesteryear to social media and web-based ads of today, and something else tomorrow. At the end of the day, that is not “the” retail or consumer business, but only how those companies try to communicate with the consumer. Milton Cooper aptly suggested that in the future many


of today’s retailers may be gone, but they will be replaced by others or by new consumer services-oriented tenants. That is the essence of a lasting paradigm, not a passing one.


Michael P. Niemira is Staff Vice President, Director of Research and Chief Economist for the International Council of Shopping Centers. He can be reached at +1 646-728-3472 or mniemira@icsc.org.


INTERNATIONAL COUNCIL OF SHOPPING CENTERS


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RETAIL PROPERTY INSIGHTS VOL. 20, NO. 2, 2013


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