In its 2020 Real Estate Outlook, Cushman says the combination of these trends and expectations is having a huge impact on the retail sector in terms of consumer behaviour, new business models, retailer strategies and space allocation. Consequently, the mindset among retailers, consumers, developers and investors has changed and will continue to evolve.
Cushman’s four key messages for the retail sector heading into 2020 comprise:
- Physical stores will remain an integral part of the retail ecosystem, but to survive and thrive in the current environment, retailers will need to be more proactive to consumer needs and improve and curate the shopping experience. As such, retailers must dedicate the time, investment and resources to take strategic advantage of new technologies.
- We recognise the fact that European retail is not one homogenous market –it is made up of a multitude of different markets which vary in maturity, quality and quantity of provision. Short term, we see the greatest impact of online on the markets of North Western Europe, while structural and cultural change in Central, Eastern and Southern Europe will take more time to filter through.
- Physical stores retain a clear set of advantages over online. Shops provide the opportunities to interact with knowledgeable staff, to try products on, to receive them immediately and, from the retailers viewpoint, to upsell to the consumer more easily. New technology supports the store through click & collect and automatic payment, which make the shopping process easier and quicker. Arguably, the recent growth in home delivery is nothing new – but rather a throwback to a time many independent shops would regularly deliver to local customers. That said, the prevalence of home delivery vehicles on the road is also creating problems congestion and pollution. We believe this will result in more cities implementing policies to mitigate them.
- Areas of interest continue to be convenience stores in urban locations, grocery stores and prime locations in major city centres; which benefit from strong footfall, often from a combination of shoppers, workers and tourists. Other key target segments should include designer outlet centres, experiential flagships, luxury shops and leisure-focused or activity-based retailers. A well curated food & beverage sector should continue to be a key driver of activity, increasingly underpinning the consumer offer in major European destinations.