Shopping Centers Morphing To Lifestyle Centers
Recent trends in U.S. retail suggest that shopping is becoming America’s favorite pastime, not baseball, says a new Nielsen study, Brick by Brick: The State of the Shopping Center report. Despite the boom in e-commerce, U.S. consumers do most of their shopping at physical stores. Shopping centers, says the report, have become much more than just places to buy things, they’re social centers, places for entertainment, and employment hubs.
Lifestyle centers are meeting this opportunity, as they blend traditional retail tenants with upscale leisure uses that offer shoppers a place to buy as well as an experience, and a place to gather. This trend is most visible at the regional level, where operators are shifting away from the traditional enclosed mall and opting for smaller, specialty lifestyle centers, more heavily concentrated in urban areas.
Notably, many big box retailers have downsized their formats to better meet shopper expectations and desires for more of an experience destination. The smaller footprints are also aimed at creating more of an intimate neighborhood shopping experience. Target’s City Target stores emphasize creative design and easy access for urban shoppers who don’t want to travel long distances to grab necessity items, electronics and groceries.
According to the study, C-stores is where the real growth is. These outlets, located within smaller shopping centers, have grown popular for quick trips, potentially drawing consumers away from larger shopping centers. According to the report, C-store growth of 4.9% for the 52-week period ending Aug. 4, 2012, is well ahead of the 3.7% rate for the overall market. And the growth is sparking new C-store development as well, indicating that there is room for large and small shopping centers to coexist in the retail landscape, as well as new formats and concepts.
At the same time, the demand for a more traditional experience showed no sign of slowing, as the number of large shopping centers (200K+ gross leasable area) jumped 65% between 2008 and 2013. These malls only account for about 7% of the total malls/shopping centers in the U.S., but they make up 46% of the total mall/shopping center gross leasable area.
And, although e-commerce is growing, says the report, consumers still spend most of their retail dollars at physical stores, where shopping center sales account for over half of retail sales in the U.S. People like to touch the merchandise, compare items and participate in the store experience. Though, E-commerce is growing, sales at physical stores continue to dwarf online sales. In Q4 2012, 5.4% of retail sales came from online channels, up from 3.6% in Q1 2008.
From a growth perspective, several channels stand out, including club, dollar and supercenter options, notes the report. However, according to the report, E-commerce will lead the pack, continuing the trend of the past five years. E-commerce poses a unique opportunity for shopping centers and their tenants, employing cross-channel real estate and marketing efforts.
For more insights, download the Brick by Brick: The State of the Shopping Center report.