This year’s International Council of Shopping Centers (ICSC) RECon, the world’s largest retail real estate convention which took place in Las Vegas Nevada, featured more than 170 speakers and panelists who offered a glimpse of some of the most disruptive trends poised to transform the future of retail.
The four-day convention, which attracted more than 30,000 attendees globally, showcased a plethora of innovative technology products and offerings which ranged from AI-based inventory trackers to virtual/reality applications designed to enhance the in-store shopping experience and electric powered delivery robot carts.
Here are some key takeaways from this year’s convention:
- Online Retail Needs Brick and Mortar
Online retailers need brick and mortar locations more than ever, according to experts at the ICSC convention. Online only retailers who invested in store locations have seen a 34% boost in online traffic after launching brick and mortar locations, according to Coresight Research CEO and Founder Deborah Weinswig, a panelist and moderator at the ICSC.
As more online retailers turn to local stores to drive sales, demand for pop-up stores is rapidly climbing. Much like the office market, increasing demand from tenants for flex-space options is making long-term leasing a less viable option. If landlords and tenants can come to terms with flex space leasing options, the retail sector has considerable opportunities for growth and generating higher rents, experts said.
- Retail to Make Massive Investment in Artificial Intelligence (AI)
In 2018, the retail sector invested more in artificial intelligence (AI)-based technologies than the banking sector did, according to data by IDC. In the next three years, the retail sector is expected to outpace manufacturing, energy, and banking in the adoption of AI-based technologies.
Artificial intelligence is quickly becoming retailers’ go-to technology to strip friction from brick and mortar stores and to connect online consumers with in-store experiences.
AI technology is being used by retailers from grocery stores to top luxury brands to create customer-centric and personalized shopping experiences. Western retailers will increasingly adopt China’s AI-based retail models as more consumers opt for digital and mobile shopping experiences.
- The Convergence of Healthcare and Retail is a Massive Opportunity
The healthcare industry is reinventing the patient experience by adapting key retail principles. A confluence of factors such as demand for distributed care settings, the push for lower cost, and less capital-intensive delivery systems and solutions, which optimize for scale in local markets, is creating a new opportunity to use existing retail spaces for the provision of healthcare services.
The healthcare landscape, once heavily dominated by giant, multi-departmental, centralized facilities, is shifting to decentralized facilities to meet demand from customers for convenient locations. The growth of urgent care centers, micro-hospitals, and wellness treatment centers are driving demand for more retail spaces designed for healthcare use cases.
The number one priority for healthcare CEOs is growing outpatient market share, according to a recent report by McKinsey. In fact, 60% of new healthcare facility spending is now earmarked for outpatient-only care with an aim towards finding convenient locations, consistent branding, and creating a soothing patient care environment.
Healthcare innovators are creating more holistic, customer-centric experiences by eliminating inefficient processes such as long sitting and wait times, adding technology designed to improve wayfinding in large medical centers, and reducing stress from a numerous number of patient visits when possible. Hours and pricing are also becoming more consumer-focused with digital technology and consistent branding woven in.
As the future of healthcare looks more and more like retail, it is creating a massive opportunity for the sector to innovate like never before.
- Autonomous Vehicles Are Ready for Last Mile Delivery
While the deployment of fully autonomous cars is still a dream in the making, retailers are ramping up efforts to use smaller AVs and electric powered delivery carts to solve the problem of last-mile delivery. Benefits of small AVs are clear: the immediate delivery of goods to customers, relieving the number of delivery cars on the road, and mapping and monitoring streets and sidewalks. Startups like Postmates and Marble have already unleashed their fleets of small AVs into the retail space.
Postmates has also partnered with Ford and Walmart to test the business of delivering goods like groceries and pet food using self-driving vehicles.
As more companies strive to meet customer demand for same-day or even same-hour delivery, it’s going to completely transform the retail industry.
“As transportation becomes more efficient through the use of AV’s, we’ll need more drop-off areas and less space, said David Hoffman at LK Architecture, whose firm was among the founding members of the ICSC. “New service and business development for building, routing, cleaning, charging, and maintaining the new fleet of AVs will be required. We will need to introduce new loading and unloading zones, and design spaces for the delivery lockboxes to accommodate driverless delivery vehicles in the future,” Hoffman said.
Once fully adopted, AVs could eliminate billions of square feet in parking space, which could be repurposed to more profitable uses. In the near future, retailers will need to rethink how AVs will impact their supply chain decisions, customer in-store shopping experiences, site selection, architectural design, and the overall requirements for space.
- Retail is Still a People First Business
While technology has no doubt become a massive enabler, the retail industry is still all about personal connections. From the highly customer-centric strategy defined by Carlos Alberini, CEO of Guess, to the behind-the-scenes deal-making in massive meeting rooms at the convention hall, it’s clear that human interaction is still the foundation of this industry.
The resounding message from brokers, developers, technology providers, and even keynote speaker Marcus Lemonis, host of popular TV show “The Profit”, was that the most important aspect of the business is human connection which take place through in-person, one-on-one interactions.
As an ICSC conference attendee astutely noted, “You can’t go into the store and make a real estate deal off the shelf. You need people for that.”