Last week I had the pleasure of attending the ICSC Conference & Deal Making Event in Philadelphia. Three words have continuously come to mind when I’m asked my thoughts on the event: “the real deal.” Everyone who was involved in the production of this event left no detail untouched.
I had some pretty valuable take-aways that fit nicely with the blog content I typically cover. Some of which, was all new information brought to light by CRE experts and industry researchers backed by extensive consumer data.
The first portion of the event I attended was the ICSC Research Session, where Christopher Gerlach ICSC Director of Research discussed real-world issues shaping commercial real estate now and in the future. He made connections between the fiscal environment driving sales in both brick and mortar and dot com avenues. From his perspective, store value is broken into (1) brand awareness, (2) showcase, (3) point of sale, (4) fulfillment, and (5) the “halo effect.”
We’re reaching a unique convergence of in-person and digital consumer experiences where each equally shape a brand. The brick and mortar model is still very relevant, but it needs to accommodate the digital customer as well—in an all-inclusive way so the product/service is compatible in both settings. When success in a physical store environment is tied to online channels thriving, there is a ground to somewhat curb behavior and guide traffic both in-store and online.
As far as the whole e-commerce spectrum appears from a macro level, online grocery represents the smallest share of activity. However, Nielsen predicts a significant growth rate in this area due to the value perceived by the millennial generation and their large population coupled with the group approaching child-rearing age and a search for convenience.
When optimization is concerned in the online shopping experience, an interesting fact was shared that the last mile of shipping transit represents 50% or more of total parcel delivery costs. This is one of the main challenges that large-scale retailers see, and continuously work toward optimizing by growing increasingly closer geographically to their consumer. With the vast cost pool presented from analytics around “the economics of the last mile,” the technology of additive manufacturing is a potential solution in the future as the concept is perfected. With this transaction, a buyer would purchase a data file of a product and be able to print the goods at home on a 3D printer. With the need for goods being available this readily without leaving home, in-store retail becomes a much more arts and entertainment focused experience with non-traditional tenants (cooking classes, brand immersion events, etc.)
At the forefront of all these transactions is “a consumer-led disruption” represented by attitudinal shifts by technological innovations. Behavioral patterns exhibited now by consumer demographics will show the future, and eventually shape generations to come by example. As a whole, life choices are being delayed, and buying decisions are shifting as a result. Some of the priorities in purchasing products/services include convenience, value, and experience—and different groups place very separate preferences on these areas.
One of the largest generations, Generation Z (representing a larger cohort than Baby Boomers or Millennials), has some interesting values influencing their purchase choices. They’re main motivator in a buying decision revolves around price most, and quality second. They like to shop in store to socialize with their family and friends, but also enjoy the digital touchpoint to stay connected to products and brands they appreciate.
The key to retail success is an omni-channel model with multiple consumer points of contact. This involves single channel, multi-channel, and cross-channel (integrating a brand through multiple touch points and understanding the best way to do so through data). To visualize a Venn diagram with minimizing fulfillment and maximizing customer satisfaction coming together would paint the picture of a center-point that modern retail must stay at to compete.
The roundtable discussions following the research sessions expanded on trends in the industry, and brought all the topics full-circle. The following day, I was able to engage with diverse exhibitors and have conversations with retailers, engineers, architects, developers, and brokers. Even if there wasn’t a direct relationship potential, all the exhibitors and attendees really impressed me with their action-oriented perspective on collaboration and meeting new industry contacts to learn from. If you’re seeking a valuable commercial real estate forum in the Philadelphia area, ICSC Deal Making has my vote, hands down.