HOUSTON — Retail sales have always had ups and downs, but not usually all at once.
But polarization describes the post-recession recovery so far at the nation’s shopping centers. Luxury shops are doing well and value stores are doing well. The middle — groceries, apparel, sporting goods — not so much.
Consumer spending is still sagging in the middle and so are stores that rely on it, said Houston-based Naveen Jaggi, senior managing director, retail service, for CBRE in the United States, Canada and Mexico. Jaggi was on a panel on the future of shopping centers at the recent National Association of Real Estate Editors annual meeting.
On the top end, he said, fashion, food and furniture are doing well.
Fashion is fickle, though, with the biggest ups and downs and the most potential to disrupt neighborhood shopping centers. Furniture stores, which are fairly safe from e-commerce, are expanding. Restaurants are becoming more common as anchors for 50,000- to 100,000-square-foot centers.
On the hurting end, Jaggi said, closure, contraction and consolidation are driving.
Struggling chains want to close underperforming stores, but labor, financial and landlord issues are slowing closures, he said. He said he expected no big announcements this year because most retailers have to let their lenders know their holiday inventory plans by now.
Looking further ahead, stores that emphasize customer experience will be most successful, said Christopher Volk, president and CEO of Scottsdale, Ariz.-based STORE Capital, provider of net lease financing for middle-market companies. (STORE stands for Single Tenant Operational Real Estate.)
Jaggi pointed to AT&T Experience Stores, which blend “clicks” and “bricks” — mobile and e-commerce with on-site interactive product and service demonstrations — as the leading example.
AT&T opened such a store in Oklahoma City, at 5325 N May Ave., last October and has since expanded the “experience” to other locations, seeking to capitalize “as the lines between the physical and digital retail worlds blur and consumers turn to their mobile devices and apps to enhance their mobile lifestyle.”
The point is to “meet the need at the time of need,” said Michael Lagazo of Sperry Van Ness in San Diego. That kind of interaction with shoppers is the future for most retail, he said.
In the meantime, Jaggi said, e-commerce is still a small part of retail sales, about 5 percent, but is growing 15 percent per year.
But “clicks” are just part of the change under way, he said. Retailers need to treat their webpages as the “front door” without thinking of in-store sales and e-commerce as different.
It’s all the same, he said, and the aim should be to embrace clicks — but not at the expense of bricks.