Life in a suburb is defined by dependability. Your morning coffee shop will be there ready to refill your cup. The local pharmacy is fully stocked and the 7-11 always has Slurpees rotating at the ready. You know that the local Italian restaurant will have placemats with a map of Italy on them and you’ll probably run into 10 people you know with every trip to the supermarket. You know where to find the kids at 9:00 on a Friday night because there’s only so many places they can be.
That suburban dependability extends to shopping, too; up until recently, you could always rely on shopping malls and big-box stores to beckon you from the highway. But that’s been put to the test in recent years as the landscape of America’s retail scene has shifted. Longtime retail giants are going away, while those who survive do so because of seismic shifts to their strategies. Even in the suburbs, where everything is easy to reach, convincing people to shut their laptops and get out of the house is getting harder and harder.
Those changes are far from over and the growing pains will be tough for many companies (and customers). Here are 10 shifts and trends you’ll want to watch as your dependable local retail center evolves for the modern era.
Some Longtime Tenants Are Going Away
For the generations who never wanted to grow up because they were Toy R Us kids, news that the toy retailer was going to shutter all its stores felt like a shock to the system. However, the writing was on the wall for some time, not just for Toys R Us but for many well-known, large retailers who simply couldn’t keep up with the modern economy.
We’ve already said goodbye to Radio Shack and you may have also noticed a severe drop in the number of Sears, Kmart, JC Penney, Payless, The Limited, Gymboree, and rue21 stores in your area — 2017 was a particularly bad year for those companies. Lifestyle preferences are changing and retailers aren’t allowed to just stick around because they’ve got a brand name. Like sharks, they have to keep moving forward or die.
Dave & Busters is Probably Replacing Them
One of the big questions involving Toys R Us is what will happen to the cavernous retail spaces they leave behind? Local shopping centers are having a tough time as it is filling empty retail space, let alone a big-box store like this. Some landlords expect to fill the space quickly with off-price retailers just to get someone in. Others will likely split the space to lure smaller retailers.
One company that’s salivating at the thought of all this empty space is Dave & Busters. The “eater-tainment” company is in the midst of rapid expansion and has been more than happy to fill the voids left behind by companies like Sears, snapping up sizable storefronts for their restaurant and arcade game needs. The company often requires spaces between 25,000 to 43,000 square feet but has also been experimenting with locations as small as 17,000, depending on local population density.
Dave & Busters came into 2018 with a little over 100 locations but also had signed 29 leases for locations opening in 2018 and 2019. According to one executive, they’re eyeing “nearly a hundred more sites across the U.S.” for expansion.
Other Companies Might Be on the Way Out
J.Crew ended 2017 by announcing they would be closing 50 stories, saying in a statement that “we must evolve our business model from a traditional brick-and-mortar specialty retailer to a digital-first omnichannel business.”
Ascena Retail Group (Ann Taylor, Loft, Dress Barn) is shuttering 500 stories in 2018 and expects that number to rise to over 650 by 2019. Gap and The Children’s Place are both closing over 100 stores but expect to roll that out over the next three years as they feel out the market. Other mainstays that will be shrinking their presence include Teavana, Mattress Firm, and Walgreens/Rite Aid.
If you suddenly swing by your local outpost of any of these retailers and find the windows empty, don’t be surprised.
A Dollar Goes a Long Way
The retailers who go bankrupt or close stores are the ones who get the headlines, but the ones who are thriving don’t get enough credit. While some familiar faces are going away, expect to see a whole lot more discount and convenience stores.
Specifically, Dollar General and Dollar Store had an absolutely gangbusters 2017, opening 1,290 and 650 new stores, respectively. Given the market and economic issues affecting low- and middle-class shoppers, it’s no surprise that bargain sellers continue to succeed.
Meanwhile, 7-Eleven and Couche-Tard (who oversees brands such as Mac's, Circle K, and On the Run) added 412 and 318 stores last year, respectively. Even the supermarket sector saw big gains from discount retailers such as Aldi (200 new locations) and Lidl (100). Also, TJX, the parent company of off-price merchandisers Marshalls, HomeGoods, and TJ Maxx, saw 110 new locations in 2017.
The lesson is, consumers are always looking for a good deal. If you build your business around providing one, you’re going to stick around for now.
Big-Box Stores Are Downsizing
To avoid the same issues so many other retailers are facing, many big-box stores are looking to become something more akin to “middle” box stores in order to keep costs low and focus their services on specific customers.
You’ve probably already noticed that companies with traditionally large storefronts (Target, Best Buy, Ikea) have been introducing streamlined, skinnier versions of themselves. These smaller stores are often more curated to meet the needs of each local customer base instead of throwing everything against the wall regardless of location.
The popular notion is that customers don’t want to (or need to) wander long aisles anymore to shop for things they could find with a click of a button on the internet. So by becoming more efficient, large retailers can remain relevant, fit better into urban environments, and allow companies to reach larger population centers.
Some Familiar Names Are Doing Better Than You Think
It’s not all fire and brimstone for your favorite retail brands. If you’re a loyal shopper at Costco, Wal-Mart, Nordstrom, and Best Buy, you don’t have to worry about these big retailers going away anytime soon.
While so many large retail stores are being forced to downsize, these companies figured out a while ago how to evolve with the times. Costco and Wal-Mart provide a value that can compete with the internet, especially in parts of the country where online shopping isn’t a given. Nordstrom and Best Buy figured out how to thrive in their niche and positioned themselves as one-stop shops for multiple customer needs.
Subs and Casual Dining Are Out; Donuts, Pizza, and Burritos Are In
When it comes to fast food and quick-serve restaurants in your local retail center, there’s a pretty clear trend at work that looks bad for some brands and pretty good for others.
The bad news is that America’s favorite footlong sandwich purveyor, Subway, is coming off a particularly bad 2017. The sandwich chain closed 400 stores thanks in part to market oversaturation, a stale menu, and a one-two punch of bad PR that’s been following the brand for a few years.
It's also been a tough time for casual dining chains such as Pizza Hut, Applebee’s, and Ruby Tuesday. They usually like to blame millennials for their problems, but the issue stems more from customers either opting for cheaper alternatives or “nicer” dining options as well as an interest in newer, fresher brands.
On the flip side, these are boom times for doughnuts, pizza, and burritos. Pizza-chain Noble Romans was the big expansion winner in 2017 with 200 new locations, joining Domino’s (134), Marco’s (97), Blaze Pizza (75), and Papa John’s (70) on the growth scale. Unlike Pizza Hut, these chains have found their respective niches.
Dunkin Donuts has finally stopped thinking of itself as a regional brand and seems to be thinking nationally, adding almost 200 new locations, updating their menu, and potentially streamlining their name in order to show consumers they’re more than just donuts.
And of course, there’s Chipotle. In spite of multiple food poisoning incidents, the burrito chain appears to be unstoppable, expanding to more locations and even raising its prices because they know there’s pretty much nothing that’s going to stop you from eating there. Qdoba and Taco Bell continue to ride those coattails upward as well.
Stores Within Stores (In-Store Experience)
It’s not just the names on the storefront that are changing and evolving; the experience inside your local retail store is changing, too. Because every brick and mortar store has to compete with the internet, the best way to remain relevant appears to be creating an in-store experience that makes you want to leave your house.
Perhaps you’ve gone to Urban Outfitters and noticed there’s now a pizza place next to the clothing racks. Or maybe you’ve stepped into a dressing room and found technology that allows you to change the lighting, get feedback, or see more items based on what you’ve picked out. These are just a few examples of the kind of experiential updates that retailers are incorporating in a neighborhood near you.
Behold the Omnichannel
If you can’t beat ‘em, join ‘em. That’s the thinking behind retailers who create an “omnichannel shopping experience” as a way to bring the value of shopping online into the store with you.
Next time you visit Crate + Barrel, you might be given a special tablet that allows you to scan barcodes, learn more about a product you see, add an item to your wish list, and call for a sales associate to meet you wherever you are.
REI is known for a similar strategy, which implores you to use your mobile phone while shopping in-store in order to provide you with additional information, special deals, and store location information.
In other words, it’s all of the benefits of going to the website, but now you can actually interact with the items you’re shopping for.
The Rise of Retailtainment
The buzzword “retailtainment” might send shivers down your spine, but it’s an actual thing that companies are using to provide customers with a fun environment that they’ll want to return to over and over. By combining retail and entertainment experiences, it’s another way to bite back against the online and stay-at-home experience that’s so enticing these days.
Some examples are more extreme than others. A golf store adding a putting green is a simple but effective way to create an experience. Adding yoga classes to an athleisure apparel store gives people a reason to visit.
However, there are even grand retailtainment experiences out there. Some Staples locations have added coworking spaces so people can literally work in their store. Many theater chains have added in-movie drink and dining experiences as a way to give people a reason to keep coming when they could just as easily stay home with OnDemand. Barnes & Noble is introducing full-service restaurants and bars in some stores in order to give customers a reason to stop in and shop instead of just clicking over to Amazon.
There is perhaps no one who embodies the focus of “retailtainment” quite like Starbucks. At first glance you might think the mighty coffee shop company is in some trouble considering they’ve shuttered all 379 of their Teavana stories. But in truth, they’ve simply refocused their efforts by streamlining their menu and putting the focus on customer in-store experience. Your neighborhood Starbucks gives you various ways to heighten your next trip. Free reward cards and apps, smartphone and online ordering, and limited time promotions for Instagram-worthy beverages incentivize customers to stop in more often. Starbucks Reserve stores create food court-style experiences that include a mixology bar and artisan food stands. And that’s just the tip of the whipped cream-topped iceberg as Starbucks hopes to one-day become known less as your neighborhood coffee shop and more as your go-to neighborhood hangout.