We attended Connect Retail West in Los Angeles this week, and the opening keynote on retail trends encapsulated many of the topics that we’ve been writing about in the Anchor this year. The panel included an illustrious group from Paragon Commercial, Marcus & Millichap, CenterCal Properties, and Shopoff Realty Investments, moderated by Greenberg Glusker. We've highlighted our key takeaways from the event below:
Takeaway #1: The Reign of Athleisure
The first trend the panel universally agreed to was the impact of working from home and the resultant casualization of clothing. Darlings like Lululemon, Nike, Alo Yoga, and Vuori were mentioned as brands that are continuing to double down on their omnichannel capabilities, but definitely taking a thoughtful approach as they expand their store count. Chuckles ensued as the panelists remarked that pre-pandemic, almost all the men would have been in ties whereas of late, perhaps only 50% were. A look around the room confirmed the absence of neckwear on about half the male attendees.
Takeaway #2: Appetite for Physical Stores has Returned with a Vengeance
After a shock to the system with pandemic-induced closures where shopping centers had to get creative with curbside pickup and appointment shopping, optimism for brick-and-mortar has returned. Retail REITs are 95% occupied, and REITS like Macerich called out as having record leasing volumes. CenterCal Properties, with their open-air lifestyle properties, are seeing increased interest from potential tenants hungry to offer the latest in experiential throughout their portfolio, with inquiries from non-traditional tenants such as medical, services, and entertainment.
Takeaway #3: Expect the Unexpected in terms of New Brands
Direct-to-consumer (DTC) online brands see value in physical retail, as online acquisition costs and competition increase. DTC brands can use stores to attract new customers, get shopper feedback, lower barrier to entry by accepting returns, offer an in-person brand experience, and increase awareness. They may have a limited following online but can increase their brand love by going physical. Other types of new brands we may be seeing in centers include new forms of entertainment, like pickleball. In Santa Monica, a pickleball court called Pickle Pop is opening on Third Street Promenade. Panelists also mentioned an uptick in gourmet treats, such as donuts in new variations and flavors. Mochinut is one such sensation, with their delectable, bouncy-but-chewy donuts with the toothsome addition of rice flour to the batter. Black sesame glaze, anyone?
Takeaway #4: Casual Dining, Fast Casual, and QSR Expansion
Restauranteurs in this space still see room for expansion. Starbucks has announced plans to add 17,000 global stores by 2030 (on top of its current store count of 38,000 locations). We’ve written in the Anchor about hot new brands like CAVA. Americans also can’t seem to get enough of specialty fried chicken, such as Korean fried chicken, or the Hot Chicken chains we’ve seen sprouting up across the country. QSRs continue to experiment with robot helpers and drive-throughs to make the fast-food experience even faster and more frictionless.
Takeaway #5: Right Retail, Right Place, Right Time
Interest rates are still in line, historically speaking. While the influx of easy money in recent years may have skewed perceptions, the panelists wanted to remind the audience that, contextually speaking, retail has survived and even flourished at current interest rates, and that due to pent-up demand from the Covid years, there is a level of renewed interest in retail. The mantra repeated throughout was that it needs to be the appropriate mix that is tailored to the trade area, in an environment that is attractive to your target audience, that enables them to accomplish both essential tasks like grocery or big-box shopping, while also providing venues for discretionary shopping, dining, and entertainment.