What We Learned at ICSC New York
The grocery store industry is undergoing some major changes and it appears that only two types will survie. The discount, low-priced oriented grocer (LIDL, Aldi, Walmart Neighborhood Markets) where people specifically shop to get the best and lowest prices. At these places though, you won't get the greatest selection or service. The other class is the experiential grocer, like Lucky’s Markets and Whole Foods. At these places, shoppers can go in and have beer or wine while they shop and some are adding restaurants and food offerings. Prices won’t be as competitive, but they offer an overall better shopping experience with more entertainment. Trader Joes is exception because it has items buyers can't find everywhere else. If grocers don’t begin making strides to fall into one of these two categories, they will very likely fail.
What’s next in digital retailing? Straight up internet retailing is not profitable enough because of distribution, shipping and return costs. What numbers show is that 85%+ of what people buy is local—within 20 miles of their homes (grocery stores, boutiques, etc.) Other percentage you might do online. This is the majority of population. Given the nature of that, brick-and-mortar retail will continue to be a big part of regional and local business.
Retailers that succeed will be ones with a strong brick-and-mortar presence and a stellar online presence to support the B&M locations. The strongest validation of this—maybe ever-- is Amazon’s purchase this year of Whole Foods – proof that even the most successful online retailers need brick-and-mortar to survive.
They are the future and the future is closer than anyone realizes. They will have a huge impact on shopping centers--both i nterms of physical construction and the need for new technology and apps. For example, a mall may have 30 driverless cars—and if a person wants to go to that mall, all they have to do is request one of those cars to pick them up.
This will be something big to watch in the year ahead as the driverless car technology really progresses.