Physical store design has become a priority again for many retailers as they change their focus back from simple survival to growing sales, retail real estate executives said at ICSC’s RECon Digital.

More space in both front and back for omnichannel

Many chains find their store prototypes to be too small or too large. “We need wider aisles and more assisted-checkout stands,” said Five Below vice president of real estate Zach Minteer. “That made us grow the size of our box.”

At Target, the volume of buy-online-pick-up-in-store commerce has increased 21 times compared with a year ago. That begs structural changes at many Target stores, said vice president of real estate Laurie Mahowald. “We had to build up our capacity at the front end.” The retailer also is rightsizing stores to accommodate fulfillment space. “We are freeing up capacity for ship-from-store,” she said.

Dick’s Sporting Goods is adjusting for BOPIS, as well, said e-commerce program manager Shannon Monahan. “For a store that is being built or that was built in the last half of 2020, we have a more upscale version of the buy-online-pick-up-in-store area to showcase that it’s a program that we care about. It has storage space. We are slightly changing the footprint of our stores to accommodate for it.”

Lease language

Retailers are eyeing co-tenancy issues as they pursue new locations, said Ulta Beauty vice president of real estate strategy Maria Toliopoulos. During the pandemic, tenants saw neighbors go dark. “We’re putting the right co-tenancy protections in place” in leases, she said. “It’s more time consuming than ever to stay ahead of co-tenancy.” Five Below’s Minteer agreed: “We are far more focused on the health of our co-tenants. There’s higher scrutiny than there was pre-pandemic.”

Ulta Beauty also includes in new leases language to protect stores from negative effects of non-retail uses that landlords might add, said Toliopoulos. “How do you future-proof your lease?”

Rich data

Toliopoulos is a big fan of mobile data tracking as a metric. “I can’t say enough about the benefits of being able to understand where the customers who visited our property went afterward,” she said. The big retail chains retain multiple data firms to have a richer view of the market. Said simply, “We love data,” according to Target’s Mahowald. “Massive mobile data is a massive tool for us,” said Minteer. Mobile data has proven most useful to Five Below, he said, when it’s deciding between two similar properties in a market.