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The current retail landscape is nearly indiscernible from a decade ago and the industry can expect an even faster evolution in the years to come, said a panel of nationally prominent retail analysts at a RECon panel Monday titled "Wall Street on Main Street." Those brands and REITs that expect to remain in investor favor in the next year, let alone in ten years, can't be averse to changing consumer whims and new ideas, they said. "It's a faster paced evolution than what we have ever seen," said Joe Feldman, senior managing director of New York-based Telsey Advisory Group. "The industry is embracing technology at lightning speed and moving it forward."
Edward Yruma, managing director of New York-based KeyBanc Capital Markets, said physical stores are going out of their way "to create the very compelling and emotive experience we all want and need" in order to separate themselves from the e-commerce experience. Much more retailer attention is being paid to letting customers know that they're offering something new and something fresh, he said Added Feldman: "People buy things on line but I don't think they shop on line. There's a big difference."
As the industry has evolved in the last several years, it's bifurcated in two distinct directions, said Tom Forte, senior analyst with New York-based Brean Capital. "There are retailers that offer the lowest price point to compete with Amazon -- and good luck with that -- and there are those that differentiate." QVC TV/online and its growing physical store counterparts, QVC Outlet and QVC Studio Store, is one such retailer because 75 percent of what it sells isn't available on Amazon, Forte said.
Besides engaging customers, physical stores must continue to be like their e-commerce counterparts in reducing what the industry calls "transactional friction," or reducing cash-stand waits and training employees to be more versatile and knowledgeable, Yruma said. "It's like the Apple store model; anyone can check you out."
The grocery segment continues to be retail's star-performer, said panelists. Much like the European model, Class A malls might be wise to add such best-in-class grocers as Whole Foods, Wegman's and HEB Central Market to their mixes, in part because they are enormous traffic drivers, said Feldman. Up-and-coming, technology-savvy retailers with strong e-commerce brands are good bets for malls as well, he said. The surging Restoration Hardware also would be strategic addition on the large-tenant level and Sephora and lulelemon on the small-tenant level, other analysts said. Retailers that were once confined to malls, power centers or other shopping center classes continue to look at a variety of different-type center and footprints to remain flexible, said Dana Telsey, CEO and CRO of Telsey Advisory Group.
How will department stores fare in the fast-changing environment? "Not well...if you are just going to be a collection or brands you can buy everywhere else," said Feldman. However, department stores such as Nordstrom with its highly regarded e-commerce site and sales-driving Nordstrom Rack stores are an exception, Telsey said. "All the department stores know they can't be where they were ten years ago," she said. KeyBanc's Yruma believes the department store chains that will thrive and survive are those "that create an environment that engages the consumer." While there has been much doomsaying about J.C. Penney, Telsey believes the department chain's latest remerchandising strategy, including a successful test of major appliances, now rates it as a "buy."
In other coming trends, social media site such as Pinterest, Instagram and Facebook are all headed to leveraging their networks to sell products, such as garments that are worn -- and automatically identified -- in user-posted online photos, said Forte. "And there are lot of apps being created for new and emerging (retail) brands that will leverage these social networks as well."
And while delivery time for e-commerce products continues to quicken, same-day delivery remains a dream for most retailers, panelists said. For it to be possible, retailers will have to partner with Walmart, they agreed.
Some things won't be changing. "Brands still have to say what they do and do what they say," summarized Telsey. — Steve McLinden