Kroger and Macy’s are aggressively adopting omni-channel platforms they consider critical to meeting today’s consumer expectations. The efforts show promise, said Nick Hodge, vice president of corporate real estate for Kroger; and Douglas Sesler, senior vice president of real estate for Macy’s, at a CBRE retail trend round table at RECon.
Kroger reported online sales of $5 billion last year — an impressive year-over-year growth rate of 58 percent — and the company anticipates that the amount will roughly double this year, Hodge said. The company also reported total sales of $121.2 billion last year. “We’ve got 10 or 11 million people walking through our doors every single day, and they’re telling us that they want to engage with us at the store level, to be able to pick up products [ordered online] in the store, and that they want home delivery,” Hodge said. “We’re in the early innings of developing out our fulfillment process for getting that done, but my glass is certainly half full.”
DLC Management founder and CEO Adam Ifshin observed that consumers used to provide the last-mile shopping “labor” for retailers — from driving to centers, to taking the goods home, and, possibly, returning them. But thanks to the growth of e-commerce, consumers now expect retailers, many of which are operating on a low margin, to shoulder those services without cost. “I have no idea how, in the long run, a low-margin business can keep providing that level of service for free,” he said. “Can people be retrained to understand that they’ll have to pay?”
“Can people be retrained to understand that they’ll have to pay?”
Sesler acknowledges that retailers must address pricing over the long term to remain viable. Online and physical omni-channel retailers are already gravitating toward centralized brick-and-mortar pickup locations as part of that evolution, he said. “It will be a lot easier on retailers, because they won’t have to do that last mile,” he asserted. “And there will be tiered pricing — if you want the product at your doorstep, there will be a premium associated with that.”
Another question centered on the Millennials’ impact on the shopping center industry, given their tendency to starting families later, to shopping differently from their parents, and to showing loyalty to altruistic-minded retailers. On that topic, the panelists were of one mind: Millennials arguably make up the largest consumer base in history, so deal with it.
“If you’re a retailer,” Ifshin said, “you have got to figure them out.”
By Joe Gose
Contributor, Shopping Centers Today