With all the negative headlines about the “retail apocalypse” and store closures, it’s easy to forget the big picture. Brick and Mortar sales are continuing to grow, albeit, not at the same rate of online growth. Online sales increased by 14.8% year over year, compared to brick and mortar growth at 1.9%. However, brick and mortar sales account for close to 90% of total retail spending. Which brings me to an interesting question, is online retail killing brick and mortar or helping drive their sales?
Our friends at ICSC (International Council of Shopping Centers) discovered some interesting results and published them in a report entitled The Halo Effect: How Bricks Impact Clicks.
New Brick & Mortar Store Openings Increase Web Traffic
The findings of the report clearly shows the impact that brick and mortar retail locations have on digital engagement. Not only do physical stores impact online sales, but also brand perception and awareness. Physical locations are an extension of the retailer’s brand and provide an opportunity to connect them with their consumer.
The big unspoken secret of Amazon’s push to get into physical stores is that Target and Walmart use their broad physical footprint as fulfillment and delivery hubs. In fact, by one estimate, 70% of Target’s 2018 online holiday sales were picked up at one of their stores. This intersection of digital and physical will grow even more pronounced as Walmart, Target, Kroger, Publix, Best Buy, and many others remodel their stores to accommodate lightening fast pick-ups for online orders.
I’ll leave you with this note, Bloomberg reported that Amazon plans to open 3,000 Amazon Go locations by 2021, Whole Foods opened its 500th store in April of this year, currently operates 18 Amazon books stores, 3 Amazon 4 Star Outlets, and five Amazon pop up sites. They are also scouting to acquire regional grocery chains to add to their distribution channels. Amazon is growing its brick and mortar business.
About the Author: Jason Ricks, Principal with Concordia Equity Partners LLC
Mr. Ricks is a native Texan, professional real estate investor, certified commercial investment member (CCIM), and real estate entrepreneur whose primary focus is on acquisitions, leasing, construction, and development. Mr. Ricks’ background in retail leasing and asset management make him an invaluable member of Concordia’s team for developing strategy to unlock the value of a property. Mr. Ricks also has extensive experience and familiarity with south and southwestern US markets. Mr. Ricks’ most recent experience is with AMLI Residential as the Vice President for Retail Asset Management where he established and has led the mixed-used Retail Asset Management team working on premier properties worth hundreds of millions across the country. Prior to that, he served as an Asset Manager for BH Properties where he oversaw a 2.2 million square foot value add retail portfolio throughout Texas and Oklahoma. Mr. Ricks broke into the commercial real estate business as a Shopping Center broker for Tarantino Properties. He received his BS in Business Management from Oklahoma State University, where he was a Team Captain for the Oklahoma State Football Team (The Cowboys). Mr. Ricks is a member of the International Shopping Counsel of Centers (ICSC). Most recently, he was featured in the #1 Amazon bestselling book: DESIRE, DISCIPLINE & DETERMINATION (2019).
Concordia Realty Corporation has been successfully connecting sound economics with experience in real estate for more than 28 years. We are a premier private real estate investment and management firm that specializes in Retail Real Estate, including Shopping Centers and Single-Tenant Net-Lease Detail/Medical (“Medtail”) properties. Our wide range of experience has uniquely positioned us to redevelop and repurpose properties that are experiencing disruptions related to technology and merchandising. This experience has built a skill-set that helps to add value to all of our real estate ventures.
For more information on Concordia Realty, contact us here:
DISCLOSURES, LEGAL AND TAX COUNSEL: Concordia Realty Corporation, Concordia Equity Partners LLC, Concordia Realty Management,Inc. (collectively “Concordia Realty”) and their affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction or undertaking. Concordia Realty highly encourages individuals and investors to seek the counsel of a qualified attorney as well as seek the counsel of a tax professional or Certified Public Accountant (CPA) to determine if there are any potential tax liabilities or consequences as the result of anything contained herein. NO GUARANTEE: All users of this website should understand there are NO GUARANTEES of any success, outcome or profitability of any transaction or undertaking, expressed or implied by Concordia Realty or any of its members, shareholders, officers or affiliates and will NOT be liable for any financial or other losses or damages incurred as a result of any undertaking. Go HERE to view complete DISCLOSURES.