21 I Lake Cook Corridor Market Study and Plan
RETAIL OVERVIEW RETAIL MARKET TRENDS While the Lake Cook Corridor looks to overcome its challenges and fulfill its potential, it should be cognizant of emerging national retail trends. A key retail trend is the shift toward housing retail in lively, mixed-use destinations. The market is generally moving away from single-purpose developments such as strip malls and enclosed shopping centers and towards mixed-use destinations centers. Such centers feature densities and a mix of uses (residential, open space, office, and commercial) to create energy, provide critical mass and foster an urban feel in a suburban setting. Key to these developments is seamless integration of uses under a unified development design which ties into the surrounding area. Successful mixed-use destinations create an identity for a community and become a social gathering place and civic hub. They are particularly favorable to millennials who are looking to leave the city for the suburbs but would like to maintain the convenience and accessibility they have grown accustomed to in urban environments. An underlying component of mixed-use destination centers is walkability. Studies have found that walkability in suburban retail centers leads to increased retail sales, property values, and occupancy rates. Aside from known healthy and sustainability benefit, walkability has clear benefits for landlords and developers.
A recent academic paper (2016) by the University of Arizona declared that “all else being equal, the benefits of greater walkability were capitalized into higher retail and apartment values by up to 9 percent.” As walkability is on the rise, parking visibility is on the decline. Destination mixed-use and other commercial centers are moving away from large surface area parking lots in front of their retail stores and commercial businesses. Today’s centers are now accommodating parking by integrating it into development, utilizing screening, and otherwise reducing its visibility so that developments and centers are more pedestrianoriented instead of auto-oriented. Many are also utilizing on-street parking for tenants that generate high-turnover customers. In addition to the external environment, the retail market is also experiencing a shift in retail marketing and operations. Today’s retailers are moving towards experiential retail and focusing on the customer’s experience. According to Elite Wealth Management, there were 34 billion visits to U.S. stores in 2010; by 2015, that number was below 17 billion – essentially reduced by half. Research is finding that to attract customers and generate sales in-store, the customer must now have a memorable experience, either based on the level of customer service, the ability to socialize with others, interact with the products offered, or the uniqueness of the store's design. According to a 2016 survey conducted by the National Retail Federation, the “in-store experience” is now the single most important factor in determining whether or not a customer will return to a retail outlet after an initial visit. Starbucks has led the movement in experiential
retail. Starbucks effectively transformed a simple coffee shop into a space where people can conduct business meetings, socialize, or work independently while using the store’s free Wi-Fi. Grocery stores are also starting to follow this trend as chains such as Whole Foods have started to include meeting areas, alcohol and coffee bars and Wi-Fi in their layout. In doing so, they are effectively turning their grocery store into places to socialize, work and relax, as well as shop. Grocery stores are finding that integrating multiple formats helps them stay ahead of the competition. Other examples of retailers that focus on their customer experience include: • Sporting goods stores, which integrate climbing walls or fishing demonstrations • Outdoor outfitters, which offer classes, training, and group events or trips • Home improvement stores, which provide do-ityourself project instruction or clubs • Clothing retailers, which offer sophisticated fittings or personal advisors In addition to offering customers a meaningful experience, many retailers are also offering online shopping and in-store pick options for their customers. In doing so, their stores become a crucial link in retail supply and distribution. E-commerce continues to grow in its share of retail sales, however, it still represents only 9.5 percent of total retail sales. Consequently, creating a welcoming and relevant retail environment has become more important than ever.