News What we learned at the 2019 ICSC OAC Summit

Members of the Atlantic brokerage team recently attended the ICSC Open Air Center Summit held at the Fairmont Hotel in Austin, Texas. The barbecue and live music were fantastic, but our team found the conference itself to be just as lively. Unlike most ICSC events, OAC limits attendance, creating a more intimate atmosphere, thoughtful panels, and providing attendees an excellent opportunity to network and learn from the leaders who are helping to shape the retail real estate industry.

It’s been written ad nauseum how technology is impacting retailers and, as a result, retail real estate. For the most part, these stories have focused on the negative impacts such as store closures and competition from ecommerce. What struck us during the summit was the myriad of new technologies that are improving the way retailers operate and positively impacting our business.

Autonomous Vehicles could forever change how customers access retail

Paige Fitzgerald, Waymo’s head of Strategic Partnerships and Business Development, gave an eye-opening look at how their technology (powered by Google) is proposing to change mobility and transportation forever. Today, cars are idle 95% of the time, and 60% of trips travel less than 1 mile. Despite these facts, in the United States there are 35,000 fatalities every year on the roadways, and 94% of crashes are a result of human error. Since starting in 2009, Waymo’s goal has been to not only improve safety but also save people time and improve transportation accessibility. Their fleet of self-driving ride-share vehicles, which have completed 10 million miles in 25 cities, have the potential to do just that and sooner than you may think.

This technology will have a massive impact on the shopping center business. First, cars won’t be sitting idle in large parking fields or garages anymore, reducing the need for parking. This will create opportunities to develop new projects on less land and allow owners to densify existing centers. Second, autonomous vehicles have the potential to dramatically reduce traffic and alter commuter patterns. While current high-traffic corridors will likely remain, retailers who place a value on traffic counts may need to re-evaluate that metric. Finally, proponents of autonomous vehicles envision a world where vehicular travel is a commodity and individuals no longer own cars. This has the potential to re-shape auto-related businesses, shifting their focus from a consumer-oriented experience into a true B2B, altering the quality of real estate they require.

GeoFencing opens new doors for owners
and retailers to identify true trade areas

What’s scarier than a self-driving car? Your cell phone spying on you from your back pocket… While that may be hyperbole, it’s no secret that large tech firms are doing everything they can to get as much intelligence as possible on the American consumer. GeoFencing is an emerging technology that uses cell phone movement to identify true trade areas. When coupled with demographic software, it becomes a powerful tool for owners and retailers to look at markets in a whole new way.

GeoFencing has significant benefits for owners and retailers alike. Fencing of individual stores can allow an owner determine customer flow through their center and help identify complimentary tenants. For retailers, even those with established research departments, it can be a great cross-check on their own trade area analysis and help them refine their own store analogs. Also, since virtually any property can be analyzed, retailers and owners can easily study the true trade areas of their competition and make more informed decisions as a result.

Improved customer experience
(both in-store and over social media) is still key

When asked about 2019 trends in retail, Laurie Mahowald, VP of Real Estate at Target, stated that a “frictionless” checkout would be one of the most important innovations impacting a customer’s in-store experience. It’s no secret that Target has placed a big bet on its stores, coupling the convenience of online with the immediate satisfaction of brick & mortar. A smoother checkout can create a more efficient sales floor and reduce size needs. Additionally, getting the customer in and out of the store easily will help build brand loyalty and ensure subsequent visits.

Responding to the same question, Christina Froehling of Xponential Fitness (parent of Club Pilates, Row House, Stretch Lab, and others) expanded on the role social media is playing in retailer success. Anyone who has opened Twitter or Instagram sees the tremendous impact they have from a pure marketing standpoint, allowing retailers and service providers to directly reach their customers. However, social platforms offer an added benefit of customers interacting with each other, further promoting a brand or service. In the fitness category specifically, users are sharing their personal success stories, creating a positive feedback loop which incentivizes more people to put down the phone and get on the rowing machine. When brands offer an “Insta-worthy” experience in their physical locations, the benefits can be compounded.

While technology was certainly the overarching takeaway from the 2019 OAC Summit, it was not the only one. Check back for future posts covering the latest demographic trends and our thoughts on the future of mixed-use projects.