Retail Is (Still) Alive—and I'm back!
Retail Rocky Road
It’s been a while. Actually, it’s been one year and almost eight months since you’ve heard from me. Truthfully, I was intending to publish this in January, but here we are. I have reasons (more on that below), but I’m renewing my commitment to monthly posts—now that it’s out there I have to do it! We have a lot to catch up on so let’s get to it.
It’s funny to me that my last post (published in June of 2021) was imploring brands not to succumb to FOMO and sign a lease without a clear vision of the purpose of the retail environment. Times have clearly changed and now most brands are skittish about signing any lease given the current economic uncertainty. Still, the sentiment holds up—but we’re in for a bit of a rocky road.
I was recently asked for my retail predictions for 2023, and after I finished rolling my eyes a little (it is well documented that as humans we are terrible at predictions), there is one datapoint that is worth watching as we all try to read the tea leaves.
There’s a new baseline for traffic. Back in mid-2021 Sensormatic, maker of the popular people counter ShopperTrak, started putting out a report that measured aggregate US shopper traffic against 2019, 2020 and 2021 levels.
Since 2020 was by all counts a retail anomaly, I started watching 2019 versus 2021 traffic closely. When we turned the corner into 2022, the data became even more valuable as we could measure against both 2019 and 2021.
It’s important that you understand my retail philosophy before going any further. I deeply believe that retail is an enduring channel–that there is no “physical retail is dying/dead” moment in the near or far future. It will never happen. The medium of physical retail sits at the intersection of entertainment, necessity, utility, community, and commerce. I own the trademark Retail is Alive™—that is the depth of my belief.
For over two years now I’ve been waiting and watching this traffic data. I believed that as soon as the worst parts of the pandemic abated customers would return to stores in greater numbers than they had previously. Why? Because like the stock market, retail traffic always goes up. Right? Unless it doesn’t.
For nearly two years, we’ve been sitting squares between -15% to -20% of 2019 traffic levels. A few important things to note: this is aggregate traffic across the US. There are certainly cities and MSAs where traffic is exceeding 2019 levels. But on the whole, this new traffic baseline hasn’t really budged much over the past two years.
What does this mean for physical stores? Brands that either have, or are considering, physical retail stores—now more than ever—need to nail two things:
Who the physical environment is for.
Where the store is most likely to succeed.
A store for everyone is a store for no one. One of the biggest mistakes brands make is to create a vague, non-distinct environment in an effort to appeal to a wide audience. This seems logical on its face: cast your net wide to catch a lot of fish. The reality is without a specific customer in mind the environment will fail to convert true promoters of the brand. This is not to say that you need to have fancy expensive fixtures or futuristic tech. Quite the opposite, actually. When making decisions about the physical environment, brands should use the filter of: what would he/she/they (specific customer) need in order to increase their likelihood to buy.
Go where your customers are. Another common fallacy of physical retail comes up in location selection. Commercial real estate professionals and landlords are really good at inducing FOMO with aggregate traffic numbers and visions of new customer acquisition in totally unknown markets. The flawed logic here is: if you go into a totally new market, you’re going to acquire all new customers. And yes, brands will inevitably acquire new customers in a new market, but the ramp-up period is much longer and growth is typically much slower. Why? Because of inertia. Shoppers look for excitement, buzz, and yes, newness, but with validation. A brand that opens a store in a market with a critical mass of customers is busy. It’s buzzy. It draws other shoppers in and increases discovery. If a store opens in a market where there are no existing customers, does it make a sound? Probably not.
What to do, then, about the question: To physical retail or not to physical retail? It’s clear that there is still a fair amount of economic uncertainty which continues to impact consumer behavior. According to one report, 75% of consumers remain cautious about rising prices—though this is a lower percentage than in summer of 2022 at peak inflation. And consumer spending tends to mirror the overall financial outlook across the country, which is on the rise.
I realize this isn’t a straight answer, but take it from me, the Retail Is Alive™ gal, retail will endure. Evolve, but endure. If a brand has the up-front capital for the build (it might be less than you think), knows who its store is for, and has data to support its location selection, it just might be time to go physical.
ICYMI
There’s over a year’s worth of catchup to do here so let’s try to squish everything into a few bullets like my son trying to cram all of the candy in his mouth at once during our weekly movie nights. Hoping this is just as sweet:
Featured on the cover of Crain’s NY Business
Spoke on a panel to commercial real estate professionals at a conference for Lee and Associates
Goofed off on several Re-tales.io podcast episodes with friends
Opened 12 stores across 10 states for 8 brands (and tweeted about it)
Launched a new website
But most importantly…
Introducing rekon Retail™
We are now an agency. A Physical Retail Agency.
In the beginning of 2022, Kondrat Retail (which was just me, myself, and I), became a “we.” We are rekon Retail™. Meet the team:
Libby Shani—Partner, Omnichannel Operations
Courtney Jones—Operations Project Manager
Litoya Mikel—Retail Frontline Recruiter
Plus several other occasional partners including visual merchandisers, instructional designers, and retail operators.
Together we’re building something magical. Magical because to us, retail is a special experience. It’s interactive, social, and engages a sense of discovery.
We manage the end to end process of getting stores up and running. And we love it.