Retail Space: Less About Products, More About Brand Experience
June 6, 2012
We’ve written on the
various impacts the e-commerce wave has had on commercial lease space San Diego. Usually, the trends point to a general future decline in demand
for brick-and-mortar as the growth in e-commerce shows no signs of slowing.
But not every trend and
development is bad news for traditional retail. It’s possible that internet
retail’s growth does not always come at the expense of traditional retail.
Amazon.com, whose revenues have
been rising an incredible 30-40% per year are a huge part of the internet
retail picture, a $200 billion market expected to reach a 9%
share of total retail by 2016. With numbers like these, it might be surprising to learn that
Amazon is planning to open brick-and-mortar commercial real estate in San Diego or anywhere. But they are.
Industry analysts say Amazon’s planned Seattle
retail store could be inspired by
the runaway real estate success of another technology giant, Apple Computer.
There’s a lot to be
inspired by. Apple’s business model relies heavily on commercial real estate,
sporting more than 300 retail stores in 11 countries. 13% of Apple’s overall
sales were due to retail in 2011, and that includes 21% of its flagship laptop
products. It’s Retail division claims 30,000 “full time equivalent” employees,
and most eye-popping to retail experts, Apple claimed in 2009 that its stores
brought in $4,300 per square foot.
Apple’s singular success
in meshing technology and bricks might be leading Amazon into a wisdom about
retail that is often overlooked: the customer is there for goods, to be sure,
but not only goods. Brand experience draws people into retail too – the
entirety of their experience, from personal customer service, to amenities,
trying out items, to all the intangible expectations that come with that brand.
Finding the right
balance between brand experience and goods availability is the trick. Will a
customer base brave traffic, parking, crowds and lines for a radically reduced
set of on-the-shelf items? Amazon might be put into the position to try to
prove that the brand experience can trump physical offerings if their strategy
will rely on Amazon’s flagship gadget, the Kindle Fire.
Amazon’s impact on
national commercial real estate and commercial lease space San Diego is growing far beyond its retail test: the company sports 69
enormous warehouses, 17 of which came online in 2011. That kind of growth could encourage
experimentation and might give the giant the conceptual space it needs to
tinker with a retail formula to rival Apple’s. If they get it right, it can
only be good news for shopping centers across the country.
Source: Wayne
Grohl, CommercialSource
DISCLAIMER: This blog has been curated from an
alternate source and is designed for informational purposes to highlight the
commercial real estate market. It solely represents the opinion of the specific
blogger and does not necessarily represent the opinion of Pacific Coast
Commercial.
Comments
Post a Comment