Dive Brief:
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A quarter of retailers globally plan to open six to 10 new stores this year, and another 23% plan to open 11 to 20, according to a March report from CBRE. A fifth of those surveyed say they plan only one to five new stores in 2016, while another 17% say they plan to 40 or more new stores. More than half (55%) say they’ll open least 11 new stores this year.
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Rising real estate costs worldwide are a major concern for retailers, according to the report. Well more than half of retailers surveyed (56%) say so, while 42% are leery about the economy in general. And more than a third are concerned about the quality of spaces available to them.
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Even when affordable real estate can be acquired, over a third of retailers surveyed are concerned about the quality of their spaces.
Dive Insight:
Despite the continued rise of e-commerce, stores remain the pillar of retail sales—both on Main Street and in malls. Indeed, software guru and thought leader Marc Andreessen’s 2013 prediction of the absolute end of brick-and-mortar shopping seems long ago and even quaint.
“Retail guys are going to go out of business and e-commerce will become the place everyone buys,” Andreessen told PandoDaily back then. “You are not going to have a choice.”
Well, actually, choice is exactly what the American shopper wants, and that still includes physical stores. That has become only more true as retailers themselves have blurred the lines between digital and brick-and-mortar.
Customers still want to be able to feel and try on merchandise before they buy, and physical stores are increasingly reinventing themselves to be more than just a place to buy. Many retailers, from apparel retailers like Urban Outfitters to grocery stores like Whole Foods, are experimenting with different formats, adding in restaurants, bars, and unique merchandise catered to a store's location. Other retailers like Nike and Lululemon have strived to create communities within their clientele, hosting fitness events at their stores. These are all experiences hard to recreate in the online world.
But there are certain realities to contend with, as CBRE’s report reveals. As the world economy improves, at least in fits and starts, in many areas, lease costs are also rising, and that has retailers worried.
Still, more than three quarters (76%) of retail executives told CBRE that urban shops will be key to their store expansions, while 72% say regional shopping malls will also be important.