Experiential retail to hold sway as pandemic alters shopping behaviour2 min read . Updated: 09 Oct 2021, 01:46 PM IST
- Store design and location strategy are likely to evolve in response to consumers’ changing expectations,” CBRE South Asia said
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NEW DELHI : Retailers will need to adapt to a shift in how consumers shop and redesign stores, pick more strategic locations as well as develop stronger omnichannel capabilities going forward, according to a report by real estate consulting firm CBRE.
The pandemic has had a significant impact on shopping behaviour, prolonged store closures led to loss of sales for apparel retailers; while demand for groceries both online and online remained high. For retailers, the past year has meant changing the way they reach shoppers both online and offline.
“While brick-and-mortar stores will undoubtedly remain key going forward, experiential retail would hold sway among brands. Meanwhile, store design and location strategy is likely to evolve in response to consumers’ changing expectations," CBRE South Asia said in its ‘India Retail Reboot 2021’ report released earlier this week.
CBRE foresees the redistribution of space between various areas of retail stores such as fitting rooms, product testing zones, pick-up counters and stockrooms. Stores may work with lesser inventory as companies ship directly from warehouses, it said.
“Less space will be allocated to areas that have a minimal positive impact on consumer satisfaction. With inventory management already being optimized with the aid of predictive demand analytics, brick-and-mortar stores may eventually become inventory free as purchases would be dispatched from warehouses to consumers’ homes upon payment," it said.
The pandemic has altered consumer shopping habits, some that will have long-lasting impact on how people shop. The switch to online is a clear outcome of longer stay-at-home orders but the pandemic has also promoted offline retailers to re-think locations, in-store inventory and building capabilities that enable orders via multiple channels.
A key takeaway from the pandemic has been that buyers are looking to minimise contact and touchpoints. Online shopping has provided existing and new customers with the convenience to shop in a safe environment. As a result, most leading brands and even small, homegrown retailers are either setting up their own e-commerce platforms and partnering with third-party aggregators—in addition to their physical store footprint, it added.
Such an omni-channel presence will be key for most retailers, it said.
The report also pointed to a changing landlord and tenant relationship. The pandemic that led to temporary closures of stores both in malls and high-streets also pushed retailers to renegotiate rental agreements. Landlords provided several relief measures to accommodate retailers, including rental rebates and deferments.
Post the pandemic, more partnership-like agreements started to surface between landlords and retailers. "Going forward, we expect that lease agreements that are designed to absorb the impact of such structural disruptors while at the same time provide scope for rental growth and visibility on retailer performance would be preferred by retail stakeholders," it added.
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