The shifting retail landscape

Commentary

Brick-and-mortar retail is going through a dramatic and rapid transformation.

On the one hand, many brick-and-mortar stores are dropping like flies. Sears, Roebuck & Co. is closing 150 Sears and Kmart stores this year. J.C. Penney Co. Inc. recently announced it will close 138 stores. Macy’s Inc. will close 68 stores this year. Payless ShoeSource Inc. closes nearly 400 stores. General Wireless Operations Inc. closed 200 RadioShack stores in March. Hhgregg Inc. closed 88 stores. Abercrombie & Fitch plans to close about 60 stores this year. Sun Capital Partners closed all of its nearly 250 The Limited stores across the country on January 8.

I could go on…but I think you get the picture.

Southeastern Wisconsin has seen its fair share of store closings, too.

Amazon clearly has changed the retail game. If your family is anything like mine, you probably are spending far less time at brick-and-mortar stores these days because almost anything you need can be bought for less on Amazon and delivered right to your door. My next-door neighbor works at the Amazon fulfillment center in Kenosha and raves about the sophistication of the operation.

You don’t even need to do your grocery shopping at brick-and-mortar stores anymore, thanks to delivery services such as Peapod.

But on the other hand, there are several new retail developments that are being built, or have recently been completed, in the Milwaukee area. The Corners of Brookfield, anchored by the state’s first Von Maur store and one of the biggest retail developments in the region in years, opened recently. Meijer Inc. has built several stores in the area. Kohlberg Kravis Roberts is planning Mills Fleet Farm stores in Oconomowoc and Kenosha.

Many of the new stores that are getting built are part of mixed-use developments that often include apartments, restaurants and entertainment venues. Mixed-use projects like The Corners, 84South in Greenfield, Whitestone Station in Menomonee Falls and Drexel Town Square in Oak Creek are attracting tenants.

What seems clear about brick-and-mortar retail is that its survival will depend upon the experience provided to shoppers. For some, shopping is still an enjoyable experience to do in person, so stores that provide a fun, exciting atmosphere will thrive.

The mixed-use town center-style developments clearly are better positioned to deliver a great experience than traditional enclosed malls or dull strip malls. A major component of many of these developments is restaurants, which are attracting more customers at the same time many brick-and-mortar stores are struggling. It’s no wonder the traditional malls, like Brookfield Square, have been adding more restaurants in an attempt to make themselves more of a destination. Malls must continue to transform themselves into entertainment destinations, not just places to shop. That’s probably why Simon Property Group made a deal with Marcus Theatres to add a movie theater complex next to Southridge Mall.

Expect retail property owners to increasingly look for ways to evolve their properties with a mix of uses to attract more customer traffic.

Yet above all, the biggest advantage brick-and-mortar retail still has over online retail is customer service. To survive, brick-and-mortar retailers are going to have to offer outstanding customer service; not good – outstanding.

Customers seeking a low-price commodity retail product are going to keep shopping online.

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Andrew is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, he is a lifelong resident of the state. He lives in Muskego with his wife, Seng, their son, Zach, and their dog, Hokey. He is an avid sports fan and is a member of the Muskego Athletic Association board of directors.

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