Does E-commerce Leave Space For Retail Expansion?

Posted by Retail Attractions Blog on April 21, 2016 in Blog | No Comments

It was only a few years ago that people like software guru and investor Marc Andreessen were announcing the impending end of retail brick-and-mortar stores. Now in 2016, we’re starting to see these predictions were mistaken. Retail stores are not dying. Yet even though retail stores are still around, there’s a concern that the rising popularity of e-commerce will negatively affect retail expansion in physical locations. As a community looking to attract new retail development, or an investor looking for a location to build next, how worried should you be about e-commerce?

Percent of Sales Online

While e-commerce will affect physical retail stores, it is not going to do away with them. The percentage of retail sales that happens online is climbing, but not as quickly as you might think. In 2006, online stores accounted for about 3% of sales. In 2015, the adjusted figure was 7.5% according to recent figures released by the U.S. Census Bureau. That still means well over 90% of sales are taking place in physical stores.

Really, webstores are replacing paper catalogs more than they are physical stores. People like the convenience of online shopping, but it can’t replace the experience of shopping in a physical store where they can try on clothing and see the quality of items in-person. Physical stores also offer the instant gratification of taking home your purchase immediately and you don’t have to pay for shipping.

Retail Expansion Continues

Further proof that retail is not dying can be found in the expansion plans of major retailers. According to a March report from CBRE, only 1% of surveyed retailers said they did not plan to open any new stores in 2016. More than half plan to open 11 or more new stores this year.

The expansion efforts are pretty evenly balanced between urban shops and shopping malls. 76% of executives described urban locations as key to their expansion plans, and 72% indicated they plan to expand into shopping malls. Both types of retail locations are still seen as valid and lucrative regardless of e-commerce’s popularity.

A Few Concerns

The CBRE report reveals that some of retail investors’ key concerns regarding retail expansion don’t relate to e-commerce at all. Rising real estate costs around the world are a major concern for 56% of survey responders, 42% express concern about the economy, and 37% are worried about the quality of retail spaces available. These responses call attention to the vital role communities must play in attracting new retail. There are investors looking for a location to build, but they need a situation that’s both economically feasible and offers quality retail space.

Whether you’re a community wanting to attract new retail development or a retail investor searching for the best location for your new project, Retail Attractions is here to help. We understand the needs of both investors and communities and are dedicated to helping you make the most of your partnership. Contact us today for more details.

Preparing for Public/Private Partnerships

Posted by Retail Attractions Blog on April 6, 2016 in Blog | 1 Comment

Using public/private partnerships for urban economic development is a growing trend in the United States. In many cases, partnering with the private sector is required for cities to pay the cost of building public infrastructure, especially when that infrastructure is essential to a retail deal. If your community is looking to set-up a public/private partnership to fund new growth, there are a few key steps to take before you even start talking with potential investors.

Early Vision

Start involving your community and resolve conflicts within local government before making contact with developers and investors. Having a comprehensive plan for development that everyone can agree on makes a public/private partnership easier to create and maintain.

If you know what your community wants to get out of the partnership and what you can offer, it saves time in negotiation and lets private investors know you’re serious about investing effort into the partnership. Retail Attractions can help with this type of strategic planning by reviewing your work and conducting visioning workshops with the city.

Ready For Development

Have the land ready and legislation in place for retail development before seeking private partners. Investors don’t want to start negotiations with your community only to find that they don’t yet have access to the land you intend to develop. Developers are more likely to invest in a community that makes things as easy as possible for them. With that in mind, try to streamline building codes and regulations as much as possible before investors arrive.

Identify Goals and Resources

Investors will want to see your community’s vision for the partnership presented clearly in verbal, written and graphic form so they can see what you have in mind and how prepared you are to get the project underway. Share your goals with potential investors and let them know what resources are at their disposal.

You’ll also need to consider what kind of incentives you can offer potential investors. Most retail growth happening in a local setting involves some type of incentive so it’s not something you can afford to overlook.

Evaluate Funds

As a community, you need to know where the funds are going to come from to hold up the public half of a public/private partnership. Public/private partnerships should result in revenue that your community can’t create on its own, but in the initial stages imagination and forward-thinking will have to come into play as you try to come up with needed funds. Explore both public and nonprofit sector funding sources such as development grants, transportation funds, local revolving loans, and tax increment financing tools.

Expert Negotiation

It’s easiest to work with potential investors if your city creates, or already has, an entity to handle the partnership, such as a redevelopment authority or quasi-governmental agency. What’s most important is that the public party contacting investors has the skills and experience necessary to handle the negotiation.

This is a key area where Retail Attractions can help in the initial planning. While your community might not have much experience negotiating public/private partnerships, we can fill that void. Retail Attractions has extensive experience working with communities to create public/private partnerships that benefit both the public and private sides of the partnership. Contact us today to get started.