Speaker Recap for July 29, 2013
Our club was privileged this past Monday to hear from Mr. Garrick Brown, Director of Research for Northern California at Cassidy Turley in San Francisco. He is also the editor of a weekly retail publication, the Terranomics Retail Newsline, which is distributed weekly to over 15,000 retail decision makers nationally. He is also the founder and creator of the Bay Area Network and Central Valley Comp Network, which work closely with the Northern California appraisal community and facilitate exchange of commercial real estate data among their members.
Mr. Brown's main messages were "these times they are a changing." Apparently his data show that the "big-box" stores are fading, restaurants are surging, commercial retail goods warehousing is on the rise, and (no surprise here) the "Internet" is "changing the face" of shopping and of our neighborhood shopping centers.
Retail centers -- whether neighborhood shopping centers anchored by a traditional supermarket or larger complexes with a Target and Home Depot -- will increasingly emphasize food, services and entertainment to keep shoppers coming. Apparently consumers are still buying groceries at shopping centers, but they're just as likely also to go there to get a dental checkup or a massage, share meal with friends, work out and catch the latest movie.
He believes the big driver of change is the continuing rise of e-commerce. Online sales make up 8 percent of retail sales, and are expected to increase to over 10 percent within a few years. Mr. Brown sees them peaking at around 30% over the next 15 years. The pace of the growth is accelerating -- in 2012, retail e-commerce in the U.S. jumped 15% to $186 billion, and e-commerce worldwide reportedly exceeded $1 trillion (with a "T") for the first time. That's great news for the on-line retailers, and a real downer for the old school "brick-and-mortar" stores.
At the same time, reports Mr. Brown, there is rapid growth in the amount of commercial warehousing nationwide. Retailers are moving towards promising and delivering "same day" delivery of goods, which requires an extensive network of huge regional warehouses linked to trucking via our nation’s highways. (All the more reason to continue investing in our nation's infrastructure as a means of creating jobs and aiding business expansion.)
So Mr. Brown believes we will tend to see continued changes and growth at our local shopping malls in those businesses that provide goods and services you just can't get on the internet -- great food, live entertainment, personalized service. We also see increased delivery of goods purchased "on line" which will further erode the need to visit the local malls for such goods. We thank Mr. Brown for his very informative talk and wish him well in his future endeavors. (Anyone wishing to subscribe to his weekly retail report may contact him at GarrickBrown@cassidyturley.com.)