Luxury Retailers Need to Offer an Experience the Internet Can’t Match
Luxury retailers occupy some of the most coveted real estate on the market, but they are being challenged to provide an experience that outweighs the convenience of online shopping. When evaluating a real estate investment for luxury retailers, the ideal brick-and-mortar storefronts are in close proximity to affluent neighborhoods but also attract tourists by creating a trifecta experience through dining, entertainment and shopping.
“A lot of people still really enjoy going to mall, getting dinner and finishing errands,” said Gerald Crump, senior vice president of Weingarten Realty Investors, a REIT with 91 shopping centers. “The online guys can’t provide that entertainment.”
Luxury retailers have withstood the pressure of ecommerce by offering unparalleled customer service. They have to make sure they deliver customers a personal experience that can’t be replicated online. People still feel more confident making a puchase in-person with the advice of real salespeople. The more expensive the purchase, the more important it is to consumer to have that customer service experience.
At the International Council of Shopping Centers Conference, Michael Hirschfield of JLL commented on meeting luxury customer needs in stores and malls, “When a customer walks in, they expect a certain level of service, and that service is not technology driven. It’s person-to-person driven.”
Luxury retail has shown steady growth over the past few years, which means rents are increasing and prime real estate is being swept up quickly.
“You’re talking about a community of affluent shoppers who are not job restrictive, and in many ways, recession-proof,” he said. “Luxury retailers are going to find them — even if it is in a smaller market.”
Luxury retail is a highly profitable niche segment. If you’re a luxury retailer or interested in investing in luxury retail space, talk to the Intelica Retail Brokerage team about the best markets in St. Louis.