Trend Report For 2018: A Pivotal Time for Brick and Mortar Retail

Possibly not since the first enclosed mall opened in 1956 in Edina, Minnesota, has brick and mortar retail experienced such a pivotal point in its history. Most would attribute the changing retail environment to the effects of e-commerce and the Goliath that is Amazon; however, we believe there are more powerful factors at work.

In-store brick and mortar retail sales accounted for more than 89% of total retail sales in 2016, and early indications seem to point to 2017 being the best holiday shopping season in 4 years. So, if people are still shopping at brick and mortar stores, why do we hear the term “retail apocalypse” every time we turn on CNBC or pick up a Wall Street Journal?

The End Of The Department Store Era—Not Brick And Mortar

What we are seeing is not the demise of brick and mortar retail, but more the end of the department store era. Department-store-anchored malls that sold everything from apparel and electronics to furniture and home appliances dominated the 60’s, 70’s, and 80’s. But specialized big-box retailers have steadily eroded the department store model over the last three decades.

Eventually, we were left with malls anchored by department stores that focused on just a few categories centered on apparel. Does this mean that we will soon see the end of department stores and enclosed malls? Yes and no.

We will continue to see enclosed malls struggle to compete with convenience/grocery-anchored centers, experience-based shopping destinations, open-air lifestyle centers like Bridge Street Town Centre, and local specialty destinations such as The Garage at Clinton Row. Many malls will be able to adapt and survive with the addition of entertainment venues, hotels, and even office space. Others will simply disappear from the landscape to be replaced by a more modern retail and entertainment experience as we are seeing take place at the site of the old Madison Square Mall.

As far as the old department store is concerned, we are already seeing the same type of adaption into a more mixed offering of services and experiences. Many department stores are starting to reduce the size of the sales floor to make room for cafés, salons, pop-up shops, and even fitness concepts. Not all department stores will survive, but the ones that do will be more focused on the high-end specialty categories and customer experience. Instead of existing for exclusively for retail sales, they will provide a total experience and numerous services in one convenient location.

What Does The Future Look Like?

What can consumers expect the retail environment to look like in the future? Currently, the trend is what is called omni-channel retail. This is a combination of brick and mortar stores with online and mobile sales. As evidenced by Amazon’s acquisition of Whole Foods, e-commerce retailers are getting into the physical storefront game. It appears they understand the value of physical storefronts and their impact on the bottom-line. Sure, online shopping is convenient, but does it result in sales?

Research has shown that over 40% of items purchased online are returned. Furthermore, consumers make a purchase at a rate of 20% of the time when they walk into an actual store. That rate drops to 3% when visiting a website. The successful retailer of the future will be able to combine online, mobile/social media, and physical locations to create a positive experience for the customer.

One issue that is flying under the radar is the new tax reform bill and its impact on retailers. A reduction in the corporate tax rate could have a significant influence on the ability of brick and mortar retailers to compete with e-commerce retailers. With the reduction of the corporate tax rate, the savings experienced by the retailers can be used for an investment into omni-channel/mobile platforms, upgrading stores, or simply lowering prices to compete with e-commerce.

A Theme Of Adaptation

In conclusion, we continue to believe that the future is bright for both retailers and landlords. Once again, the theme continues to be adaptation. Traditional retailers are building their online presence and e-commerce retailers are getting into the bricks and mortar game. This environment creates opportunities for landlords that have the vision to meet the changing demands of consumers and the needs of the omni-channel retailer. It’s certainly an interesting time in retail, but one that can bring exciting changes to the benefit of everyone.

 Have questions about the changing retail market? Wondering how you can adapt in 2018? You can contact Zac at zac@crunkletonassociates.com or by calling 256-536-8809.

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Originally from Tennessee, Zac studied business management at Samford University. After moving to Huntsville in 2001, Zac started out his career in banking, wealth management, and financial planning. In 2010 he joined Crunkleton and has since become the VP of Leasing for the commercial real estate group where he focuses on retail leasing and development.

Zac Buckley
VP of Leasing
Crunkleton Commercial Real Estate Group
ZAC@CRUNKLETONASSOCIATES.COM

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Merry Christmas From Crunkleton!

Merry Christmas and Happy New Year from our office family here at
Crunkleton Commercial Real Estate Group!

We hope the love, laughter, and joyful memories you make this holiday season are with you throughout the year. Here’s to a wonderful 2018!

– Eric, Zac, Richard, Wesley, Alex, Shelby –
– Amy, Lauren, Anusha, Haley –

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HALEY CLEMONS
MARKETING COORDINATOR
CRUNKLETON COMMERCIAL REAL ESTATE GROUP
HALEY@CRUNKLETONASSOCIATES.COM

 

A Very Happy Thanksgiving From Crunkleton!

With the holidays quickly approaching, we are reflecting on the many things we have to be thankful for this season. This year has been filled with exciting projects, new team additions, and much more.

Here are just a few of the reasons we are thankful:

The Addition Of New Businesses To Huntsville/Madison

Many new businesses have joined the Huntsville area this year. From first-to-Alabama eateries to clothing boutiques and medical offices, Huntsville’s growth has been impressive. We are always excited to work with incredible business owners and visionaries.

Restaurants like Wayback Burgers, Honest Coffee Roasters, and Frios joined the Huntsville scene this year (as well as many others), while Earth & Stone Wood Fired Pizza expanded to an additional location in Madison.

Downtown has seen a lot of growth, as well. Shops at The Avenue like Scout & Molly’s Boutique, Zoom Indoor Cycling, and Church Street Purveyor are now open and welcoming new clientele and guests.

And there’s even more to come! Very soon, the Rocket City will enjoy the grand openings of Oshi Poke Bowl & Sushi, Baby Bite Bake Shoppe, Soda Jerk, and J. Kennedy Clothing Company. These businesses span across the city, and we can’t wait for them to open their doors.

Welcoming New Team Members

This year, Crunkleton welcomed three new team members and celebrated the promotion of Lauren Plott to Property Manager.

Haley Clemons joined the team as the new Marketing Coordinator, Shelby Smith brought her talents to the Office Manager position, and Alex Oden became Crunkleton’s newest Office Broker.

 Announcing New Developments

This year’s major announcement was STOVEHOUSE. As we revive the historic Martin Stove building on Governors Drive, we will continue to update you on what businesses are coming to the project. We have received a lot of interest, and we can’t wait to share it all with you soon!

Enjoying Team Outings

Whether it’s team dinners, enjoying a day outdoors or volunteering together, we are thankful that we have had time outside the office to enjoy each other’s company.

We hope that this Thanksgiving brings you and your loved ones many blessings.

Happy Thanksgiving from Crunkleton!

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HALEY CLEMONS
MARKETING COORDINATOR
CRUNKLETON COMMERCIAL REAL ESTATE GROUP
HALEY@CRUNKLETONASSOCIATES.COM

Broker Spotlight: Zac Buckley

How did you become interested in commercial real estate?

Before I began my career at Crunkleton, I was working as a banker/financial advisor. One day, Wesley called me—I’d known him for a few years—and he asked me if I’d be interested in joining his team. I met with Richard and Wesley both to discuss the business. After a few days of thinking it over I decided to dive in, and here I am today.

What do you enjoy about your job at Crunkleton?

The process of negotiation is something I’ve always enjoyed. Whether it’s a lease or sale, helping two parties come to a mutually beneficial agreement is very rewarding. It’s not about putting a tenant into a space and just moving on to the next deal. It’s about looking at all of the facts, knowing what’s ahead, and determining where my clients will find the most long-term success. Landlords and tenants have to be on the same page and working together for everyone to be successful.

Zac Buckley

What challenges do you face on the job?

Allocating my time and resources so that each client gets due attention is something that takes effort. I have to constantly make sure that I am working efficiently and understanding what leads are worth pursuing. I also have to make the lease or sale process as smooth as possible. It’s all about using your time effectively and not chasing deals when there are signs on the front end that it won’t be beneficial for your client.

You specialize in retail brokerage, what does that entail?

In the retail sector of commercial real estate, you are dealing directly with shopping, dining, grocery, and much more. I work with a lot of developments that are anchored by grocery store chains like Kroger and Publix. Even the service tenants within the development—like hair salons and insurance businesses—are considered retail real estate. It’s my job to put together a successful tenant mix that allows both the landlord and business owners to be profitable.

Crunkleton has brokers that focus on specific types of commercial real estate to ensure we are experts in a particular area. It keeps us hyper-focused on a specific market.

What do you do to stay on top of your game?

For retail brokerage on a regional and national level, staying active in the community is important. Taking part in events like the ICSC Conference in Las Vegas every year allows me to stay informed about what’s going on with the state of retail. I use that time to connect with brokers and businesses outside of the Huntsville market and bring that expertise back with me to Crunkleton.

What value do you hope to bring to your clients?

When I’m working as a tenant representative, I want to find a place where my client will find long-term success. By understanding terms from both the tenant and landlord side, reviewing the area’s demographics, and knowing their future clientele, I am able to put them in the best position to be around their customer base.

I continually work to know tenants’ specific markets and review current trends so my clients are paying a fair rate. When working for the landlord, I make sure they are getting market rates for their property as well.

It’s also valuable to look to the future when making a deal. A certain location may seem like a good fit for now, but if things are happening there that would negatively affect business it’s my job to steer my client in the right direction. You can’t just think about today, you have to be looking to the horizon—two or three years down the road.

Why is Huntsville an ideal place to work in commercial real estate?

Our city is a rapidly growing market. Huntsville is getting more and more national retail chains interested in the area. We have a good, solid economy that weathers downturn better than a lot of places, and we have a community and local government that is supportive of bringing in new businesses.

What advice would you give to someone who is considering a career in commercial real estate?

If you want to be successful as a broker, you have to be outgoing and remain confident even after you hear several rejections. If someone told me they wanted to enter into this career path, I’d tell them that it would be beneficial to work in property management first. Take a few years to understand the process from that side—learn what goes on after the lease is signed.

Being a property manager would help them understand what lease terms really mean and what’s important to the client moving forward. I also think it would help a future broker make the connections they need with tenants and landlords to build up their network and make positive relationships in the commercial real estate world.

I’d also suggest finding a team that you work well with once you get in the business. The success we have as individual brokers at Crunkleton stems from our work as a team. We are constantly bouncing ideas off each other and helping one another with a deal. We work at it together.

What do you enjoy doing outside of the office?

I enjoy any time I get to spend outdoors. I also love to read and spend time with my family. I’m very thankful for the time I get with my nieces and nephews.

You can contact Zac at zac@crunkletonassociates.com, or by calling 256-536-8809.

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Make sure you’re staying on top of the latest trends, newest developments and hottest new stores in Huntsville by subscribing to our weekly blog updates!

haley_square
HALEY CLEMONS
MARKETING COORDINATOR
CRUNKLETON COMMERCIAL REAL ESTATE GROUP
HALEY@CRUNKLETONASSOCIATES.COM