Village Solutions

Location in Real Estate Becomes a Relative Word

I have long predicted a fundamental shift in the retail distribution channel by a new and lasting divide between fixed brick and mortar retail locations and other points of purchase, other than online shopping.

In brief the fixed marketplace is going to go mobile. But this is not another catch phrase for web based purchasing from PDAs, and cell phones. What I am talking about is a market place that is mobile and fluid. This is a market that goes to the consumer rather than the consumer going to the mall. Think in terms of the circus coming into town for a 10 day run and then packing up and moving to the next town. Translated into a real mobile marketplace, think of a vintage produce truck locating on campus and selling soaps from fruit baskets and fruit crates.

However many experts will point out that this is more prophecy than predictive calculation, given previous predictions on the long term impact of internet shopping. But we believe that some emerging changes may even be more profound than online retailing and involve many more levels and channels than on-line shopping. In this scenario, technology will only be a component of the new channel but hardly the defining mechanism. Most importantly, the new mobile channel will disconnect from fixed location and it will change the static shopping centers. Consequently, all parties connected to any retail development will therefore, require a complete comprehension of these coming changes in the consumer goods distribution channels in order to properly position their developments.

So let’s start with the so called golden rule of real estate called “location”. How often have we heard that the only three things you need to know about real estate is location, location and location? When I hear the “location” comment I often wonder if the person making this profound statement actually has the ability to adapt to a marketplace which is becoming far more fluid and less about location. That is because market factors are quickly minimizing locational differences of fixed real estate investments, especially with the impact of the fax machine, the internet, home delivery and now the mobile market.

Historically given all things being equal, shoppers patronized a retailer that was the easiest to reach. But, locational differences can be overcome with a combination of prices and store assortment when these attributes are communicated effectively. In recent years outlet centers have proven that shoppers will travel to a secondary location for the right price and merchandise.

We have likewise known for years that all it takes to pack a mall wall to wall with people on any given weekend is $25,000 in advertising dollars and a promise. A bold statement –but my years as a marketing director at several large malls proved that a well communicated offer of low prices, entertainment and special events was all it took to fill up a mall with potential shoppers. In the old days, all you needed to do was to run a full page ad in the local newspaper on Friday morning and then again on Saturday morning and back it up with a little radio advertising and you had an almost guaranteed mall filled with people. After the event’s weekend run, the mall’s traffic would always return to normal until the next event. Run too many events in a row and the excitement created in the previous effort gets a little less for each subsequent promotion.
This takes me to the real point of this entry. Retailers have long used catalogues and home delivery to appeal to a certain shopper. However, internet shopping has grown to a 7% share of all retail sales which has primarily come at the expense of catalogues. Likewise, just over 70% of the 25 to 34 year-old bracket have used the internet to make purchases, and, as that generation grows in buying power, it is expected to drive the biggest change in US retailing. But in order to overcome locational differences, retail is increasingly disconnecting from fixed base locations by going direct to the consumer via mobile units. We predict that mobile markets will be a part of a bigger trend where retail is no longer held hostage to long term leases and fixed locations.

Therefore, let’s take a closer look. In a totally free retail market, mobile containers, shipping containers, museum like galleries, retro buses, vintage milk trucks, converted railroad cars and 1950s travel trailers will bring goods to the consumer in highly creative and innovative ways.

Recent examples include a Burton Snowboard’s mobile retail experience that included a lounge, snow board heritage display, a theater, and kiosks for ordering products online. DIM, is a 53 foot long apparel store that travels throughout the US, bringing big city chic to the hinterlands. The store features 200 product drawers with LCD screens on the front to showcase models wearing the fashion and images of the last person who opened the drawer. Other mobile units may pop-up unannounced to draw large crowds of the in-the-know thanks to twitter, and then disappear just as soon as the masses hear about it, to only pop-up again, adding a sense of exclusivity and surprise.

In LA, DC and NYC gourmet mobile cafes are trolling the streets before setting up camp to the delight of consumers that may have been waiting in line as long as an hour for the privilege to buy a chef prepared meal.

Brazilian cosmetic firm Oceanic decided not to build a nationwide chain of stores and decided to franchise mobile units by customizing Fiat Doblo minivans to serve as both delivery vans and retail shops. Order sun screen online and have the entire shop arrive in your drive way. The mobile units made it easy to target prime consumer locations such as universities, schools, parks, trade shows, and street festivals.

These pop-up, mobile markets and their like will succeed because they offer a need for original, exclusive, and time constrained inventory. Their hidden locations become part of the urban fabric and satisfy consumer needs for delight and surprise – something greatly missed by national chains.

This entry was posted on Tuesday, July 28th, 2009 at 8:40 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.