(Excerpt of article by Leslie Braunstein in Urban Land, posted 5/20/2013) – America’s 80-million-strong generation Y, the most tech-savvy generation yet, has not forsaken shopping in stores for online purchasing, says a new ULI report released at the Spring Meeting in San Diego.
That’s the good news for real estate developers, owners, and investors, said report co-author and ULI Trustee M. Leanne Lachman, president of real estate consulting firm Lachman Associates. The unsettling news, she noted, is that gen Y’ers, who grew up with computers and unprecedented exposure to media, are fickle consumers who are always looking for new and exciting experiences. Retailers must continually change their looks, services, and merchandise offerings in order to engage them.
Lachman and co-author Deborah L. Brett, founder of Deborah L. Brett & Associates, surveyed 1,251 memberes of generation Y, did a literature search, and conducted a focus group at Columbia University’s Graduate School of Business to reach their conclusions. Their study found that 37 percent say they love shopping, and 48 percent say they enjoy it. Half of the men surveyed and 70 percent of the women consider shopping a form of entertainment and something to share with friends and family.
Gen Yers tend to spread their dollars around, the study found, with more than half visiting a variety of retail centers at least once a month, including discount department stores (the retail type most frequently visited by gen Y), community shopping centers, enclosed malls, department stores, big-box power centers, chain apparel stores, and neighborhood business districts. At the same time, 91 percent of respondents said that they had made online purchases over the previous six months, with 45 percent spending more than an hour a day looking at retail-oriented websites.
“Contrary to what some retailers have feared, we found that gen Y still does most of its purchasing in stores,” said Lachman. “Gen Y’ers use the Internet to research products, compare prices, envision how clothing or accessories might look on them, or respond to flash sales or coupon offers, as well as to purchase items; they are definitely multi-channel shoppers.”
“This taps into the ‘be afraid, be very afraid’ scenario that developers fear every day,” said Linda Berman, president of Team I-Sight, a brand-strategy consulting firm based in Pasadena, California. “Today’s smart developers are not leasing space – rather, they are curating tenants. Ethos is as important as creditworthiness; we spend as much time looking at what retailers stand for as what they sell. The type of people you hire to do your retail leasing need to be in touch with gen Y; we recruit people from entertainment, fashion, and sports. Instead of being on time and on budget, retailers need to be on trend and on target.”
Steve Morris, president of Columbus, Ohio-based Asset Strategies Group, said that more than 300 “lifestyle centers” have been built around the U.S., but most are not faring well. “The format is good,” replied Berman, “but the tenancy – with stores like Chico’s – is irrelevant, not only to gen Y but also to older consumers who think of themselves as young.”
Developers can be challenged to keep up with retail trends favored by gen Y, noted moderator Alan C. Billingsley, principal of Billingsley Investments. An example of this delayed response is the fact that most malls remain unfriendly to pets, while a large percentage of gen Y’ers have delayed childbearing and dote on their pets.
One way to attract trend-conscious gen Y shoppers and diners, panelists agreed, is with pop-up stores and restaurants. “We are working on restaurant pop-ups with high-profile celebrity chefs, thus redefining the concept of the mall food court,” said Berman. “To do this, we hire event planners and we hold competitions for local design students to design the pop-up space, which gives us great low-cost design, community involvement, and a great story to tell. Retailers can integrate successful elements from the pop-up designs into their inline store spaces.”
Berman even has a new definition of e-commerce. For her – and for a growing number of retailers – the “e” stands for excitement, engagement, and entertainment. In other words: it’s not your father’s shopping mall.