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CoverStory

Of the 27 retail categories measured, only discount stores crease in online sales in that market, as consumers forget
exceeded 10 percent year-over-year (YOY) growth in about them and turn elsewhere to make their purchases."
same-store sales, yet a number of categories performed
well. "Consumer confidence levels are extremely high, and Even online giants like Amazon recognize the value of
we're seeing that translate into spending," said Jared Driel- physical stores in the retail mix, as evidenced by its physi-
ing, Director of Business Intelligence for The Strawhecker cal entry into the grocery, convenience and bookstore
Group, noting that 3 to 4 percent YOY growth in same- segments. Cegielski said that to address the blending of
store sales is considered healthy. channels, we may see department stores downsize their
footprints and incorporate technology that enables them
"Probably the biggest trend we've seen in the first half to ship items directly to customers' homes and keep mini-
of 2017 is an explosion in household-related goods sales, mal inventory in retail stores.
primarily due to bounce back in new and existing home
sales," Drieling said. As a result, sales at household appli- Cegielski also anticipates further growth in the food and
ance, floor covering and carpet, and furnishings specialty beverage categories, which include restaurants, food halls
stores spiked 6 to 8 percent above last year's totals. and even new grocery formats. To comprehend the size of
physical retail, 115, 892 shopping centers across the United
By contrast, niche retailers such as sporting goods, jew- States collectively generated over $2.64 trillion in retail
elry, book and electronics stores have faltered. "As more sales in 2016, based on CoStar Realty Information Inc. data.
consumers gravitate toward one-stop big-box retailers like
Target and Wal-Mart, niche specific companies like Best Post-EMV tech-grab
Buy have struggled," he said. "When you look at the Cost- Beyond its global research and advisory services, IHL
co model, which sells a wide variety of things, including Group developed a subscriber-based lead generation sys-
cars and caskets, it's almost like a physical Amazon store. tem called Sophia, which tracks IT spend for over 5,000
I think we're going to see more of that." global retailers and restaurants based on 300 types of
Shopping complex refresh technology. It has proven to be an essential resource for
technology providers interested in targeting specific mer-
To accommodate changing consumer preferences, shop- chant systems due for replacement. It also provides con-
ping centers and malls must adapt. Design consultancy tact information on retail decision makers.
firm CallisonRTKL envisions malls of the future as en-
compassing mixed use residential, office, hotel, restau- "An algorithm takes into consideration what that particu-
rant, grocery, retail, cinema and public plaza spaces, with lar retailer has installed, when they installed it, the name
parking and transport hubs all contained in one complex. of the vendor and when it is due to be replaced," said Greg
Buzek, President of IHL Group.
Some malls have already made adjustments. "Today, we go
to the mall for more than just shopping; we go for dining, According to Buzek, about a third of retailers have decou-
entertainment, fitness, health information, classes, servic- pled their IT investments from the previous year's sales,
es and more," wrote Deborah Weinswig, Managing Direc- meaning they no longer base their current IT budgets on
tor at Fung Global. "We expect retail to continue to be a big the prior year's revenue. Another third have yet to com-
part of the shopping mall, but experiences and technology plete EMV (Europay, Mastercard and Visa) implementa-
will grow to play a more prominent, if not leading, role at tions, and the last third are planning to continue using
some mall properties." legacy systems.

International Council of Shopping Centers Vice President "The group that has decoupled IT is absorbing what's
of Public Relations Stephanie Cegielski has observed simi- being left behind by the last group that's not investing,"
lar trends among the organization's 70,000 members. "We Buzek said. "You don't have to outspend and outrun Am-
are seeing a variety of tenants moving into vacant spaces," azon; you just have to outspend and outrun the weak-
she said. "They range from fitness centers to health care est competitors in your marketplace. And that's literally
facilities, movie theaters to artisan markets. Landlords are what's happening."
finding new ways to fill space based on demographics and
demand in their local community." He said the decoupled group averages three to four ma-
jor IT transformations at once, for example, investing in
Since a majority of retail purchases still occur in-store, sales associate tools and unifying systems to lower supply
having a physical presence remains paramount. "Retailers chain costs, as well as enable viewing of customer data to
are more top of mind for consumers when there is a physi- deliver loyalty in real-time.
cal location nearby," Cegielski said. "Consumers want the
option to purchase online and in-person, so a retailer who Helgeson believes EMV implementation created a
offers both tends to fare better and have more brand rec- 24-month gap in product innovation and investment by
ognition. A retailer that leaves a market tends to see a de- retailers. "But now that we're beyond that, we are seeing

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