Retail is a world that constantly reinvents itself to appeal to newer generations, the latest trends or a fluctuating economy. Today the retail world is completely different than it was at the turn of the century, and that retail was different than the one that came twenty years prior. The last decade has seen consumers begin to climb out of a recession only to be thrust into a pandemic.
It would be easy to say the newest face of retail is a result of the global pandemic, but that is not the case. Jim Stuart, developer and partner with Matter Real Estate, explains that the original proposition of retail has always been to gather goods that consumers want and if a retailer gathered the right goods, they turned a profit. However, e-commerce, such as Amazon, irrevocably changed this long-standing proposition of retail. No longer do retailers need to cross their fingers and hope they get their supply right, because now everything a consumer could want, or need, is right at their fingertips. Coupled with this is the convenience of never having to leave home to get these goods. They can be delivered right to the consumer’s door.
According to Stuart the main contributions of the pandemic were to force the last e-commerce holdouts over the line, and produce a desperate need for people to connect with each other. This need for connection is what brick-and-mortar retailers latched on to so they could entice customers off their couches and back into stores.
“[Retailers] have to create an environment that tickles the senses in a way that traditional shopping never could.”
Connecting the Consumer With the Brand
During the pandemic consumers were presented with a retail experience that centered on convenience, from double drive-thrus to groceries being brought out to their car. “This convenience is something that consumers are reluctant to surrender,” said Jennifer Ott, a retail specialist with CBRE. Retailers understand that in a world where consumers can get whatever they need in a moment’s notice, no retailer can truly stand apart from another unless they offer something different.
The “A-HA!” moment, according to Stuart, was establishing brand confidence so the consumer is connected to a brand both in person and online. The winners, said Stuart, are the brands that used their retail footprint to connect with their customers. When consumers get behind their computer their loyalty would cause them to search for the brand, and not just the product.
One of the keys to this idea is experiential retail. For retailers it is imperative that they present something to their consumers that they cannot get lounging on their couch, or behind their computer screen. Experiential retail, said Ott, is anything that gets a customer into a store to bond with a brand, and the goal is to keep them in the store as long as possible.
Retail to Remember
Nevadans, especially those local to the Las Vegas area, are no strangers to an experiential retail system. For better or worse, Las Vegas is the entertainment capital of the world. Experiential retail grew by taking concepts, such as Build-A-Bear and American Girl dolls and made them the baseline for retail environments.
“[Retailers] have to create an environment that tickles the senses in a way that traditional shopping never could,” said Stuart. Since Nevada has long since been the home of an unforgettable experience, it makes sense that some of the most unique retail opportunities only exist here.
Culture Kings, an apparel shop in the Forums at Caesar’s Palace, promises an experience to its shoppers they cannot get at any other apparel store. Whenever a customer spends more than $100 in the store, they receive a gold “CK” token. These tokens enable consumers to achieve unique opportunities they wouldn’t otherwise have access to. When Culture Kings brings in prolific UFC stars or musicians such as Kehlani, the “CK” token are used to gain entry into a VIP line that offers a better chance of meeting these celebrities. Additionally, customers can use this token to play the CK Holy Grail machine and try for a chance to win not-for-sale items or ultra rare sneakers that are not otherwise widely available.
Perhaps the “king” of experiential retail for Nevadans in Las Vegas is Area15. “Area15 is the epitome of how successful experiential retail can be,” said Deana Marcello, an executive vice president with Colliers who specializes in retail. Developers of Area15 describe it as, not just a retail location, but more of an entertainment district that also includes retail opportunities. Marcello believes Las Vegas residents and tourists alike are getting a front-row seat to the “retail of the future.”
Equating Area15 to a mall rather than a singular retail location is a better description of the property. Ott agrees with this comparison and adds that the retail opportunities all stem from the experience. Consumers are invited to a world of art displays, virtual reality experiences, and other rides and attractions. All of which allow the visitors to enjoy food and drinks as well as purchase tangible items to take with them in conjunction with the experience.
In northern Nevada, the retail buzz is the anticipated revamping of the Grand Sierra Resort (GSR) in Reno. Over the next decade this resort will undergo several changes, including adding a cutting-edge arena for the University of Nevada’s Wolfpack that will seat 10,000 people. The arena will include suites and premium hospitality clubs, proving that investors understand the growing desire for customers’ to have a memorable experience. In addition to the new arena the property will also add a walking path and water show. In a statement about the project, Reno Mayor Hillary Schieve said, “This will not only redefine Grand Serra Resort but also elevate Reno to new heights in the realm of entertainment and sports.”
The Grand Sierra Resort anounced the mixed-use project will be entirely funded by a $1 billion private capital investment. “This will not only redefine Grand Sierra Resort but also elevate Reno to new heights in the realm of entertainment and sports,” said Alex Meruelo, owner of the GSR. We recognize and value the community’s support and enthusiasm as we commence this journey together.” In addition the arena and landscape features, plans include a golf facility, a new 800-room hotel tower and 300 riverfront residential units.
Coming to a Store Nearby
Experiential retail isn’t just going to be in brand new locations either, it has also changed the way Nevadans complete their needs-based shopping as well. Smith’s Marketplaces are beginning to add bars to their grocery stores, as well as clothing and apparel. This has turned what was once considered a necessary chore into an experience as well. “Friends can link up at their grocery store and share a glass of wine together before they go shopping,” said Marcello. While the bars may be new to the grocery store scene, the core principle stays the same: the longer a customer is in the store the more they are likely to buy.
Instant gratification through online retail means that consumers will typically only buy what they need. So, grocery stores have adapted and found a way to get customers to choose indoor shopping. Once they have them in the store, the plan is to keep them there as long as possible.
Social media is one of the primary drivers for experiential retail, because if you do it right, said Ott, you will achieve completely free marketing for your brand. When customers feel loved, appreciated and valued, they will talk about that experience to their friends. This alongside the retailer being tagged in a social media post that can potentially go viral is one of the newest ways to guarantee retail success.
Competitive Socializing
Another newer trend that has surfaced has been an increase in locations that offer “competitive socializing.” Ax-throwing and Top Golf are two of the standouts for this new trend, but it can be seen even on a dart board at your local bar. “Competitive socializing is niche and trendy, but it follows the foundational truth that people want to have fun, and they want to have fun with others,” said Stuart.
One thing the pandemic left all consumers hungry for was interactions with one another. Marcello also noted that commercial real estate leases in the 1980s-2000s included exclusions that prevented retailers from having bowling alleys, skating rinks and similar offerings. What we are seeing today is, that has been largely reversed and the exact opposite is taking place. Retailers want their parking lots full of customers, so we are seeing more pickleball courts and ax-throwing arenas.
Swingers, a mini-golf entertainment experience geared for adults, is coming to Las Vegas in 2024. This experience is the perfect melding of experiential retail and competitive socialization. Customers will be able to play on five different golf courses spread across 40,000 square feet of space. According to its website, each golfer can enjoy craft cocktails served by caddies, street food, a theatrical setting, and a live DJ to finish off the ultimate mini-golf experience. Once people are immersed in the experience they will want to stay in that emotional high and it is at these heights that money will be more freely spent.
A Healthy Market
With the market shifting to a more convenience centered goal, it might seem like the market in Nevada is shrinking, but thankfully that is not the case. The retail market is expanding, Stuart said, it’s just a different market that’s expanding. Nevada’s retail market is extremely healthy with a vacancy rate of 4.4 percent according to CBRE’s retail report for southern Nevada and the Greater Las Vegas Metro area. This success extends to Reno as well. Colliers’ Q2 retail report has the region sitting at 4.8 percent. Nevada’s commercial real estate market still has a little bit of everything, but stores like Goodwill and Ross are thriving.
“With a rise in inflation, Nevada shoppers are looking for relief wherever they can find it,” said Ott. Ross has even begun to sell used luxury items to cater to a demographic more interested in vintage offerings and “thrifting.” Discount stores like Dollar Tree and Five Below are also seeing an increase. “Fixed income families are going to switch retailers to better balance out their cost of living,” said Marcello.
Grocery Outlet, a California based bargain grocery store, just opened its newest store off Blue Diamond Road in Las Vegas. While Grocery Outlet is not a new retailer to Nevada, as there are more than 10 locations spread through the northern part of the state, it is new to the Las Vegas area. According to Ernesto and Dana Sesma, the independent operators of the Las Vegas location, the affordable prices are owed to product surpluses and packaging changes. Whatever the case is, Nevadans are patronizing the newest location in search of any relief they can find from rising costs.
“There is still a large demand for single tenant pad buildings like fast food restaurants, gas stations, and car washes,” said Ott. In fact, the only thing that is not expanding are the big box retailers, which have largely switched their business to online, or have been absorbed by other retailers. Toys-R-Us can be found inside Macys, and Sephora stores are now popping up inside Kohl’s.
According to Stuart the market has remained healthy, and availability is stable, thanks to lenders keeping the supply in check. As time passes, and the pandemic gets further away, we are seeing consumers shift their focus to the newer, trending retail options. While Stuart admits there are early indications of consumers potentially pulling back, he also believes that it is far too early to tell.
