It’s no secret that the face of retail has changed significantly over the past 10-plus years. Gone are the days of cluttered clothing racks, the pandemic made online shopping boom. But don’t discount brick-and-mortar businesses just yet.
In-store shoppers want something more than traditional retail, and developers are thinking creatively about how to get people on their properties and in their stores. Hence, the rise of experiential-based retail. As the trend grows in popularity, many are left asking, what is experiential-based retail and is it here to stay?
Redefining Retail
Experiential retail is the process of creating an immersive and memorable experience for shoppers. National brands have been thinking about the shopping experience for years. In the past, the conversations around customer experience included aesthetics and the type of music playing in the background. These days, experiential retail goes beyond the background and delivers an experience that shoppers will remember.
A 2020 Westfield report, “How We Shop: The Next Decade”, found that up to 60 percent of shoppers worldwide will expect more than half of retail space to be devoted to experience rather than product by 2025. As customers become more selective about the brands they shop with, each brand will want its own in-store experience to stand out from the pack. That is exactly what some of the biggest developers have been thinking about across Nevada.
Nevada was hit hard by the pandemic, but the bounce back is palpable. Many economists rank Nevada’s economy among the top in the country in 2022. The state’s population growth, employment growth and personal income growth are all contributing factors to the recent success.
Further, in 2021 Forbes reported that, “physical stores are poised to make a big comeback,” and Nevada is already watching those trends play out. Both southern and northern Nevada are seeing growth that continues to bring in brands determined to create new experiences for locals. For example, Area15 opened its doors to provide locals and visitors with experiential entertainment that has been unique to the community. As anyone that has been to the venue can attest, Area15 is a new-to-Nevada concept that is part art gallery, part retail and part activity-center for adults.
Driving Change
According to the 2016 “Harris Report”, 72 percent of Millennials prefer to spend money on experiences instead of products. The Harris Poll, who released the report, is a global market research and consulting firm that’s been around for over 45 years. With more Millennials driving the economy, the development of in-store experience must be more than just transactional.
Retailers are beginning to think creatively about how to provide that experience. For example, the cooking classes Nevadans can take at Sur La Table in Downtown Summerlin come with a coupon for shopping while they’re there. They are smart about it. You take the class, and then you get a coupon. That is [an example of] what retailers can do,” said Andrew Ciarrocchi, senior vice president, management and operations at Howard Hughes Corporation, developer of Downtown Summerlin. Brands are looking to provide value in experience by giving customers access to inspiration and discovery. Those goals might require a different type of space, and developers must be ready for that.
Customers want brands to offer a destination that feels like an escape. Jaclyn Palmeri, leasing manager of the Summit Reno, explained, “Whether that includes interactive dressing rooms, selfie walls, AR (augmented reality) experiences, outdoor gathering spaces [or] hosting exclusive instore events and promotions, the key is to create an authentic experience that endears the customer and builds brand affinity.”
Nevadans across the state are wanting more, and national brands are paying attention. As a result, commercial developers are thinking about more than retail. They are looking to provide Nevadans with the whole experience – shopping, dining and entertainment included. National brands located in the state are beginning to think about more than the tourist. For example, many retailers who only had a Las Vegas Strip presence are now moving out into the suburbs of southern Nevada, expanding to immersive shopping locations, such as Downtown Summerlin, Town Square, and the District at Green Valley.
The Impact
According to Palmeri, “from a leasing standpoint, retail vacancy is currently subfive percent which is historically low.” She added that market activity remains relatively strong despite inflation and rising interest rates.
In the southern end of the state, The District at Green Valley in Henderson is nearing 99 percent leased and fielding interest from local retailers. Angie Kory, vice president of leasing at The District said, “We’ve had some momentum coming out of the pandemic. We don’t have enough shopping space to accommodate interest from local retailers.”
Ciarrocchi has seen similar activity happening in Downtown Summerlin. The center is located in the northwest of Las Vegas and has seen a resurgence of brands wanting to be part of the community. In fact, some online brands have chosen to begin their brick-and-mortar presence in the Downtown Summerlin area. That’s a huge departure from reports that retail stores are dying. Ciarrocchi indicated he believes the indoor shopping experience never totally went away, but the way people shop is changing. Experience is more important than ever before.
Downtown Summerlin has active growth and much of that is due to the shopping, dining and entertainment experiences that have been developed in the area. The area boasts the Las Vegas Ballpark and the City National Arena, plus shopping and dining from both nationally recognized and locally loved brands. Some of the most successful experience-based developments in the area have been those that engage the consumer, encouraging them to stay and play. Some of those include TruFusion studio, a one-stop fitness shop, Dance Dynamics, a youth dance studio and a variety of other experiences such as patio dining and grocery shopping, among others.
Downtown Summerlin is just one example of corporate growth toward experiential retail and real estate happening across Nevada. Developers of The Summit in Reno included experiential destination elements from inception. Tenants at the outdoor center include Apple, Lululemon, Century Theaters and, soon, Athleta and Five Below.
“We utilize market and consumer research to define the merchandising strategy for each asset,” said Palmeri. She added there is, “a commitment to attracting first-to-market brands to ensure our properties provide a unique experience for the community.”
Across the Summit Reno, shoppers can expect to see traditional tenants such as LensCrafters and Sephora, as well as newer brands, like Lululemon, adapt store designs and amenities to create memorable experiences for customers. For example, Lululemon is expanding its showroom to incorporate Mirror, an interactive gym. The retailer also hosts a variety of fitness classes just outside the store.
In Henderson, just southeast of Las Vegas, developers and landlords at The District at Green Valley Ranch have experienced a hybrid of traditional and experiential retail. Retailers are asking for different requirements, such as square footage or access to outdoor space and real estate requirements are adjusting to meet the demand. “Landlords, in general, are looking at space a little differently,” said Kory.
One way in which The District has provided experiential retail has been regular events like Movies on the Green, Fitness on the Green, holiday events and farmers markets. These events provide incentive for consumers to come to the center and hopefully stay beyond the event for the shopping. Retailers themselves are also hosting events to bring in business and attract customers.
Local and national brands are taking advantage of the activity and by all indications, it’s a hit with shoppers as well.
Future Retail
What’s to come? There is no crystal ball, but developers are expecting to see the immersive experience continue to evolve. According to Kory, businesses can, “continue to see more of that shopping, dining and entertainment over the next few years.” She added that, if developers and landlords get it right, they will see the fruits of their labor.
“We can’t keep doing the same thing,” said Ciarrocchi. He said the key to future success is, “continuing to adapt and be ahead of the curve of what’s coming next.” Downtown Summerlin’s 400-acres are not fully developed and new office space, retail and living spaces continue, following the center’s master plan.
In general what comes next will depend on how developers, brands and landlords work together to develop experiences that the people want.
“Brands and landlords must continue to work together to provide an inspiring environment where people want to be,” said Palmeri.
This includes taking all the lessons learned from the rise of online shopping and the shutdown of the pandemic and implementing them into the future. Consumers expect more. As a result, brands continue to think creatively about the experiential shopping experience, the convenience of e-commerce and the rise in brand loyalty in order to meet changing customer behaviors. Landlords and retailers are taking advantage of opportunities to learn from the customers that are shopping.
For many retailers, Nevada’s economy has bounced back and locals and tourists alike are shopping and dining out. And they expect to be entertained. The transformation of experiential retail has many in the industry thinking differently about how to best serve customers.
Over the next few years, many expect to see more experiential retail, and developers are thinking strategically about how to combine an immersive shopping, dining and entertainment experience. In Nevada, it’s no longer just the tourist who is expecting to be entertained. Locals demand a fully immersive experience, and businesses are delivering.
