2020 has been an interesting year for retail. Stores were shuttered for weeks during the pandemic and even as physical locations reopen, many national chains are significantly reducing their footprint leaving excess space behind. It may seem like the worst time to open a store. However, for a small business looking to open a storefront or expand their footprint it’s actually an opportune time. Here’s why…
There is Excess Space
National retail chains are cutting their store fleets and leaving behind move-in ready storefronts. To manage the void left by exiting national retailers, property owners are looking for new ways to fill space. It’s creating a timely opportunity for regional and local tenants that can benefit from a physical presence in a variety of sectors - healthcare, fitness, food, baked goods, specialty shops, boutiques, maker spaces and more. Properties are becoming increasingly community-minded and focused on finding new ways to cater to small businesses and entrepreneurs.
The Online Market is Saturated
Online boutiques and businesses have taken off but making your brand stand out online is becoming increasingly challenging. Having a physical presence can help set you apart from your competition and ultimately give you a sales advantage. The International Council of Shopping Centers (ICSC), found that retailers with a strong omni-channel presence experienced a substantial sales impact by having a physical store.
Their initial study found that opening one new physical store in a market results in an average 37% increase in overall traffic to that retailer’s website, compared with web traffic prior to the store’s opening.
A second study on the topic found that when a shopper spends $100 online and then goes to that retailer’s physical store, the customer spends an additional $131 on average for a total spend of $231. The effect is even greater when the purchase starts in a physical store. Total spending within a 15-day span jumped to $267.
Customers still like to feel, touch and test products and providing that experience in store can generate brand awareness and sales that can put you ahead of your competitor. With more online businesses and boutiques popping up, a physical presence is even more important to stand out.
Distribution Needs are Increasing
Any business needs space for inventory, storage, distribution and personnel and as you grow, the need for space becomes more apparent. According to the Small Business Association, 69% of entrepreneurs in the U.S first started their business in their home using a guest bedroom, dining room or home office for operations and distribution. When faced with the need for more space, most businesses first consider renting storage or office space where there are expenses such as rent and utilities.
But, consider a storefront where you have the same expenses with the added benefit of additional sales. There are many creative ways to divide a space to have both a visible storefront and a hidden distribution and production area. Today, landlords are finding new ways to accommodate growing tenants who need a smaller sales floor and larger area for storage, office and distribution.
Local Love is at an All-Time High
According to a report by Yahoo Finance, 87% of consumers believe it’s important or very important to support local retailers. Communities rallied behind small businesses during pandemic closures but that sentiment is expected to last. In a survey by McKinsey & Company, nearly two-thirds of consumers who switched to new brands or retailers during the pandemic intended to stick with them in the future.
People will continue to gravitate toward local retailers when they start shopping in physical store locations again making it an opportune time to have a physical presence.