ICSC Chairman Welanetz: Online Sales Have Not Supplanted Retail Stores
October 10, 2014
ICSC Chairman Welanetz: Online Sales Have Not Supplanted Retail Stores
Atlanta Business Chronicle

The convergence of online sales and bricks-and-mortar stores.

The enormous impact of food-related concepts on development.

Continued urbanization.

These are the most important trends affecting retail, according to Bob Welanetz, one of the industry’s biggest names. Welanetz is global retail adviser for Blackstone and chairman of industry trade group International Council of Shopping Centers, better known as ICSC.

Welanetz gave his thoughts about the industry at the Oct. 7 “State of the Retail Market,” held at the Atlanta office of law firm Arnall Golden Gregory. His insights were particularly compelling because of his roles at ICSC (almost 70,000 members) and Blackstone, the world’s largest real estate private equity firm with $80 billion in assets under management. Some 25 percent of those assets are real estate and, of those, a whopping 20 percent are in retail.

Here are several key themes from his discussion:

1. Online sales have primarily disrupted catalog sales but not supplanted retail stores – not even close.

A tremendous opportunity and demand exists for bricks and mortar retail stores. Several heretofore online — or catalog-only retailers — recently opened physical stores to boost sales and support their brands. Examples include women’s active-wear store Athleta (Lenox Square, Atlantic Station) and menswear company Bonobos (Buckhead Atlanta). Bonobos opens showrooms that carry all sizes and colors of its clothes, but you can’t walk out with them. You must order goods online at checkout, and they will later be delivered to your home.

2. Food-related concepts are hugely important for retail development.

This includes not only restaurants and gourmet food marketplaces, but also hot grocery concepts such as Sprouts Farmers Market, Earth Fare, Fresh Market, Whole Foods and others. The buzz around restaurants and food halls can be seen locally at such retail developments as Buckhead Atlanta, Avalon, Ponce City Market, Atlantic Station, Krog Street Market and Inman Quarter.

3. The world is experiencing “acute urbanization,” which will have an enormous impact on retail. Half of the world's population is now living in urban areas — versus 2 percent in 1800.

4. Large-scale institutional real estate investors and retailers are more focused than ever on global opportunities.

In particular this means an increased appetite for retail real estate in the Asia/Pacific and Middle East regions. The emerging markets offer real opportunity for the global player. Nonetheless, global investors continue to increase investments in the United States and Canada thanks to the assurances of investing here.

In related news, of ICSC’s nearly 70,000 members, 25 percent are international, and that segment is growing at a higher rate than U.S. memberships. Welanetz has visited more than 30 countries, and spent eight years in Shanghai, but calls Atlanta home.  

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