2021 will be the year to break into new retail concepts. The commercial real estate market has been tumultuous throughout the year; however, it has also presented the chance to test new ideas. While over 15,000 stores have been forced to close this year due to the pandemic, 10,000 new stores have also opened. This means that the retail landscape isn’t going away, it’s changing. Furthermore, online retail has flourished as more consumers are staying at home and some of those digital sales have driven physical sales as well. Physical retail is still an important part of the shopping experience and it will still be around long after the pandemic is over.  As we exhibit and attend at this year’s ICSC RECon NY 2020 virtual show, one thing is clear; the road to recovery has already started and current shopping trends could give us insight into the early 2021 landscape.

The holiday season is in full swing and shopping is expectedly behind last year, though innovation has prevented a collapse. This is partially attributable to the season starting sooner this year with an October Amazon Prime Day kicking it off. In addition, the sheer amount of options provided to consumers ranging from next-day deliveries to contactless curbside pick-ups has helped retailers across the board. These options gained more traction as consumers have become more comfortable with them and retailers streamlined delivery systems. According to panelists at ICSC RECon, between December 4-6, 88% of shoppers purchased from stores that have a physical presence, whether that was for delivery, pickup, or instore.

The physical store still has a strong presence and 2020 has proven that digital and physical sales can be intertwined. Curbside pickup has been a particularly effective use of digital and physical as it can draw in consumers who want to avoid deliveries and shopping in-store. This innovation is poised to thrive beyond the pandemic as consumers shift their focus from safety to convenience. Other retailers like Macy’s have been using their stores as dark locations that fulfill online orders. 2021 will see more traditional locations begin to be repurposed and used to expand options to consumers.

The use of pop-up stores has also increased throughout the year and has given a lifeline to struggling retailers and landlords. Some retailers, including those that would have difficulties in a standard format, have been able to take shelter in larger stores. This is especially prevalent in stores with grocery aisles, which have become the new mall anchor. For instance, Target, which was deemed essential during the pandemic, has reached a deal with Ulta to open pop-up make-up stores next year. It creates a symbiotic relationship that can help two brands reach new customers and overcome some of the challenges like the closure of non-essential stores that has stricken physical retail during COVID-19. Other types of pop-up stores have been used to fill vacant retail spaces quickly and provide a short-term outlet for landlords. Most of the innovations we are seeing are not ideas born purely out of the pandemic, instead were ideas that got accelerated to meet the new demands of consumers. In 2018 the idea of Kroger hosting Toys “R” Us inside their stores seemed like a novel idea, however it may become more widespread as more retailers look to increase foot traffic at the busiest time of year.

The most important current aspect of physical retail is safety. Consumers are constantly concerned about exposure to COVID-19 and conscious health efforts in store can boost confidence. Many companies have spent the year retrofitting stores with new ventilation systems, contactless ordering, and training protocols. The fruits of that labor are being seen during the holiday shopping season and some companies that are unable to open have benefited from an online presence. These innovations are even more important as they will still be useful after the pandemic subsides.

The commercial real estate market is undergoing a transformation for 2021 and flexibility will be indispensable. Physical retail spaces could look significantly different next year while providing new options to consumers. The level of redesign that has gone into physical retail is difficult to grasp and the acceleration towards these changes is unprecedented. The challenges of 2020 can be overcome and the commercial real estate industry is poised for recovery.