Retail Tenants, Landlords Grapple with Divergent Perceptions of their Future in Brick-and-Mortar

A recent survey of 30 of the largest retail real estate investment trusts, and mall and shopping center landlords, as well as 90 U.S.-based retailers, examined how these two interdependent industries view the role of physical store locations in future revenue growth. The authors of this article discuss the results of the survey, which reveal the divergent views of the role of brick-and-mortar in the future of retail, and basic business issues.

Mall and shopping center landlords and their retail tenants differ on the role that brick-and mortar store locations will play in the future, more digital world of retail sales. Understandably, landlords are more concerned about the very real impact of online shopping on the need for physical space and ultimately, on vacancies. Retailers, on the other hand, are looking for ways their landlords can help them better adapt and thrive in the face of retail’s new omnichannel reality by adapting their stores to enhance the customer experience and meet evolving consumer demands. This issue was explored in a recent survey of 30 of the largest retail real estate investment trusts (“REITs”), and mall and shopping center landlords, as well as 90 U.S.-based retailers, to examine how these two interdependent industries view the role of physical store locations in future revenue growth.

The results of the survey not only reveal their divergent views of the role of brick-and-mortar in the future of retail, but also about basic business issues, including the shift to online shopping, evolving consumer demographics and preferences, and competitive pricing and promotional pressure. Because of this disconnect, retailers’ and landlords’ approaches to attracting shoppers and growing revenue differ significantly. But, change breeds opportunity.