Retail's Hot Future

There are several trends to watch within these next five years that will transform retailing. First, we will continue to see supply constraints challenge how retailers grow store footprints. Additionally, elevated interest rates will impact both short term and long term construction pro forma, challenging retailers assumptions on cost of goods and impact on margins.  Another trend to watch, the demographic shifts to the sunshine states in the sunbelt region will continue to stress demands on labor, which could lead to a further short supply stock issue. Next, retailers will increase their influence for data analytics to identify customer preferences, purchase history and behavior. This will help reduce a stock shortage in a physical retail store and keep the retailer aware on product demands in the targeted submarket. Also, consumers will want bespoke product alignment with their buying preferences, which is another reason why retailers will continue to rely heavily on data to gather this information. Lastly, baby boomers will retire at a greater rate than replacement rate of labor. This will put upward pressure on labor, which imparts upward pressure on inflation. Meaning, I don’t anticipate any near term inflation rate reduction, which will continue to impact consumer confidence as cost of goods remain high.

Naveen Jaggi

President of Retail Advisory Services, JLL