Is There a New Form of Retail on the Rise?

The retail space is undergoing significant changes, driven by factors like Covid-19, high rental costs, and shifting customer expectations. So, what are the trends shaping this evolving retail landscape?

The New Mini-Mall

While online shopping dominates a major sector of retail, many businesses still maintain physical setups. However, the approach is changing. Some retailers now opt to rent smaller floor spaces (1.25m²-10m²) on a semi-permanent basis in malls. These spaces cost around R2000 – R12000 per month, depending on location. Retailers benefit from a central location with high foot traffic, access to customer-centric sales teams, stock turnover data, and social media exposure—all at a reduced cost, making it an attractive option for many.

Omnichannel

Research shows that few people limit their shopping to either online or in-store. Consumers prefer a blend of both, now referred to as the "omnichannel" experience. This approach integrates online and offline shopping, offering customers a seamless, unified experience across both. Experts agree that the future of retail is not just about in-store transactions but also about creating a holistic, technology-driven experience that enhances the personal connection between customer and brand.

The Retail Experience

Shopping is no longer purely transactional. Retailers now focus on offering experiences rather than just products. This trend, known as "experiential retail," involves creating tactile, engaging in-store experiences that cannot be replicated online. It’s about drawing customers in with memorable interactions that go beyond mere product sales.

Engaging with Gen Z

Generation Z has grown up with technology, seamlessly blending online shopping with on-the-go purchases. To attract these tech-savvy customers to physical stores, retailers must create destinations that offer something unique. Gen Z cares less about traditional branding and more about unique, meaningful items that help them stand out. Retailers that incorporate experience, values, and distinctiveness into their business model are more likely to capture the attention of this demographic.

Halo Brands

A "Halo Brand" is a company that is widely recognized as a leader in its industry. The "Halo Effect" occurs when smaller retailers associate themselves with these brands, gaining market share through their existing momentum. This strategy helps smaller businesses reduce marketing costs while benefiting from the larger brand's influence. Retailers are increasingly partnering with Halo Brands to draw in customers and build interest in their stores.

The Bottom Line

Retail is evolving from being just about shopping to being about experiences and connections. Retailers must understand their value within this broader context and find ways to integrate these trends into their business models. As Redefine retail asset manager Nashil Chotoki explains, "People are social beings, and they want to spend their downtime in a place where they can integrate shopping with other aspects of their lifestyle." By adapting to this new retail landscape and finding their niche, retailers can secure a meaningful position in the future of alternative retail.

‍