The Voice of Retail speaks to the “so what.” It synthesizes trends, questions conventional wisdom, and surfaces risks and opportunities to watch for next
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In this issue
Closing the Gap in Bricks-Clicks Data and Insights
Changing the Channel to Unified Retail Commerce
Powering Up AI
Courting Change in Retail Ad Spend
Profiting From Private Labels
Closing the Gap in Bricks-Clicks Data and Insights
Brands have so much more information on customer behavior online than in store. Online, customers discover a brand through an ad or influencer, come to the site, browse, add things to their cart, and buy them. Retailers see real-time data on page views, click-throughs, and conversion. All that data allows brands to personalize the customer experience more closely online. Closing the bricks-clicks data gap is one of the most significant opportunities for retail over the next few years.
The wheels are in motion. Many retailers and some investors are using sensors and AI-enabled computer vision to better understand customer behavior. The tools let retailers de-duplicate traffic counts, measure dwell times, track flow patterns, and spot areas that could use extra staffing. The best part: Retailers get a clearer view of the path from customer behavior to purchase. Computer vision also helps investors better monetize properties, making events more strategic and tapping into the growing demand for partnerships like retail media networks. (Take a closer look at RMNs in our October issue.) And while privacy is a concern, the tradeoff for consumers can be a more customized experience. Think VIP access and tailored goods or merchandizing.
Retailers are also deploying smart tags for dynamic pricing and adopting radio-frequency identifiers to track merchandise in real time. In Zara’s new flagship store near Chicago, RFID and robotics are powering labor-intensive activities like try-on, pickup, and checkout. See the concept in action. At Reformation, shoppers can tag pieces to try from interactive displays or their smartphone, in store or before they arrive, then pluck the items from the "magic wardrobe" in their dressing room. Requesting another size or a different item is as simple as a swipe on an iPad. Reformation gains customer insight while its associates save time—time they can spend building relationships with their shoppers.
Why it matters
By pairing what they learn in-store with their online metrics, retailers can create a unified lake of data, with analytics running across the dataset. Those unified analytics will fuel the race to be as convenient as possible to the customer, whatever the channel. Read on for more about that idea.
Changing the Channel to Unified Retail Commerce
First came single-channel retail. For centuries, customers went to a store and made their purchases. (I recently visited the Stoa of Attalos, one of the earliest examples of formalized retail. It dates back to 140 BCE.) E-commerce goes back to at least the 1970s, but it really took off around the time of the iPhone launch in 2007. Soon after, cross-channel retail began to connect the in-store and online experience. Omnichannel retailing took the idea a step further, infusing mobile devices into both in-store and online shopping.
Today omnichannel is omnipresent, grocery to luxury. For established brands, brick-and-mortar locations have a halo effect on online sales. Conversely, digital-native entrants—brands like Warby Parker, Glossier, Away, Rent the Runway, Koio, and M.Gemi—are growing their physical footprint. Why? Physical stores typically have better margins. Letting customers try before they buy cuts back on the bracketing that drives up return rates and costs. And the costs of last-mile delivery and reverse logistics for returns are significant.
But as long as “channel” is in the name, the distinction between the physical and digital realms is implicit. The next step: unified retail commerce, for a unified customer experience. While omnichannel connects siloed data, unified retail commerce centralizes customer insights in a single hub. It creates that unified lake of online and in-store data, where retailers can track what customers like, what they buy and how they prefer to communicate, in real time. Instead of responding to needs, retailers can anticipate them.
Unified retail commerce makes it easier for customers to find the convenience they want. They can create a cart or wish list in a mobile app, then try or buy in-store. Or they can start a purchase online, check inventory in real time (RFID inventory tracking runs across all channels), and pick up in-store. Loyalty and product preferences follow the customer across e-commerce, app, store, kiosk, or anything else. Keep an eye on continued innovation and the drive toward ever-greater convenience and seamlessness for the customer.
Powering Up AI
What company these days isn’t using AI? A company that may not be around long. In a quick pivot, AI has gone from cutting-edge to table stakes.
For anyone concerned that AI will minimize human interaction, rest easy. Used right, AI should do the opposite. In its simplest form, AI streamlines repetitive tasks. Our team is focused on increasing adoption to shift even more of our time to our most valuable work, advising our clients. And for retailers, AI puts time back in the day to forge real-life connections with their customers. Because in the end, customers want to talk to a human being. Brands can have the greatest impact by thoughtfully using the power of their people.
How long will it take before AI becomes so woven into the retail fabric that we wonder how we ever shopped—or sold—without it? Where better to get the answer than AI itself? Here’s a lightly edited summary of a response from Copilot.
In short, for AI in retail, the future is now. This is the moment to ramp up AI skills. Get comfortable with the tools. Explore different models. Learn to write better prompts for better results. And, from our August issue, see how AI can better train our thinking.
Courting Change in Retail Ad Spend
Two recent rulings involving search and social media giants could affect retailer ad spend. How? In the short term, probably not much. The cases could take years to go through the courts. But prepare for change, with more transparent data and more ad tech tools in a more fragmented marketing landscape. Long term, think about the cost of customer acquisition in-store versus online. All that in-store data retailers are collecting could really pay off.
In 2024, store-brand dollar sales increased four times as much as national brands—3.9% against 1%. The story was the same in unit sales. Private labels gained 2.3%, while national brands dropped 0.6%. The advantage to consumers: more value for less money, from labels they have come to trust.
Differentiation, by offering products their customers can’t get elsewhere.
Adaptability to customer preferences and market trends, by controlling the production process.
Wallet share, by leveraging an e-commerce strategy that targets loyal customers—especially through generative AI.
Private labels may even offer retailers some protection against tariffs, through supply chain control. But, coming full circle, the real edge for retailers has everything to do with their data. The better the customer data, the more retailers can customize the product. And with private labels, it’s a straight line from insight on the customer to product on the shelf.
Read On
Recent readings with insights on and beyond commercial real estate
Today’s retail space needs to draw both customers and talent. How can it do both? Experience. The muscle memory of creating magnetic space for customers gives retail an edge in placemaking for employees. Find out how retailers are making the workplace work for their people.
Think back 15 years to when the chatter was all about the U.S. being over-retailed; we seemingly had too much space. Now we’ve just seen six straight quarters of the lowest availability rates in retail history (though both vacancies and rental rates vary by market and submarket). How did we get here? Obsolescence. A new report from CBRE EA looks at what’s happening, regional trends, and opportunities for retailers and landlords.
In October, we called out some serious stats about the Ozempic effect. It looked as if grocery sales fell 3% among those taking the drug. Well, buckle up. A Cornell University study finds household grocery spending drops 5.5% in the first six months of GLP-1 use. The drop is even steeper—8.6%—in higher-income households. Also down 8.6%: spending at fast-food chains, coffee shops, and limited-service restaurants. Meanwhile, restaurants are adapting their menus and portion sizes, and group dining is getting complicated. But a Circana study points to gains in other items, like ready-to-eat meals, portion-controlled snacks, and high-protein items. And beauty, wellness, and pharmaceuticals are trending up among GLP-1 users—the flip side of the Ozempic effect.
Could self-driving cars turn road trips into shopping excursions? Engineers are dreaming up designs for the day when cars really drive themselves. Imagine. You step in, get comfy and … watch a movie? Play a game? Pull out your shopping app? Or you could settle in to work. Imagine what that would mean for the value of real estate far from transit hubs. Just as long as you can tell your car, “Find me a great roadside market.”
