With this issue, The Voice of Retail becomes Retail Reframed, with fresh angles on what’s next for brands and owners. We’re always seeing something new, and so are you. Let’s share!
The cliff would be concerning enough if CRE had a deep bench. It doesn’t. Only 28,000 mid-career professionals are on deck to replace 761,000 retiring leaders. Filter that down to those focused on retail, and you’re scouting for a unicorn. Now layer in reticence to hire entry-level roles as AI promises greater productivity. Clearly, as an industry, we need to consider how we will attract and grow fresh talent.
Office Location
We really enjoyed this insight from our Americas Consulting team. The primary driver behind office location decisions isn’t space. It’s access to the right talent at the right pay. See how saving $1 an hour in comp equates to almost $17 PSF in rent for a back office with 500 employees.
Altogether, talent makes up more than 75% of operating costs, against 10% for real estate. But Americas Consulting’s recent look at six years of HQ relocation showed talent fifth among the leading reasons to move.
Which locations are HQ magnets?
Think Texas. Between 2018 and 2024, HQs surged in Dallas (100), Austin (81) and Houston (31). The HQ boom also hit Nashville (35), Phoenix (31) and Denver (23). Shifting talent has obvious implications for the consumer and retail.
Value Play for Customer Data
Tapping into a third-party marketplace
Stores and e-commerce attract streams of first-party customer traffic. (Scroll down to What we’re hearing for a definition of 1P, 2P and 3P.) Today more retailers are realizing a third-party marketplace can also unlock incredible access to first-party traffic and data. Want an example?
Back in 2011, Best Buy launched a third-party marketplace. Technical glitches and customer confusion shelved that idea in 2016. Now it’s back, with the promise of better technology and—this is key—in-store returns even for third-party items. The marketplace will more than double the products on Best Buy’s website and app. We’re talking about 500 online vendors added, including triple the furniture assortment.
From where we sit, this looks like a retail media network play with a payoff in visitor volume and related ad revenue. As more products draw more visitors, third-party traffic turns into more first-party data for Best Buy. Already the site draws more than 200 million customers, 10 billion site views a year and a million transactions a week. With even more data coming in—not to mention the RMN revenue—the value play is huge. Even merchandise returns can pay off, bringing customers in the door for another look around and another trip to the cash register.
We enjoy watching what Best Buy CEO Corie Barry is doing at the helm. For more on the storied Best Buy turnaround, check out former CEO Hubert Joly’s bookThe Heart of Business.
Retail’s Next Gatekeeper?
Capturing customers with new (and newer) tools
We’ve all been there. Searching for “best of” products. Scrolling through lists. Making spreadsheets. Stuck in analysis paralysis. Then AI entered the chat. Just ask that digital assistant to take your preferences and give you a short list. Is there a new influencer in town—or something more?
Agentic AI may be not just an influencer but retail’s next gatekeeper, one brands must engage and persuade.
By 2030, AI-friendly consumers will drive up to 55% of purchases, Cognizant projects. So far, customers are using AI to sort and sift their sometimes overwhelming options. The leading search and e-commerce platforms have AI agents and features. Now Chat GPT lets AI agents handle customers’ purchases from other websites. Amid the noise of options and content, will some shoppers come to trust AI as their curator? Or will AI just make trusted brands even more trusted as they deliver on value, service and experience?
Demographics. Younger and higher-income adults use AI more.
Technologies. Conversational AI outshines chatbots for customer engagement.
Product type. Small purchases and essentials are AI’s sweet spot, while sales of luxury goods demand the human touch.
Phase of the learn/buy/use journey. AI adoption peaks as customers learn about and compare products but dwindles when it’s time to buy. The research team sees room to gain adoption in the use phase as customers see AI’s potential to automate order tracking, reordering, returns and subscriptions.
What’s a retailer to do? Cognizant offered these ideas.
Make it easy for AI to discover and digest product details.
Create a seamless path for routine, repetitive purchases.
Integrate AI facing the consumer with back-end systems.
Target the product, demographics and purchase phase.
Unify the retail commerce experience (which runs on data).
What’s your game plan as AI becomes real?
Mobile Data Rules (and Blues)
Musing on digital data in the physical world
I was at a drugstore looking for one of the same simple items I often grab and had the impulse to reach for my phone to search for the item in the store. Possible? Perhaps, but probably not without sharing more of my personal data than I had in mind. Where’s the line between convenience and intrusion? And what does it mean for the digital-physical data gap? — Laura Barr, Americas Retail Leader
Retailers and investors find themselves picking their way through a patchwork of data rules and regs. And while workarounds are available, they don’t resolve the larger question: Is mobile data a sustainable solution? Right now, it’s what we have. But it’s inherently flawed. Drawing data only from opt-in apps limits and skews the dataset. The data also appears uneven between geographies, making it hard to compare locations without resorting to blind trust. The data also appears uneven between geographies, making it hard to compare locations without resorting to blind trust (or a trusted analytics partner).
The quality of data and analytics differs sharply between the digital world and the physical world. Closing the gap could mark one of the most significant industry shifts over the next five to 10 years.
GLP-1’s Global Snack Impact
Satisfying a world of appetites
As GLP-1 drugs spread from the U.S. to Europe, snacks are taking a hit. Can the food industry stage a snack counterattack?
Read On Recent readings with insights on and beyond commercial real estate
What we’re hearing
The language of retail is always evolving. Here are some of the words increasingly on our radar. What would you add?
1P, 2P and 3P — Three models for online sales. First-party merchants (1P) sell their products directly to an e-commerce marketplace that buys, stores and ships the goods. Second-party merchants (2P) own their products, but the marketplace stores and ships them. Think “fulfilled by ...” Third-party (3P) merchants own the product and handle fulfillment.
Masstige — Prestige for the masses. The Oxford English Dictionary traces the portmanteau word to the Cosmetics International trade magazine in 1996. But the concept has been around a lot longer. “The champagne of bottled beers” slogan launched in 1906—the same year as CBRE. Expect masstige to gain traction as economic shifts bite into budgets.
Smart textile — These high-tech fabrics contain electronic components that aid UV protection, antimicrobial safeguards, thermoregulation and more. They’re used in clothing, automobiles and other products. And the market is growing. See below.
PPI versus CPI — Two ways of looking at price changes. The Producer Price Index separates the costs of goods from the cost of transporting, retailing and wholesaling them. The Consumer Price Index includes the value of the good and transporting it, along with the trade margins of its sale. So PPI is used to measure real growth in output, while CPI is used to track changes in the cost of living. Same coin, two sides.
CAGR of 18.2% puts the smart textiles market on pace to reach to $5.6 billion by 2030. Driving the growth: innovations in medical wear, defense, athleisure and beyond. DuPont and Gentherm are rolling out textiles with biosensors that track patients’ vital signs remotely. AiQ Smart Clothing looks to scale up production and exports on the strength of Asia's robust manufacturing and supply chains. At this rate, what seems revolutionary today may soon be old hat.
In July the Producer Price Index jumped 0.9% MoM, triple the projections, pushing annual index growth to 3.3.%. On the flip side, the Consumer Price Index rose just 0.2%, coming to 2.7% for the year. With raw material prices up, producers are feeling the pain. Consumers, not so much—yet.
Consumer sentiment is down, but consumer spending keeps nudging up. Why the mixed signals? An analysis of credit card data may have the answer. Economist Dhiren Patki says the top fifth of households are propping up the consumer economy. But as sentiment sags, is retail just waiting for the other Manolo Blahnik to drop?
Brands have soul. And soul comes not from products but from the way brands connect with customers. Is TikTok a brand builder? Well… Ad recall is short of 10%. And more than a third of Gen Z buyers can’t even remember what they bought. Here’s another take on content chaos and customer connection.
