5 Retail Real Estate Survival Tips for 2019

May 2019


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Thrivers are digitally savvy, customer-centric, and think like urbanists

It’s been a rough few years for many brick-and-mortar retailers, with several high-profile bankruptcies altering the face of local malls with thousands of store closures. Despite strong underlying economic fundamentals and high consumer confidence, many large malls have faced significant headwinds. Retailers in outdated malls, or those that have lost anchor stores, have been hardest hit. Even in cities like New York, retailers are feeling the pain of declining traffic in brick-and-mortar stores. According to BDO’s Real Estate and Construction compass, vacant retail space in New York City climbed to over 12 percent in 2018, on par with the national average. It’s becoming clear that even the most prominent retail hubs in the country aren’t immune from brick-and-mortar woes. 

Traditional retailers are facing an uphill battle against pure play e-tailers that exclusively operate within digital channels. One in five department stores are struggling to compete, according to findings from BDO’s Retail Rationalized Survey of 300 retail C-suite executives. More than half (54 percent) of traditional retailers–including big box, department store, discount and specialty retailers–say they are just surviving, defined as stable and breaking even. Meanwhile, the overwhelming majority of pure play e-commerce businesses (84 percent) consider themselves to be thriving. 

Despite national vacancy levels at a 10-year high—more than 14 percent in 2018—there are reasons for optimism. Disruption is igniting a new age of retail that emphasizes personalization, interactivity and convenience. Thriving retailers are changing up their business models and spaces to appeal to next-generation customers, who are younger, digitally savvy and value experiences as much or more than products themselves.