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Retailers Putting Physical Stores at Center of Omnichannel Experience

The retail sector could be experiencing a momentum swing back to brick-and-mortar stores after more than a decade of focusing on e-commerce fulfillment.

Many large retailers are recalibrating and focusing on making the physical store the hub of the overall omnichannel experience, said Agree Realty CEO Joey Agree during a CNBC interview. For the first time since 2008, some retailers are looking to expand, he said.

Agree Realty owns retail properties across all 50 states with a strategy built around recession-resistant brands like Walmart, TJ Maxx and Auto Zone. Such retailers provide core, durable brick-and-mortar services that consumers need regardless of the macroeconomic environment, said Agree.

Retailers are enticing customers back to stores through discounts and coupons, "because at the end of the day, free shipping and free returns doesn’t work for the bottom line,” he said.

Stephen Yalof, CEO of outlet shopping center investor Tanger, said it focuses on merchandising its centers with the goal of driving traffic from a variety of demographics visiting for different reasons.

“It's not just a jewelry store or just a restaurant, it's a whole complement of uses that you put together in one large venue, so that a lot of customers will come for a bunch of different reasons, but hopefully stay and interact with all the different uses that are available on the site,” he said during a separate CNBC interview.

Food and beverage offerings drive longer dwell times in retail environments, which leads to increased sales, said Yalof. In addition, beauty brands such as Sephora have been a great driver of traffic lately, especially for younger consumers.

“You never want to alienate your core customer, so we've got the brands that they've always come to love and come back for over and over again,” said Yalof. “But to get a new customer off the couch and into a shopping center, there needs to be a number of uses that appeal to them.”

Luxury brands have struggled a little bit following a post-election bump as uncertainty crept back into the market as interest rates have fluctuated. The market may see luxury brands bring in high-performing products like cosmetics to their storefronts to attract customers, he said.

As more and more employees head back to the office more days per week, apparel brands stand to benefit.

”We're seeing brands like Brooks Brothers and Cole Hahn doing a really good job,” he said.

Reprinted with permission from the Friday, 17 January 2025 07:11:57 EST online edition of GlobeSt © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.