With commercial real estate tanking after the pandemic, what is the future of online shopping? How will retail stores modify the shopping experience to adapt to this new world? Join Ken McElroy and CNBC’s Senior Retail Reporter, Courtney Reagan, in a discussion about the future of online shopping and what the change in commercial real estate means for you. Learn more about your ad choices.
Ken McElroy:
I’m here with Courtney Reagan, who many of you may recognize at CNBC she’s a senior retail reporter and part of her coverage of the retail sector. She’s interviews the CEOs of Walmart target Macy’s Kohl’s home Depot, gap eBay, and many, many others.
Ken McElroy:
And obviously, as you guys know, they, they’re the ones who have the cut of the pulse on what’s happening in the commercial real estate space. She also contributes to the New York stock exchange and NASDAQ and the new New York mercantile exchange. Courtney, thanks for joining us. Thanks. Yep. So let’s get right into it. So a lot of retail retailers are already incorporating the digital shopping into their physical stores, as you know, as you, as you pointed out that, you know, sometimes it’s, you know, it was like as a novelty almost, you know, you know, now they can order some lot online and pick it up at the store. So things have really changed. What are some other things that you’re seeing now in this brick and mortar stores? Uh, from a digital standpoint?
Courtney Reagan:
Yeah, I think, yeah, you know, the buy online pickup in store is something BOPUS is the term that a lot of retailers were trying to figure out, uh, for quite some time. And it sounds like a pretty simple thing, but a lot of times online inventory does not match in store inventory. And so you to your website is up and running to do that. You have to make sure that you pull that inventory from the shelf quickly to fulfill that online or before someone in the store grabs it. So I think it took a while to figure that out and get that right. And then during the pandemic, curbside was the new thing, you know, Hey, don’t worry about it. You don’t even have to come into the store, we’ll put it in your car. Well, target actually was already doing that, um, in advance of COVID hitting and Walmart was as well when it comes to grocery.
Courtney Reagan:
So, um, they may sound like similar innovations and they are, but it took an awful lot of work to get that far. Um, you know, I think retailers are, are really wanting consumers to interact with their apps while they’re in store. Um, they may be able to, if you have your notifications on and your geo locator on, they may be able to push you notifications or sale items if you’re standing in the shoe aisle for a while, but you haven’t really interacted with the product. Um, you know, there is technology where can push you at 20% off shoes because they know you’re standing there and maybe you just need that extra little push, some might call it creepy, but you know, it might work a lot. Yeah. They’re willing to give up their data or their personal information if they get something in return that they will leave as valuable. So I think, you know, using the technology of the location to really try to personalize offers for shoppers is something important that a lot of retailers are trying to figure out again without bordering on creepy.
Ken McElroy:
Yeah, yeah, yeah. That’s for sure. So I know over the last 10 years or so, we’ve been kind of seeing developments that are mixed use retail, residential, I’ve personally done some, I’m actually doing some right now. We’ve seen them, you know, in a master plan we’ve seen, you know, re retail under residential and, and you know, all kinds of scenarios. Do you think we’re going to be seeing more of these residential shopping centers, you know, a kind of mixed use stuff, uh, around them?
Courtney Reagan:
Yeah, I absolutely do. I mean, I think people are we’re pressed for time than ever before. I guess I should say a normal times, not when we’re in COVID times and we’re all at home, but, but, you know, for those of us that will be commuting again and picking up children and running around to activities, you know, I think having things compact is just something that is very, very valuable to many people. And we’re only going to get busier and technology does enable our lives to get easier, but it also, um, sort of add more layers of complication at the same time. So I think mixed use retail is very attractive for many people, not just in the cities, of course, but also in the suburbs. You know, I know that there, there are many malls out there that are not doing as well as other malls.
Courtney Reagan:
And I’ve talked to folks that have looked at, at mixed use plans. Maybe we build a condo at one end, we’re an anchor store goes out and then maybe we reuse the middle of it. And it does become a more food, more grocery, um, there’s doctor’s offices, their dentist offices, things that become much less mall like, so it’s a mixed use property that used to look like a mall and kind of just looks like a mini mini city right now. I think that’s a very smart way to go about it. And at least, you know, from the developers that I’ve talked to, they’re trying to push in that direction, will it be successful? I, you know, I don’t know, those projects do take a long time. And so I think sometimes your ideas initially don’t always end up panning out by the time the project is done in the exact way you had planned. But I think it’s a possibility that we should.
Ken McElroy:
I agree with you. I, you know, w w what we found is it’s a win-win for both, you know, like w we’ll have a property with three or 400 people in it, and if they can walk across the parking lot, or, you know, just, uh, have a short walk to a coffee shop or a GM, or even to the store, you know, cause they do go to those things anyway, it’s just, they’re now avoiding jumping in the car and all that. So I agree with you. Um, so right now we’re going to take a quick break after this, we’ll be back with Courtney Reagan, right after this.
Ken McElroy:
Okay. Hey, we’re back. So, Courtney, what do you think about shopping centers will do during this, you know, back to BIM person shopping, you know, w where do you see all these headed?
Courtney Reagan:
So I definitely think one thing that’s pretty obvious, but should probably be said is there’s going to be different sanitation practices with the plexiglass, with the masks. I think, you know, some retailers are trying to figure out exactly what they want to do with returns, the forest, the science is, you know, sort of still mixed about content. Is it contact or airborne or regardless? I think it’s just about a feeling you want your, you want your shoppers to feel safe. And so I think the shopping experience may feel a little different when we go back, but hopefully it’s done in a way that makes us feel as, as safe as possible. Um, but I think because so many people tried online shopping either in ways they hadn’t before in categories, they haven’t before or in volumes that they hadn’t before. You really need to give people a reason to go out to the store, especially if you sell what I would call a commodity product.
Courtney Reagan:
I mean, I always just use the example of like laundry detergent. I’m not sure you can get me excited to go into target, to buy laundry detergent. When I know exactly what it’s going to look like, feel like smell, like when it gets to my door online. It’s just a heck of a lot easier than me getting in the car. But if I do get in the car to get that laundry detergent, wouldn’t it be nice if you had some categories that surprised me that I didn’t intend on buying, which is something that target has done really well, especially with their own private label brands. So without going too far off on a tangent, I think you do have to give customers something perhaps that they weren’t expecting, and you have to give them something that feels like worthwhile to make that trip. Um, you know, whether it’s Santa Claus and stores and free pictures during the holidays for families, or whether it’s a DJ playing music with the launch of a new product line, um, you know, it may sound cheesy, but it may just add that little extra something that makes the trip not feel like such a pain, especially if you’re rushing around.
Courtney Reagan:
You know, I think I live in New York city and I often forget, um, you know, that folks in the middle of, of the country and in Ohio where I grew up often drive right past them, all right, past the shopping center on their way home from work. And so for them, it’s not necessarily, um, inconvenient to in and get something. And in many cases that’s faster than even ordering from Amazon. Um, in two day or same day, if you really need shampoo, you really need it right now that experience better be quick and easy because it’s a commodity product. So don’t make it a pain for me. But if I’m going to shop for something that’s more special, a special occasion dress or some jewelry, there’s gotta be a level of service. And I would say that also brings up an extra level of complication, um, without going too deep into the weeds.
Courtney Reagan:
We know that while unemployment is high labor is also in short supply for many of these retailers and restaurants as well. And that’s really tough because you can have a CEO and an executive team with a really great vision, but at the end of the day, it’s that frontline worker that’s serving the customer. And if they don’t provide a great service or a great experience, then what’s the point in the overall strategy. And so I think that’s why we’re hearing more retailers talk about how they’re taking care of their employees because they realize, I mean, that’s really, that’s the final linchpin to getting that, right? Yeah.
Ken McElroy:
It definitely is. It’s the entire reason a lot of people even come back. Right, right. Yeah, yeah. Yeah. Well really, really good. Okay. So now let’s talk about cash cashless, digital, you know, you know, obviously, you know, that’s where we all had to go, right? We had to go cashless during the pandemic. So, you know, we went from, you know, slowly getting there to boom and you see that trend sticking around.
Courtney Reagan:
I do, I, I think, um, whether it’s the contactless payment with a credit card where you just tap and go, um, whether it’s Venmo or square, uh, these different, which also are very helpful for some of the smaller retailers, um, when it comes to transaction fees. I do think that it’s, it’s going to be something that will stick around. We talk to the electronic transaction, uh, association to get some numbers when I was kind of trying to figure out this exact question a couple months ago, and I was trying to figure out contactless payments or cashless payments and how much that had gone up. And it had gone up of course, very much since, um, 2020, which, or it’s been since 2019, but it’s continued to stay higher as people have continued to shop. So once you feel at ease with it, I think it will stay. I’m sure there were some people that were reluctant to put a credit card on their phone. I mean, think about how much your phone has all the data credit card, all your pictures. I mean, my gosh, it’s like the most valuable item in your possession, but as long as you have a sense of security and ease, I mean, why would you, why would you have to go back to cash, but you have to get there. Of course you have to be able to feel comfortable within the first place.
Ken McElroy:
Yeah, I completely agree. And I know, you know, a lot of this kind of moves to that, you know, removal of the person too, right. You know, the cashier and I kind of leads us to this next question, the bonus question, and that is, you know, we’re starting to see a lot more AI integrated technology, you know, move into the in-person experience was things like digital kiosks. And self-checkouts, how do you see that developing, you know, over the next few years, because right now we have this labor issue, as you know, we have the, we have the cashless and the AI thing happening, you know, for safety too. And, and, you know, it’s going to be really, really interesting. How do you see this rolling out
Courtney Reagan:
So much? Like, I believe that the most successful retailers have some sort of physical presence in some sort of online presence and use the two together. I believe the same thing when you’re talking about, um, a checkout technology service in the stores. I know it’s probably, you know, not another thing retail wants to invest in to have to give everybody everything all the time, but I think that’s the key to winning. I mean, even just anecdotally, I know sometimes if I go to a store and I, I have to return this item, or I have a question about this, I want to part of it on a gift card and part of it on this, I can go to self checkout. That’s just going to be too complicated. I don’t know how to use that machine. So I I’ll wait in line for a person, but if I’m just running in to grab some Tylenol and toilet paper, I can very easily use the self checkout and I’m happy to have it.
Courtney Reagan:
I was at a drug store just yesterday and just buying two very simple items like that. And it didn’t have self checkout. And I thought, oh my gosh, I don’t want to wait. But other times I need to wait in the line. I need a person. And so I just really think the answer is it’s going to have to be a hybrid model. I wrote is the new word for everything for work for, just for the way that we shop for the way that we want our service. Um, different situations are just going to call for different needs and use cases. And I think best retailers are going to have to find a way to invest in both.
Ken McElroy:
Yeah. Yeah. Cause some people do, as you said, want that quick and easy thing. And some people want the experience and I think it’s going to be a hybrid for a while and then it’ll be what it’ll be. Right. Exactly. So guys, if you’re not watching Courtney, you got to get on and check her stuff out. Cause she really does interview the brightest of people in this industry. And, and a lot of them are going to tell you great information on what’s happening in the commercial space. So Courtney, thank you so much for your time. I can’t thank you enough for your insight and your wisdom and of course, all that you do to deliver such great information.
Courtney Reagan:
Thank you for having me again.