As the world continues to recover from the pandemic and global recession, retailers and brands are looking to 2023 with renewed optimism. Despite the challenges that the past few years have brought, industry professionals expect that the next year will bring new opportunities for businesses to adapt and grow.
According to Shelley E. Kohan at Forbes, the five biggest retail trends for 2023 are:
- Retail Media Networks
- Social Media Sentiment Monitoring
- Hybrid Shopping and Seamless Shopping Journey
- Store Design Shifts and Mixed-Use Spaces
- Consumerism Curtailment.
Retail Media Networks is essentially a marketing strategy or infrastructure where retail brands offer third-party vendors advertising space on that retailer’s website or app. Therefore we should see apps and websites become increasingly important as for retail brands. This also allows brands to place ad space where their consumers are already spending time.
Social Media Sentiment Monitoring is the active collecting, monitoring, and analysis of a brand’s online consumer presence. Having the data on how the public is talking about and feels about a brand will help that business make real-time decisions to better curate their public image and target its audience better.
The Hybrid Shopping and Seamless Shopping Journey will be a focus for retailers as they aim to deliver improved experiences across all shopping methods, including online, in-store, mobile devices, social media, and live streaming. The goal is to create an enjoyable and meaningful hybrid experience as consumers utilize both online and brick-and-mortar shopping experiences simultaneously. If online and in-store experiences can mesh into one experience that retailer should experience higher sales. For example, many consumers check online for a product’s availability before heading to the store. A classic example is the BOPIS (buy online, pick up in-store) which became very popular during Covid.
Store Design Shifts and Mixed-Use Spaces will see store designs being adjusted to support new shopping initiatives such as curbside pick-up and fulfillment from stores.
Consumerism Curtailment will see consumers buying less stuff and being more invested in understanding the product life cycle, with an increasing focus on sustainability and pre-owned products.
While retailers are optimistic about the future, they also expect inflation to pressure profit margins and predict diminished consumption in 2023 due to rising financial concerns for consumers. However, retailers have learned much about resiliency in the past few years and are now better prepared to handle the changing market. As the retail industry continues to evolve, businesses will need to stay ahead of the curve to remain competitive and successful in the years to come.
What About Montana?
As we look ahead to 2023, the commercial real estate retail market in Montana is expected to be shaped by a number of trends. One trend to watch is consumer behavior. While consumer spending has remained strong in the wake of the pandemic, it’s important to continue to monitor this trend as unemployment rates rise. This may affect the demand for retail space and influence the success of retailers.
Another trend to watch is the potential for certain retailers to consider separate shopping facilities for delivery platforms such as Instacart and Uber. This could help to alleviate congestion in primary retail stores, which may be important as more consumers opt for home delivery options.
We also expect that neighborhood centers in well-populated areas will continue to perform well in 2023. These properties may benefit from a steady stream of foot traffic and be well-positioned to serve the needs of local communities.
Finally, we predict that rents for retail properties will likely hold steady due to very little development in the pipeline. With fewer new retail spaces coming onto the market, demand for existing retail space is likely to remain strong, helping to support rental rates. In Missoula, we saw less than 100,000 square feet of space being developed in 2022 – and similarly, low square footage developed in Bozeman as well.
Overall, these trends suggest that the commercial real estate retail market in Montana in 2023 will be characterized by stability and a focus on serving the needs of consumers. It will be important for retailers and landlords to stay up-to-date on market trends and be prepared to adapt in order to achieve success. Contact Connor McMahon for more detail on retail development.