How Innovative Retailers Stay Ahead of What Customers Want

MG2 hosts an Urban Land Institute event featuring a panel discussion on ways brands can attract Gen Z shoppers to brick-and-mortar locations.

Though much of the coverage of the U.S. retail sector has focused on the legacy companies that are closing or shrinking stores, industry insiders are optimistic about physical retail’s future, with even Amazon beginning to experiment with brick-and-mortar stores and Apple, Microsoft and Tesla showing the value of “showrooming” their products to high-end customers.

“The world is changing, but those retailers that innovate will survive and thrive,” said Margaret McCauley, principal at Downtown Works, a consultancy focused on downtown retail. “We’re social animals. We still want to see and be seen, go out and touch a product. Ninety percent of all purchases made today are in brick-and-mortar stores.”

So far just this year, JCPenney has announced plans to shutter 140 stores, Sears is closing 150 and Macy’s is closing 68. Smaller brands that were once mainstays of suburban shopping malls are also struggling: fashion retailer Bebe announced recently that is closing all 168 of its U.S. and Canadian stores to focus on online sales and Payless Shoes will close almost 400 stores.

McCauley moderated a ULI Northwest event in Seattle featuring presentations and panel discussion on who makes up generation Z and what it will take to bring the next generation of shoppers into retail locations. Starbucks and Nordstrom executives also presented insights on how their businesses are evolving with the changing retail landscape.

Myra Vaughn, principal at MG2, a retail architecture and design firm, shared insights her firm has collected about gen Z. Loosely defined as people born between 1996 and 2010, this cohort already has an annual purchasing power of $44 billion in the United States. With that number projected to grow to $200 billion by 2020, this cohort is the demographic on which many retailers will focus.

Members of Gen Z have been heavily influenced by the experiences of their parents—gen Xers who suffered the brunt of the Great Recession. The young generation is also influenced by the fact…

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