Roundtable Discussion: Millennials & Retail

Hilary Marshall, 28
Manager of Marketing & PR & Retired Synchronized Swimmer

Sydney Federer, 32
Retail Leasing Director & Wine Enthusiast

Matt Whitney23
Financial Analyst with a 2nd degree black belt in Tae Kwan Do

Sama Kassem, 30
Asset Manager & Former Paper Boy

Jake Kozberg31
Retail Leasing Specialist & Dog-Father to Duncan

Will Brown, 28
Property Controller & Dad-to-be

Nicole Muratore, 23
Construction Coordinator & Self-Taught Musician

Natalie Smith29
Residential Programs Coordinator & Ice Cream Fanatic

Sam Lear, 26
Residential Development Associate Who Survived Swimming with Sting Rays

There’s been a lot of talk in the retail industry about Millennial shoppers and their expectations when it comes to retail, so we thought we’d gather a group of Millennials who work for CASTO over coffee and bagels to hear their thoughts. The following is a transcript of that conversation.

Hilary: Thank you guys for coming! I thought to kick things off I’d ask those in retail leasing what trends they’re seeing in our centers with tenants and landlords trying to adapt to the changes in the industry?

Sydney: We can all swallow the pill that retail is in a very dynamic and fluid time right now. One of the things we’ve seen in the past five years is the experiential trend and embracing the nature of omnichannel— answering the question of, how do I get to my customer in as many ways as possible to get them through the door? I believe brick-and-mortar is here to stay, but it’s going to need to shift and change and absorb as much as it can from different channels to connect with customers and bring it into the store. One of the trends we’ve seen has been not just making the experience when we walk in the door but also externally. A lot of retailers will negotiate the right to make aesthetic improvements to the façade.  I think that’s a trend that landlords are starting to embrace. With our traditional grocery-anchored shopping centers there’s not as much undulation, but another trend coupled with façade improvements that I think were going to see more of is mixed-use. I think we’re starting to build vertically so part of that omni-channeling is getting people who live, work, and play around all that retail. So, landlords are now okay with giving up and pushing for more personality in façades and creating more character for their retailers.

Hilary: Speaking of experiential shopping, a lot of grocers are moving away from just selling the staples like eggs, bread, and milk. They’re beginning to open cafes, pubs and restaurants in their stores and expanding their selections of warm or prepared foods. Who here has used those amenities and what are your thoughts on them?

Natalie: I’ve used the buffet.

Jake: These amenities are good in the suburbs for parents and young professionals will go grocery shopping with a glass of wine, they’ll take their time and enjoy the experience.

Sama: I’ve seen live music at the Market District.

Sydney: I’ve SUNG at the Market District! I was part of a quartet of singers that Giant Eagle hired to sing Christmas carols. They would routinely hire us to walk the floor and aisles, and then we’d end up on the second floor and sing. People LOVED it! But to your point, I think for parents with kids, these amenities get them in the store and keep them at the store because it’s like, “Oh well, if I can have a glass of wine and then pick up dinner after I shopped, let’s get it all done in one place.” There’s now a convenience factor.

Jake: Some great examples of clothing retailers that are all about the experience are Eddie Bauer and Bonobos. Eddie Bauer put a walk-in cooler in their store, so you can take their jackets and pants and snow stuff and try it on and really test it out. They put the cooler in the windows so when you walk by, you see people testing out their clothing. And then at Bonobos, you literally can’t walk out of the store with your purchase. You have to try it on, then they order it for you and have it delivered to your house, it’s really about the experience. These bigger retailers are adjusting, some are closing because they can’t adjust, but they’re all trying to figure out what the experience is for their customer.

Hilary: Going off of the Bonobos comment- we are seeing a lot of retailers that originally started online, like Bonobos and Warby Parker, begin to open up brick-and-mortar stores…

Sama: Even Amazon.

Hilary: Yeah, Amazon is testing out its Amazon Go concept in Seattle and recently bought Whole Foods. What are your thoughts on these online retailers coming into brick-and-mortar and what does it mean for us?

Sydney: I feel like Millennials are getting back to buying local and feeling like they know their community. So, I think it’s been an interesting spin for these retailers that are recognizing how these shoppers shop and wanting to create a more local environment, one that shows that they know Columbus or their local market. When you’re online, it’s harder to convey that than when you’re in a physical store.

“…Millennials are getting back to buying local and feeling like they know their community.” – Sydney Federer

Sama: It’s probably why local craft beer is so big.

Will: Even Kroger opened Fresh Eats, which is like a mini-Kroger. I’d rather go there than the actual Kroger because it feels more local, and more of a farmer’s market style with a great wine selection and prepared warm foods.

Hilary: That’s interesting, when I was prepping for this, there was an article that was naming five things that grocers should be focusing on to attract a younger shopper and the biggest thing was having local items. Has anyone seen those tags at Kroger that sometimes say, “I’m Local!” and does that evoke some sort of response in you, does it make you want to buy that item?

Nicole: I think so. I know from my experience at a Trader Joe’s, I’ll go there in a heartbeat, because they have good deals and I’d rather spend less money and if it’s also local then it’s a home run. I feel like I go to Trader Joe’s and Kroger all the time because they’re by my house, so they also need to be convenient.

Hilary: What do you guys think about ordering groceries online or meal delivery services which have gotten really big and a lot of Millennials seem to be using them?

Will: A lot of places have call ahead or mobile ordering like Starbucks where you can place your order and then go and pick it up. So, I’ve been thinking that CASTO should be setting up spaces where when you order something ahead the retailer knows and can have it run out to your car, so you can pick it up.

Jake: Personally, some items are convenient to order online and have ready, but there’s also something about going to the store and getting them. Sometimes you get stuff online and get it and you’re like, “This is not what I thought it was.” And then certain types of clothes, especially at a higher price, you want to go in and try it on and make sure it’s the right thing. You don’t want to deal with a couple of days of having it shipped, and then having it not fit right and then shipping it back to return it. I think that the in-store experience is still huge.

Sydney: I’m the complete opposite. I think it’s because of my time, I have so little of it right now being a mom, that I’d rather order something offline and if it doesn’t fit I can return it very easily through the mail. But I have two kids, so my life is a hurricane!

Natalie: See, I like both. I like the convenience of things so at the grocery store any of the precut vegetables that are already boxed up, I’ll take those over having to cut it myself. But the home deliveries, like Hello Fresh or Blue Apron, I tried them, but I still had to cut everything and make it all, so it wasn’t as convenient as I thought it was going to be. Now clothing, I’ll totally buy online and return in the store. But food, I’d still much rather go and buy it myself.

Sydney: I have this ridiculously expensive shampoo that I can’t stop buying through my hairstylist, and she charges an arm and a leg for it. I decided to do a search on Amazon, but it wasn’t on Amazon, so I just did a Google search for it and, lo and behold, it popped up through Walmart who seemingly has the same database structure as Amazon where they’ve started funneling other sellers and vendors through their website, so I bought the shampoo and conditioner through Walmart but it’s being fulfilled through a third-party vendor. It makes a lot of sense.

Jake: Walmart has been buying online retailers like Bonobos and Moosejaw, and now they’re doing pop-up shops that turn into leases. So, Walmart has been going after some online retailers and backing them as they enter brick-and-mortar.

Hilary: Speaking of pop-up shops, they seem to be all the rage. We’re in Columbus and Express is having a pop-up shop downtown for the whole month of December. I have some friends starting a boutique and instead of signing a lease somewhere they’ve decided to do monthly pop-up shops until they can gain customer traction. What are everyone’s thoughts on pop-up shops and leasing— what are our thoughts on utilizing vacant space for these pop-up shops?

Jake: As a consumer I think they’re awesome. Landlord hat, it gets a little difficult and it’s a lot of work and somewhat of a risk for maybe nothing. But like Moosejaw, there’s a chance that it turns into a longer lease, but for a smaller local boutique it would be harder to do. But as a consumer I think they’re awesome.

Hilary: What do we like about it as a consumer?

Natalie: I like the experience of them because they’re smaller so it’s more one-on-one with the associates. They give you more time and attention, and I always end up leaving with more than I meant to.

Matt: Maybe from that perspective, having them there to drive more foot traffic to the center could drive profitability for other tenants if customers are going there for the experience.

Sama: And it keeps the center hip.

Hilary: Shifting direction here, there seem to be some stores that are really thriving like TJ Maxx, Marshalls, HomeGoods, Target. Why do we think that is?

Nicole: I personally, as a consumer, go to TJ Maxx, Marshalls and Target all the time. I think it’s because they’ve expanded what they’re offering. I feel like I go into TJ Maxx, Marshalls or HomeGoods because they have kitchen stuff and prepackaged foods. I feel like if I need to go to the store to buy coconut oil or other things that have a really long shelf life, I’d rather get it there for a fraction of the price than paying full retail at a regular grocery store. Then they have all the clothes and seasonal stuff. My mom has gone there for years and would drag me there all the time, and now I find myself wanting to go there. I also like how, when you get a gift card for one of the stores, you can use it at any of them, which makes it even better.

Will: I think as Millennials we’re kind of cheap and never want to pay full price for anything. So, with TJ Maxx and Marshall we can get the same kind of stuff, but it might be 6 months out of style, but you can get it for half the price.

Sam: Using Target as an example, I think we, as Millennials, would rather go to one spot— like hit the grocery section, then go to clothes, and then hit cosmetics. Hitting all of those without having to go across the city makes it really convenient.

Sydney: I think something that Millennials know, and where our world is heading with the internet and you’re even beginning to see it in the auto industry, is the exposure of real price and real profit margin. We know that there’s a deal to be had out there, so we feel like TJ Maxx or Marshalls are providing that product and transparency for us. So, for me, psychologically I know when I go in there I probably can’t get it for much cheaper. We want the best deal out there, and we’re pretty sure we can find that deal with just a few clicks online.

“We know that there’s a deal to be had out there, so we feel like TJ Maxx or Marshalls are providing that product and transparency for us.” – Sydney Federer

Hilary: I also think there’s that experience of discovery in these stores. Every time you go into a TJ Maxx or Marshalls their inventory has likely turned over. Target is always bringing in new brands to change what they have. Right now, its Magnolia Home, so there’s an experience of discovering something new and keeping the experience fresh so it doesn’t get stale.

Natalie: Target also displays things very nicely. If you go in for a pillow you look and think, “Oh well that candle also looks really good with that.” Everybody knows you go into Target for one thing, but you’ll leave with a bag of $200 worth of stuff.

Hilary: We’ve talked a lot about Millennials, and we are a large demographic group, but looking at the next generation which is Gen Z’ers – there was a statistic that came out recently that stated 77% of Gen Z’ers prefer in-store shopping over online shopping. Why do we think that is and how do we make sure they stay in stores as they mature?

Jake: “Selfie” reasons.

Hilary: “Selfie” reasons, what do you mean by that?

Jake: They want to share on social media, where they are and what they’re doing, and you can’t do that when you’re online.

“[Gen Z’ers] want to share on social media, where they are and what they’re doing, and you can’t do that when you’re [shopping] online.”  – Jake Kozberg

Hilary: I see that as a big opportunity for retailers- making sure their stores photograph well. Jeni’s Splendid Ice Cream, I’m not sure if you guys know this, but when they design their stores they think about everything from color to lighting and how the store looks both in person and in photos. How many people here have seen beautiful photos inside a Jeni’s? That’s because they put a lot of thought behind sharing via pictures and ultimately social media, the ice cream eating experience- you know, snapping a selfie with your ice cream before its gone. It’s really smart because it creates more of a grass-roots marketing campaign, where people then see that photo and go, “Oh wait, I want to go to Jeni’s!” whereas if that same photo was used in an ad by Jeni’s I think people would look at it and go, “Eh, it’s an ad it’s not real, it’s not authentic.”

Sydney: I really agree with that! I got the chills as soon as you said that. I think both generations, enjoy being around each other. We work together, we workout together, we eat together, we drink together. So, to your point of taking selfies and wanting to let people know where they are is accurate. 40 or 50 years ago, if you didn’t catch someone on the phone before they went out for the night, you had no idea where they were, you just hoped when you went out you would run into them.  But now, the world is getting smaller and we’re all getting closer and tighter knit so being able to snap a selfie, saying I’m at Jeni’s in the Short North then allows me to go, “Wait! I’m across the street at lunch, let’s meet up!”

Nicole: Something I thought was funny, was when Pokémon go first came out, I would see tons of kids wandering around shopping centers trying to catch Pokémon. I’m sure all the stores got more traffic just from people trying to catch Pokémon, who also thought, “Well, let’s grab a coffee or go into a store really quick.” It was definitely an opportunity to pivot off of.

Hilary: So, to wrap up, it sounds like the buzz word when it comes to talking about us Millennials is “experiences”. And it’s a well-known fact that Millennials prefer experiences over things, but we’re in retail, we’re in the business of helping retailers sell things, but I think there’s an opportunity to create an experience around the transaction. Any closing thoughts on what you’d like to see out of shopping centers or retailers, and what your expectations are when shopping?

Will: I think when you walk into a store, the atmosphere can make a huge difference. Some stores you walk into and it looks like a messy closet, other stores you walk into and think, “Oh wow, this is nice!”. But also, the center needs to portray that. Keeping up with landscaping and façade updates. And then looking at opportunities to create more experiential uses out of unused space.

Jake: Tenant mix and merchandising will always be important. For example, centers that have an OrangeTheory, a healthy fast casual restaurant, and a store that sells athletic wear. Having a few stores that can build off of one another, and co-market together, because their demographics are going to be the same or very similar.

Sydney: I think we’ll continue to see more mixed-use as we move forward. I think retail, office, and residential built in together allows for creating a sense of community and environment within the overall project.

Hilary: And of course, we’re seeing other retailers like Target embrace mixed-use by developing smaller store formats, one of which will open here in Columbus near Ohio State’s campus. It will be interesting to see how retailers continue to adapt to the new landscape.

“…people still go to the grocery store, people still want to pick out their fruits and vegetables before they buy them.” – Sama Kassem

Sama: I think you’ll see everything surrounded by grocery stores or stores with a grocery component. It’s less of a risk from a lending or development perspective, because studies still show that people still go to the grocery store, people still want to pick out their fruits and vegetables before they buy them. How do you make it experiential within the center? I think we’ll see more restaurants and grocery stores anchoring centers because those traditionally have been drivers to centers. And then you mix in the other uses.

Hilary: Very good point. Well that’s it, thank you everyone for your time! Your comments were all very insightful and it will be interesting to watch the retail landscape continue to evolve.