Retail has experienced profound changes over the past decade, and particularly in the last five years and everyone involved in this sector, landlords and property professionals included, need to stay abreast of the shifting trends to remain successful in this sector and capitalise on new opportunities.

This is according to Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg, who says: “The traditional model of merely opening shop doors in a high-footfall area and stocking shelves with popular items has evolved into a more complex, dynamic ecosystem driven by technological advancements, shifting consumer behaviours and innovative business strategies.

“And for those in the retail and commercial real estate sectors, understanding and adapting to these trends and staying abreast of emerging shifts is crucial for success because this sector will continue to evolve.”

Odendaal lists the following trends as having the most impact:

1. Omnichannel Retailing

Omnichannel retailing integrates various shopping channels—physical stores, online platforms, mobile apps, and social media—to create a seamless customer experience. This approach ensures that customers can shop how and when they prefer, with consistent service and engagement across all channels.

Impact on Commercial Real Estate:

“Retail spaces are evolving from mere points of sale to experiential hubs where customers can interact with products and brands. Stores now often serve as fulfilment centres for online orders, enhancing convenience for customers who opt for buy-online, pick-up-in-store (BOPIS) services.

“Landlords need to ensure that retail spaces are equipped with robust technological infrastructure, including high-speed internet, advanced security systems, and integrated logistics solutions to support omnichannel operations.”

2. Experiential Retail

Experiential retail focuses on creating memorable shopping experiences that go beyond the transactional. This can include interactive displays, in-store events, workshops, and augmented reality (AR) experiences that engage customers on a deeper level.

Impact on Commercial Real Estate:

“Retail spaces must be designed to accommodate various experiential elements and, to this end, flexible layouts that can be easily reconfigured for events or pop-ups are increasingly in demand.

“Property developers should consider incorporating complementary amenities such as areas for cafes, entertainment zones, and communal areas to enhance the overall customer experience and increase dwell time.”

3. Sustainability and Eco-Friendly Practices

Consumers are becoming more environmentally conscious, driving retailers to adopt sustainable practices. This includes the use of eco-friendly materials, energy-efficient operations, and transparent supply chains.

Impact on Commercial Real Estate:

“Retail properties are increasingly built or retrofitted to meet green building standards like LEED or BREEAM. Developers and landlords should prioritise sustainable design and construction practices to attract eco-conscious tenants.

“And implementing energy-efficient systems, such as LED lighting, solar panels, and smart HVAC systems, will not only reduce operational costs, but also appeal to tenants looking to minimise their environmental footprint.”

4. Technology and Automation

The integration of advanced technologies such as artificial intelligence (AI), the Internet of Things (IoT), and automation is transforming the retail landscape. These technologies enhance customer service, optimize supply chains, and streamline operations.

Impact on Commercial Real Estate:

“Retail spaces will increasingly need to be equipped with the latest technology to support AI-driven analytics, automated checkouts, and IoT devices, however, this requires significant investment in infrastructure and ongoing maintenance.

“And, with the rise of connected devices, data security becomes paramount. Property managers must ensure robust cybersecurity measures are in place to protect sensitive information.”

5. Rise of E-Commerce and Digital Integration

E-commerce growth has accelerated, with more consumers shopping online than ever before so retailers are integrating digital technologies into physical stores to create a cohesive shopping experience that blends online and offline elements.

Impact on Commercial Real Estate:

“Some retailers are downsizing physical footprints in favour of more strategically located, smaller stores that serve as showrooms or pickup points for online orders.

“This has resulted in a growing demand for logistics hubs and distribution centres and property practitioners should explore opportunities in developing or converting properties to meet this accelerating need.”

6. Health and Wellness Focus

Health and wellness have become significant considerations for consumers, influencing their shopping habits and preferences and retailers have begun to incorporate wellness products and services into their offerings.

Impact on Commercial Real Estate:

“Properties that support health and wellness initiatives, such as fitness centres, organic food stores, and wellness clinics, are becoming more attractive and enhanced air filtration systems in enclosed spaces like malls and stringent cleanliness protocols are now essential features in retail properties to ensure a healthy environment for customers and staff.”

What Property Professionals and Landlords Need to Know

Odendaal says that the main factor to take on board is that the retail landscape has forever changed and now is continuously evolving, so it’s imperative that all industry payers must be adaptable and flexible in all aspects and that they embrace the following key components of a new industry:

Embracing Technology

Staying ahead in retail real estate requires embracing technology. Landlords and developers should invest in smart building technologies, digital leasing platforms, and data analytics to enhance property management and tenant satisfaction.

Understanding Consumer Behaviour

A deep understanding of consumer behaviour is crucial. This involves staying informed about trends in consumer preferences and spending habits to better anticipate the needs of retail tenants and their customers.

Collaboration with Retailers

Effective collaboration with retailers can lead to more successful outcomes. By understanding retailers' business models and challenges, property practitioners can offer tailored solutions that enhance tenant retention and attract new businesses.

Sustainability Commitment

Sustainability is no longer a niche concern; it is a fundamental aspect of modern retail real estate. Practitioners must commit to sustainable practices, from construction to daily operations, to meet regulatory requirements and appeal to environmentally conscious tenants.

Enhanced Customer Experience

The focus on customer experience extends beyond retail stores to the entire property. Creating engaging, convenient, and enjoyable environments will draw more foot traffic and encourage longer visits, benefiting all tenants.

“The retail real estate sector is in the midst of significant transformation, driven by key emergent trends and those who stay informed about these shifts in the sector and adapt their strategies accordingly will be well-positioned to succeed,” concludes Odendaal.

“And by prioritising flexibility, technology, consumer understanding, collaboration, sustainability, and customer experience, the commercial real estate sector can thrive in this new retail landscape.”