Building the Future of Retail

The leaders of ELS’s retail studio got together to talk about the trends they’re seeing:

Geno Yun, AIA, LEED AP, Principal in Charge of Retail, Mixed-Use, and Urban Design Studio
Maureen Boyer, AIA, Director of Retail
David Masenten, AIA, LEED AP BD+C, Director of Mixed-Use
Ryan Call, AIA, Director of Urban Design

How is the retail landscape changing?

Geno: This is an exciting time for retail and retail center design and planning. Today’s consumers demand more from their shopping experience; while the pure act of buying stuff is effective and convenient online, successful stores and shopping centers today will offer experiences that you can’t get online: socialization, dining, entertainment, mixed use programming and people watching. The human need to interact will always be there and the most successful retail centers will offer a hospitality-grade experience.

Maureen: Remember that movie You’ve Got Mail with Meg Ryan and Tom Hanks, about the behemoth bookseller that swallowed up the tiny independent bookstore? Fast forward to today and most of those giant megastores which were so dominant 10-15 years ago don’t even exist anymore. In today’s world of Amazon, people don’t need to shop at a big discount bookstore that looks and feels like a cold, impersonal warehouse.

What’s happened, and I think it’s incredibly exciting, is that the independent booksellers have been completely rejuvenated—they’ve become the alternative to online book buying. It’s analogous to what you see happening in retail, where the larger department stores are breaking themselves down into a series of smaller, increasingly focused and branded boutiques. In addition, many stores host popups, have bars, restaurants and coffee shops. The experience is utterly worth leaving home for. The malls are relying on this strategy, too. So the customer experience is completely changing.

A lot of developers are interested in creating a sense of authenticity in their retail and mixed-use centers.

David: The Ferry Building in San Francisco is wildly successful at drawing locals as well as visitors. The place has real authenticity: materiality, the history of the building and the right mix of local and national retailers that tell the story of what is delicious in San Francisco today. When it was first built it had a transit-focused life. The attraction was preserving its historic fabric to become a true mixed-use, transit oriented office and retail destination.

Geno: A trend for the future is that a developer’s portfolio will have properties that are uniquely different from each other. It used to be that developers wanted to offer the same tenants around the country. Today’s consumers are more savvy and demanding and are not looking for that. They’re looking for something more original—an offering that they can call their own.

Ryan: I’ve experienced many places in Europe and the United States where the architecture is insignificant, but I still feel great. I’m always asking myself, “Why does this work?” A lot of times it’s a design vernacular that’s rooted in local building methods. Authenticity isn’t driven as much by the architecture as by the way that the specific place connects the whole community, the way the community uses that place and, most importantly, shares that place. It’s that sharing that creates this larger identity.

How will e-commerce continue to impact the design of retail centers?

Geno: Retail centers have to adapt and provide something that online shopping can’t, face to face social interaction and experiences. About half of our projects now involve replacing empty department stores with lifestyle-focused uses. We’re taking them down completely and creating open-air plazas with social bowling venues, alternative food offerings, bocce courts and entertainment districts. We’re running real streets through these buildings and augmenting them with residential and office uses. They’re now being anchored by real experiences.

David: I see a real opportunity for urban retail centers to host events that highlight the unique attributes of a location. Well-designed open space should be designed to accommodate these events, but open space by itself is not enough. Landlords have to spend time thoughtfully programming, making sure the events activate the space and are unique and relevant to the people in the target market. Possibilities include popups, food trucks, or outdoor movie nights during the summer…

Maureen: Fashion shows, maker fairs, farmers markets… We can also help to position the anchors to create a good flow that will encourage cross-shopping when visitors actually come for a specific event. Other crucial factors for event spaces are flexibility of use and access to power and water.

What about the role of food in retail centers?

Geno: The percentage of food tenants to the overall GLA has increased quite a bit over the years. When Santa Monica Place started out, about 5 percent of its total square footage was devoted to food tenants. During the recent renovation that number jumped to about 30 percent. There is even an incubator kitchen, which offers cooking classes and group functions.

Maureen: I’m really interested in working with developers to create a shared kitchen or facilitate a popup kitchen that emerging young restaurateurs can book on a temporary basis. In New Orleans there’s a cool little place, St. Roch Market, that has a shared commercial kitchen. Each tenant has their own locked rack in the kitchen, assigned shelves in the cooler and they book time for the stove. The market management provides common cutlery, plates and clean up. It’s really popular. In Oakland there was a another restaurant concept called Guest Chef, which featured a new chef every month. It kept the flow of customers fresh and interesting.

What is the younger generation seeking in retail environments

Ryan: They’re spending more time with their friends, more time outside the home. So there is an opportunity to bring a broader mix of uses closer together so that they can get together with each other easily.

Geno: Retail developers are seeing an increase in demand amongst younger shoppers for non-traditional retail environments. Consumer-driven, curated experiences will win out over those that are more formula-driven. The tenant mixes in these environments have more unique local and regional tenant offerings, but still require a mix with national brands. Successful community-driven retail places like these will sell “culture” – not only “fashion”.

What opportunities are there for suburban shopping centers sitting in a sea of parking?

Ryan: We look at that sea of parking and think, “land bank.” We say, “Wow, look at all that space that we could build on.”

Geno: When department stores shutter, shopping center owners also have a real opportunity, because they can recapture the parking lot associated with the anchor. You can replace them with structured parking. That unlocks the site for redevelopment.

When autonomous vehicles come into play, the way people get to and from retail environments is going to change. When we design new parking structures, they need to be designed with flat floors and higher floor to floor heights so that, in the future, you can redevelop them into an office or a residential building. At some point, no one will need parking structures.

Ryan: Millennials who are leaving cities to start raising their children in the suburbs still want to take with them aspects of the fun and interesting life they led in the cities. Seniors, with more time for leisure but less desire to drive long distances, want entertainment and culture close to home. Responding to these market forces creates one of the most interesting landscapes for our industry.

Are you seeing a lot of wholesale replacement of failing shopping centers?

Ryan: For a while, developers and cities were demolishing failing malls. But I think it’s more interesting to keep the mall, reinvent it, find ways to make the connections to the outer urban fabric seamless, and leverage all those forces coming into the mall. Then, all of a sudden, you’ve got a crossroads for the culture and for the community.

What lessons are you drawing from retail environments overseas?

Maureen: Most recently, I lived and worked in Brazil. In São Paulo, the cool, fun, interesting places to shop share the same spirit with interesting places to shop all over the world. No matter the country, we all respond to the new, the beautiful the well-designed.

I’ve also spent a lot of time in Singapore. Shopping is such a huge part of Singapore’s culture. Orchard Road, for example, is the Champs-Élysées of Asia. It’s a shopping street with a vast number of shopping centers strung together. From an urban standpoint, the government of Singapore has done a great job of creating the connective tissue along that street, which didn’t really exist when those centers were built. Creating that pedestrian experience has been hugely important to the ongoing success of those shopping centers.

What kinds of uses are proving the most compatible with retail in mixed-use developments?

David: Developers today have a high level of confidence that residential uses are going to sell or lease. And they are taking notice of how retail can provide amenities for the housing they build. High quality amenities attract high quality tenant demand, the same is true with office development—if they want the best tenants, and the tenants want the best employees, they’re going to be looking at the larger community in a holistic way. They’ll be asking, “What are my employees’ commutes going to be like?” and “What are their options for fun?” That’s generating demand for mixed-use, integrated communities that are walkable and convenient.

How can municipalities work with developers to better support mixed-use development?

David: Developers need to be provided with specific guidelines from cities to ensure that each commercial envelope is attractive to future tenants. This includes providing adequate height and depth for retail on the ground floor, protecting sightlines and providing consideration for loading. When those retail spaces are not deep enough, tall enough or well located, they will generate less revenue or even worse, may remain vacant.

Geno: There’s so much opportunity now to shape the future of retail. Unlike what you hear in the news, we think now is a key turning point in retail development, one that right-sizes the industry and offers a tremendous variety of experiences.