If you’ve been reading our blog, it won’t come as a surprise to you that the traditional retail model has shifted dramatically. We’ve covered how many potential customers are increasingly in need of extra incentives coupled with a memorable in-store experience to go shopping in-person rather than taking their business to online competitors. We’ve also touched on how building owners are shying away from seeking out big-box retailers as tenants. Most recently, buzz words like “Co-Tenancy” and “Micro-Destination” are getting thrown around; but what does it all mean?
Here’s how it all comes together:
Co-Tenancy
This term refers to the concept of renting out shop space to multiple tenants. We’ve seen the model demonstrated most often in the quick-service restaurant sector, with sister companies like Taco Bell and KFC teaming up to serve both of their menus at one location. Nowadays, the business model has continued to shift towards wider adoption in the retail industry as well. Especially if you are a small business, the co-tenancy model allows for smaller overhead costs, leading to an increased bottom line. Moreover, sharing shop space is not only cost-effective, but it also helps garner more foot traffic. People will often prefer walking to a location with multiple offerings over committing to a single store in the mall. The potential for crossover marketing also grows as customers may enter a co-tenant’s shop, and have something from the other co-tenant’s offerings catch their eye.
Micro-Destination
Taking the concept of experiential shopping one step further is the establishment of micro-destinations. We’re continuing to learn that shoppers prefer convenience and overall experience over other metrics when reviewing their consideration set. The whole idea of a micro-destination is to pack as much of those two qualities into a single location as possible. This means putting an emphasis on storefronts that provide a variety of related brands and products, paired with opportunities for leaving a memorable impression on any foot traffic that comes through. We’ve seen the most prevalent examples of this in many of America’s food halls, which offer a multitude of restaurants, all within a space where everyone can choose their own experience while still indulging with their friends. The focus is definitely moving towards smaller shops which work together to provide a holistic customer journey, and it will be interesting to see the ways retail brands will be implementing this model.
As a retailer, how do you feel about the shift towards co-tenancy and micro-destinations? If you’re interested in learning how to keep your own brick-and-mortar location up to date with the newest trends, we encourage you to connect with us through the Calendly scheduler that is in the upper right-hand corner of this page, or contact us here.