While the Baton Rouge market has been negatively affected by the rise of e-commerce, which is hastening the demise of traditional retailers and shuttering big box stores around the country, the local retail sector remains relatively healthy.
Shopping center vacancy rates locally are averaging 8.8%, compared to 10% nationwide, broker Jonathan Walker of Maestri-Murrell said at a presentation at the Greater Baton Rouge Association of Realtors annual Trends seminar.
“We’re a pretty good market,” Walker said.
He added, however, that those rates have inched up over the past three years from just 7.5% in 2015, a direct result of the Amazon effect.
Retailers hoping to survive this shifting economy will have to do things differently and appeal to millennial shoppers, who grew up in a digital era and place a premium on convenience and an entertaining experience, he said.
Among the trends Walker noted:
Retailers are placing more emphasis on engaging and entertaining their customers. Outdated movie theaters, like the former Tinseltown site near Siegen Lane, are being replaced with new attractions like Top Golf, while the former Border’s Books and, later, HHGregg space in the Mall of Louisiana is going to become a Main Event “fun house for adults,” he said.
Retailers are not closing brick-and-mortar stores entirely but are downsizing, like Kohl’s in the Siegen Lane Marketplace, and either subleasing their excess space or converting it to e-commerce uses.
The most successful retailers are going “phygital,” doing business in both traditional brick-and-mortar stores and in the realm of e-commerce. Walker cited one study that showed in markets where a company closes its physical stores, online sales for that company in that market drop 38% on average.
“So retail isn’t dead, but brand awareness is key,” he said. “Retailers with the best phygital presence will be the most successful.”
As for the aging one-million-square foot Cortana Mall, which continues to lose tenants and is on the market for sale, Walker says he gets asked for his predictions on the behemoth at least once a week. His answer: its days as a shopping destination are over.
“Over 40 years, things just change,” he said. “Everybody wants to point their fingers but things just change and real estate is no different. There’s a shift in where retailers want to be and a shift in where people want to be.”
