Retailtainment is emerging as a powerful force in the retail industry, redefining how consumers interact with physical stores and driving a resurgence in in-person shopping. According to Anthony Russo in a recent GlobeSt article, this trend is not only attracting shoppers but also significantly boosting store visits and sales. Research from AIScreen has revealed that retailtainment experiences have led to a remarkable 30% increase in both metrics, underscoring the growing importance of creating engaging, memorable environments within retail spaces.
PREIT, a company renowned for its innovative approach to transforming traditional malls into dynamic, multi-use districts, is at the forefront of this retail evolution. Joe Aristone, Executive Vice President and Chief Revenue Officer of PREIT, highlighted that today's consumers are increasingly seeking social and experiential interactions that go beyond the convenience of online shopping. "People are looking to have more social experiences," Aristone noted, emphasizing that physical stores are being leveraged not just for sales but as critical components of a broader, omnichannel strategy. Retailers are focusing on enhancing their brick-and-mortar locations to support online business, encouraging customers to visit stores for returns and to engage in experiences that cannot be replicated digitally.
This shift towards retailtainment is most effective in affluent suburban areas, where consumers are more willing to spend on experiences. Aristone pointed to Scarsdale, New York—ranked as the richest area in the country by GOBankingRates with typical home values exceeding $1.4 million—as a prime example of where this trend is flourishing. In these markets, PREIT has successfully integrated entertainment-themed concepts into their properties, driving longer visits and higher spending. In Philadelphia, where PREIT has a significant presence, up to 17% of its retail offerings now focus on entertainment, particularly in affluent areas like Cherry Hill.
While the retailtainment trend is gaining momentum in wealthy suburbs, urban retail has faced challenges. Aristone acknowledged that urban retail has been "a little softer" but expressed confidence that demand will eventually rebound as consumers return to city centers. This optimism is tempered by the recognition that not all retail properties will survive the ongoing transformation. Aristone pointed out that high-quality malls—those classified as A-tier properties—are thriving, while lower-tier malls, labeled as C or D properties, may struggle to remain relevant in the evolving retail landscape. "I think you're going to see that the top-tier malls are going to continue to do well, continue to dominate," Aristone said, but he warned that lower-tier malls might "become obsolete at some point."
In Philadelphia, the impact of these trends is evident as the number of operational malls has decreased from 18 to about eight or nine. Aristone predicts that the city's mall portfolio will eventually consolidate to just five or six locations, reflecting a broader industry trend of retailers downsizing their physical presence. "Tenants are realizing that they don't need to have a store eight miles or seven miles away. They can kind of operate more efficiently out of one store," Aristone explained.
Despite these shifts, the retail sector overall has seen a strong first half of 2024, with retail vacancies hitting a 20-year low in the second quarter. However, there are growing concerns about the broader economic outlook. The unemployment rate has risen for four consecutive months, and the stock market has experienced volatility, contributing to a mixed bag of consumer confidence. PREIT has observed some softening in demand within the fashion sector, with retailers like JCPenney experiencing less foot traffic. However, Aristone remains cautiously optimistic, noting that other retail categories are performing well enough to offset these challenges. "It's nothing earth-shattering or alarming to the point where there's a panic button," he said, adding that strong sales in various categories should help absorb any negative trends.
As the retail industry continues to evolve, the rise of retailtainment represents a promising avenue for driving foot traffic and sales, particularly in affluent areas. By focusing on enhancing the in-person shopping experience and integrating entertainment elements, retailers and mall operators like PREIT are positioning themselves to thrive in a competitive market.
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