The Pursuit of Happiness

The world of retail is a mirror in which our culture sees itself. Like the image in your mirror at home, the changes that we see in the marketplace occur almost imperceptibly over the short term, yet the changes are inexorable.

As tastes evolve about health, lifestyle and consumption – the food that we eat, the furniture that we purchase, the technology that we use and the apparel that we wear, all change in sync. Retail centers are quite frequently the palette where we see these cultural changes played out.

The revolutionary growth in home technology that began over thirty years ago was reflected in the explosion of consumer electronics and office products stores like Circuit City, Best Buy, Office Depot and Staples. As technology has become increasingly personalized, those big boxes have given way to phone stores like AT&T and Verizon and the incomparable Apple Store, that have come to represent in bricks & mortar the cultural intersection between consumers, technology and mobile networks. No one reading this article navigates business or life today without a smartphone.  And our retail marketplace has evolved to match that expectation.

Since the 1960s, sugary drinks and red meat fueled the growth of fast food chains. Yet as childhood obesity and other alarms have been sounded, our culture has seriously begun to rethink its dining habits. Fast food is increasingly giving ground to fast casual, prompting a healthy (literally) struggle for the consumers’ allegiance.

Driven by the tech savvy millennial generation who prefer experiences to acquisition, and world travel to settling down with a mortgage, the pursuit of authentic experiences has become both fashionable and accessible. A boomlet of emerging brands including craft beer establishments (Public School), artisan bakeries (Susie Cakes), organic grocers (Sprouts), farm to table restaurants (Tender Greens), and local watering holes that feature handcrafted cocktails, have all taken a bite out of yesterday’s formulaic casual dining and fast food chains. Both the burger chains and large format restaurant brands such as P.F. Chang’s, Olive Garden, Red Robin and Chili’s feel their once firm footing in the marketplace being replaced by a Faustian choice between a hasty reinvention or a slow demise. Clearly, when America looks in the mirror today, it doesn’t want to see food out of a can, high fructose beverages, or a 10-page menu that suggests a two-hour meal.

It was perhaps Chipotle that best captured the millennial moment in retail, offering locally sourced, organic ingredients, competitively priced and quickly served. Healthy, Cheap, Fast. Why would a consumer ever go back to Red Lobster? Indeed, in spite of a number of operating stumbles, Chipotle currently operates over 2,000 restaurants and enjoys a market cap in excess of $12 Billion. Wow.

Seeing how the Chipotle model has resonated so powerfully with today’s consumer, a gusher of emerging brands are seeking to tap into America’s evolving tastes, reframing the Healthy-Cheap-Fast trinity into myriad interpretations, all of which are growing quickly. Sweetgreen, Mendocino Farms, Homegrown, Roam Artisan Burgers, Oren’s Hummus and Heritage Eats are but a few of the evolutionary brands in dining whose visionary owners are re-writing the playbook on feeding America, healthier, cheaper and faster. And if all of this news isn’t alarming enough for the fast food brand that needs an acre of land or the casual dining establishment that operates in 4,000 to 8,000 SF, today’s fast casual brands pump all of their sales through floor plans that average a mere 1,800 SF. On multiple levels, the old model looks increasingly unsustainable.

So what does all of this tell us about how America will see itself reflected in retail as we look ahead? Here are a few predictions:

• More small, specialty fitness concepts.  Orange Theory, Soul Cycle, TRX and Core Power Yoga are only the beginning. It’s experiential, it’s healthy and you can’t buy it on the internet.
• More fast casual dining brands, each with a unique interpretation on classic, healthy ingredients. Also internet-proof.
• Smaller, organic pharmacies that fill your prescription, but also offer alternative & homeopathic options. The prescription pharmacy business is simply too big, health-care information too accessible, and health treatments too varied for two or three legacy pharmacy brands to control the market in perpetuity (see Circuit City, above).
• Home Improvement warehouses growing smaller and closer to core market populations. Millennials don’t own trucks and frequently don’t even own cars. An Uber or Lyft ride is only a few taps away on a smartphone. To reach this audience, stores need to get closer.

The evolving makeup of our retail centers reflects how the pursuit of happiness has meant different things at different times. An inexpensive burger & soft drink, a cool technology device and colorful yoga pants have each had their turn on top.  If we have learned anything yet about retail, it’s that each new star will ultimately be eclipsed. Happiness in retail, it seems, is a moving target.