ULI Report: Gen Y shoppers still flocking to stores

San Diego -- Despite being the most tech-savvy generation in history, Generation Y, the 80-million strong cohort of Americans between the ages of 18 and 35, has not forsaken shopping in stores for online purchasing – as long as retailers keep their offerings "fresh" and interesting, according to a new report from the Urban Land Institute (ULI).

The report, Generation Y: Shopping and Entertainment in the Digital Age, found that 37% of Gen Yers love shopping and 48% enjoy it. Half of the men surveyed and 70% of the women consider shopping a form of entertainment and something to share with friends and family. The appeal of shopping is particularly strong among Gen Yers who are Hispanic and African American.

Gen Yers tend to spread their dollars around generously, the study found, with more than half visiting a variety of retail centers at least once a month, including discount department stores (the retail type most frequently visited by Gen Y), community shopping centers, enclosed malls, department stores, big-box power centers, chain apparel stores, and neighborhood business districts.

At the same time, 91% of respondents said that they had made online purchases over the previous six months, with 45% spending more than an hour a day looking at retail-oriented websites.

"Contrary to what some retailers have feared, we found that Gen Y still does most of its purchasing in stores," said Lachman, president of real estate consulting firm Lachman Associates LLC and executive-in-residence at Columbia University's Graduate Business School. "Gen Yers use the Internet to research products, compare prices, envision how clothing or accessories might look on them, or respond to flash sales or coupon offers, as well as to purchase items; they are definitely multi-channel shoppers."

The findings from the survey have numerous implications for today's retail property owners, developers and managers, including the following:

  • Restaurants at all price points are popular with Gen Y, but owners should be careful of providing tenants with generous improvement allowances to attract them. Young consumers tend to move from one "hot spot" to another; vacancies can result when a hot trend turns cold.
  • Enclosed malls remain popular, but can face challenges to retain their appeal among fickle consumers. To keep shoppers visiting, mall owners should refresh interiors frequently, encourage social gatherings, incorporate movie theaters and renovate obsolete ones, add specialty food purveyors and grocery stores, serve as pick-up points for merchandise ordered online, and encourage pop-up stores.
  • Malls are big contributors to the chronic inventory of excess retail space in the U.S.; many are ripe for redevelopment. Smaller formats are more suitable for time-conscious shoppers, many of whom may just be looking at goods that they will ultimately buy online.
  • Gen Y strongly supports discount department stores and warehouse clubs – a format that could supplant aging malls and be suitable for infill sites. In contrast, power centers with single-focus "big-box" stores are losing out to both warehouse clubs and online aggregators such as Amazon.
  • Most lifestyle centers target older, affluent shoppers; to attract Gen Y, owners should  focus on apparel brands favored by Gen Y, offer more choice in eateries and include specialties such as a gym, salon, "green" grocer, bike shop, pet store and/or dog run, and uniquely local offerings.


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