Despite many consumers that still desire a physical location to shop for the interactive experience e-commerce was steadily on the rise in the world of retail prior to the pandemic. However, as the progression of one business model evolves, we have to ask what really defines that business and its implications on value. In the case of retailers many of the larger operations have such strong buying power that the price paid for products resemble that of a manufacturer. This means that the retailer is effectively a manufacturer on paper given its ability to negotiate wide gross margins. This is nothing new. What is however becoming more evident is the fact that as the large retailers strive to compete in the new normal, their operations are relying more on more on elements that are backed by data and technology. How does a worldwide retailer such as Amazon have the ability to deliver a product to you the same day? Among other contributors is the deep logistical competency Amazon and others have espoused that are backed by data and technology. The technology responsible for logistics, our buying habits, etc. are all data driven and assembled in ways to maximize retail sales (revenue). Clearly, major retailers are more technology corporations than they have ever been and will continue along this path in order to thrive. When we evaluate commercial real estate and note tenants of this quality we must pay careful attention to their contribution to market value. #recg #retail #commercialvaluations #retailing #onlineshopping #technology #logistics #amazon #innovation
- Demitry Omrin