'Internet resistant' stores can help stabilize Tucson's retail market

Although clicking for groceries and goodies continues to be a shopping pattern for many consumers, retailers still view brick-and-mortar stores as essential.

“Recognizing that online shopping is here to stay and growing every year, retailers find value in having stores being the showrooms for online goods and they often play a role in delivering merchandise with customer pick-up and returns,” Nancy McClure, first vice president of the Tucson CBRE office, says in her annual “Big Box” report.

High interest rates and construction costs dampened new retail construction in the Tucson area, but three large retailers have broken ground and are expected to open this year.

Fry’s Marketplace is building at Tangerine Road and Lon Adams; Home Depot will go up in the Houghton Town Center at Houghton and Old Vail roads and Bass Pro Shops is opening a large store in The Marketplace at the Bridges, near Park Avenue and Interstate 10.

With the exodus of some big retailers last year, many formerly known “shopping centers” are being transformed into destination centers, McClure says.

The closure of Bed Bath & Beyond and the downsizing of Walgreens and CVS stores made the biggest impact.

The locations turned out to be “just right” for other retailers.

For example, McClure notes, Sportsman’s Warehoused leased a former Bed Bath & Beyond at Irvington Road and Interstate 19 and Roadhouse Cinemas leased the Bed Bath & Beyond at Grant and Swan roads for its Rail Yard entertainment venue.

“Entertainment uses, such as indoor pickleball courts, trampoline parks, padel courts, race cart tracks, etc. are constantly scouring the market to lease space but many of the vacant big box spaces lack ceiling clear-height and clear-span with no or few support columns,” she says.

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McClure predicts some retail shops will be demolished to make way for new concepts.

Rob Tomlinson, a retail specialist with Picor, says landlords need to be mindful of tenants whose products are more “internet resistant.”

“It is essential for retail real estate professionals, investors and developers to understand which product types and retailers are less susceptible to online encroachment and are more likely to withstand the trajectory of online consumer goods sales,” he says in his Trend report. “This understanding will help asset managers and leasing professionals target tenants with long-term stability, allow investors to underwrite retail properties more effectively, and assist in retail investment decisions.”

Consumers report that the biggest drawbacks of online shopping include not being able to touch, feel and try a product and lack of the physical shopping experience.

“Specialty stores, such as home improvement centers, garden stores and luxury goods outlets, have proven resilient (and) home improvement and garden stores offer a tactile shopping experience that online platforms cannot replicate,” Tomlinson says. “Similarly, luxury goods outlets provide an exclusive shopping experience characterized by personalized service and immediate gratification, making them less susceptible to online competition.”

He notes that while online grocery shopping surged during the pandemic, most consumers have returned to in-person shopping to hand-pick fresh produce, baked goods and meat or poultry items.

“While many routine purchases of common products do well online, the online retailing space cannot replicate the value of personal experience needed with a more specialized or personalized product,” Tomlinson says. “When considering a retail tenant, ask yourself, ‘How easily can this tenant’s product offering be replicated online?’

“If an online purchase of that product seems to be a stretch, then that is the tenant you want in your retail center.”