PODCAST: How technology is reshaping retail's future
Industry experts explore how AI, drones, and digital twins will transform urban landscapes
Imagine if your refrigerator automatically ordered milk when supplies ran low. Or drones could deliver spices in the middle of dinner preparation.
Such scenarios are part of a year-long project at JLL where thought leaders come together to answer some very simple questions: How might we live, work and play in the future? And how would that change the built environment?
Tightening the scope on retail, the latest Trends & Insights episode hears James Cook, JLL's senior director of retail research, speak about what may come to be with Katie Grissom, head of US retail and mixed use for global real estate leader Nuveen.
Their conversation examines the technological shifts and urban planning changes that might impact real estate needs, consumer behavior, and shopping experiences.
Will in-store shopping become a luxury? How might digital replicas of physical stores transform clothes shopping without stepping into a store? What if big box retail centers evolved into vibrant mixed-use communities?
“There’s a lot of things that robots or AI won’t be able to replicate; working out, having drinks with friends, going to a yoga class, getting a coffee, getting into an atmosphere that inspires you to work … there’s going to be a premium on that,” Grissom says. “The underlying question here is does that change the real estate that these retailers need?”
About Our Guests
James Cook
Senior Director Retail Research, JLL
James Cook serves as the Americas Director of Retail Research at JLL. He leads the production of national retail research and regularly engages with clients, media, and event audiences on the future of retail real estate in relation to economic trends. Cook's expertise has earned him recognition, including a place in the 2024 top 50 LinkedIn CRE influencers list by CREiSUMMIT. His role encompasses developing research strategies, methodologies, and comprehensive analyses for retail property markets across the United States, Mexico, and Canada. Cook also contributes to JLL's strategic vision as a member of the Research Leadership Council.
Katie Grissom
Head of US Retail and Mixed Use, Nuveen
As the head of a specialized team spanning the United States, Katie oversees professionals focused on retail and mixed-use investment opportunities. Her role encompasses directing the strategic vision, monitoring performance metrics, and managing daily operations for Nuveen Real Estate's portfolio in this sector. The investments under her purview are valued at more than $18 billion, highlighting the significant scope of her responsibilities within the organization.
James Cook: For the past year at JLL, we have been working on a research project we call Future Vision. We engaged with experts across many different disciplines. We had workshops with urban planners, and AI experts, and economists. And we even talked to an anthropologist, and we collected all this data and all these case studies from around the world to answer a very simple question. How might we live, work, and play in the future. And how would that change the built environment?
Today, I'm going to be talking about the most consumer facing part of that project, which is the future of retail.
James Cook: This is Trends and Insights: The Future of Commercial Real Estate. My name is James Cook, and I am a researcher for JLL.
James Cook: So, I am usually the host of the show, but today I'm going to be the guest too, along with a very special co-host. Welcome Katie Grissom, head of retail and mixed use for the Americas at Nuveen.
Katie Grissom: Thanks for having me; very excited to be here.
James Cook: Yeah, I'm excited to have you. So, I've been so deep in this future vision project for so long, I'm just excited to talk to somebody who's never heard of it before, and I'm going to get your honest take on some of this stuff. Before we get into it though, Katie, how would you describe what you do at Nuveen?
Katie Grissom: I oversee our retail and mixed-use business. And really what that means is I'm setting the strategy. I'm working with our research team and our strategy team to identify mega trends and then figure out how we're best suited to execute on them. And so, from acquisitions to dispositions, asset management, leasing everything in between.
James Cook: You are the perfect person for me to bounce these ideas off. Big caveat, we did something a little bit different instead of just forecasting and saying, this is how we think the future is going to be. We instead developed a whole series of possible future scenarios.
They're sort of predictions, but they're also thought experiments. So, it's forcing our clients and folks in the built environment industry in general to think what possible futures might happen and how would that affect my business? I've chosen three possible futures. Are you ready to go?
Katie Grissom: I'm ready to go.
James Cook: So, I thought we would start in a suburban neighborhood. So, in this possible future, we have AI agents and intelligent robots that have taken on many of our regular shopping duties. So, in our future pantries at home and in our refrigerators, there are agents that are keeping track of all the inventory. And when, say, we run low on milk, they automatically put in an order for more. And items can be delivered via different autonomous vehicles. Maybe there's a little autonomous drone that comes in and drops off sundries, every other day or something. But then there could also be flying drones that deliver items you need right away. You know, I need that one spice for this recipe that I'm making that gets delivered to me immediately. And so, thinking along this line, residential properties would be developed with drone delivery in mind.
They would have landing spots, special docking stations and, oh, and charging is big. You gotta have electricity to charge everywhere. And then if you think about multifamily, on a rooftop of an apartment building in the city, maybe you've got drones that are delivering goods, items are stored in lockers.
And then if that were the case, retailers would have to devote a lot of their thought to all of the infrastructure around this and shopping centers would too. So, you've got to think about drone loading and staging and charging and maintenance. So, this possible future what should we call this? I should have, you know, they, they come up with catchy names for these scenarios. We'll just call it drones deliver everything that could be scenario one.
Katie Grissom: I love it.
James Cook: Okay, good. So ubiquitous drone delivery off the top of your head. How would that impact, the built environment from your point of view?
Katie Grissom: Yeah. As you've been talking about this, it's funny because at Nuveen we're talking about maybe not as in depth or as outlandishly, but we are definitely asking these types of questions. Like our grocery store is going to be relevant in 10 years. Like, how are people going to shop? How do people want to spend their time?
Like what if DoorDash becomes as affordable as eating out what if grocery delivery becomes as affordable as going to the grocery store and it's as convenient as et cetera, et cetera. This is something that I absolutely love to talk about. And I think with what you're saying, if drones are doing a lot of this stuff, I think that there's going to be a lot of obsolete space that you can reimagine to support the needs of the drums, parking buy online, pick up in store thinking about how you're using staff members, thinking about the customer experience and how it changes, whether that's physical or digital or both. And I think the biggest shift which is probably where you want to go is like, how will people spend their time if they don't have to spend it trying to pick out the ripest avocado.
James Cook: Yeah. If people are going to do much less shopping, what shopping they still do, there's going to be a real premium on it. And they're going to want to have it. I think no technology in their shopping, the shopping experience, they actually do in person.
They want it to be genuine and human authentic and, and interactive. And there's going to be a premium on reality and like real human interaction.
Katie Grissom: Yeah I totally agree with you. And I think there's a lot of things that robots or AI can't replicate for you, working out, having drinks with friends, going to a yoga class, getting a coffee, getting into an atmosphere that inspires you to work. And I think to your point, there's going to be a premium on that.
I also think that. The underlying question is does it change the real estate that these big retailers need? Grocery stores need? And I guess you could argue it a lot of ways but you also could think about it from the perspective of. Convenience and being as close to the customer.
As necessary to be as efficient as possible, and there's a premium on that. And so I think where we've landed on that piece is that even if people aren't going to grocery stores, drones are going there and they need to be very convenient. But I also think the produce. And the sense of discovery piece that is increasingly becoming important to consumers around like where their food comes from, how many forever plastics are in their food, what's organic, where did it come from?
There's a whole like underground swell of that, that I think is really interesting and important as part of this conversation that is yet to be known how that unravels or unfolds.
James Cook: Yeah. It's so fascinating. And, talking about, okay we still need places to deliver drones from like, so. I'm sure, you know, you know, Walmart is doing this big delivery by drone experiment in Dallas right now. And at a handful of Walmart stores, they can deliver within a 10-mile radius.
So you still need the Walmart stores. I think what remains to be seen is the affordability of all of this too. If I'm, If I'm putting on my realistic hat for a second all of this technology is really cool, but it's not cheap. Like the computing power is expensive.
The technology is expensive and maybe it won't be as ubiquitous as that thought experiment might lead you to believe. I don't know.
Katie Grissom: Yeah, I think that's a really good point and something that we have to remind ourselves a lot because we're really focused on a specific demographic when we're investing. But if you think about the U S population and where they live and how rural much of it is it's harder to connect those dots.
And so, you almost see this period of time where you may have, these really high tech, really AI drone oriented. Urban centers, but as you move out into kind of these suburban or rural places in different parts of the country, or you focus on different demographics that maybe don't have the cell phone capabilities, or they don't have the ability to have Internet or all these things that are going to be really important for being part of that economy.
It's a really interesting point that should be talked about and considered. And also, are there people that would rather continue to have that lifestyle, especially when you think about an aging population, do people really want to relearn how to do their daily things?
I think some of those like deeply rooted traditions and habits are going to be really hard for the consumer to break.
James Cook: Absolutely agree with that. Okay. Let's go to our second possible future. So now we're going to head over to a clothing boutique. Let's say we're in Soho. In New York and a portal opens up and we're going to go and walk through. In this possible future, the digital and physical have merged seamlessly into one single retail experience that is highly personalized.
So, I would call this the world of digital twins. That's like what I think the key element of this is. So, every person, everything has both a physical version and a digital version. And you've got all these different AI agents helping you interact between the two.
If I wanted to go clothing shopping perhaps there's an AI style agent that is giving me a menu of suggested outfits that it knows I would like. But also, that my digital twin has tried on the digital twin of this outfit. So, we already know how it looks. We already know that it fits. I feel like for me, this is ideal for parents.
Like I just remember when I was a kid, I hated back to school shopping. I had to be bribed and congealed to go back to school shopping because I hated trying on clothing so much. And I imagine if my parents could just say, okay, we know this is going to fit. We saw a rendering of what you will look like on the first day of school. So, we just bought it for you. That's pretty awesome. So, what do you think? Would you want a world in which everything had a digital twin?
Katie Grissom: This is so funny because we could not be more opposite. Like my ideal day is just like being in a dressing room, trying on clothes. But I do have a two-year-old and as I, that would change my life for the better from that perspective, it would be interesting to understand. And I have seen some studies on this because.
I'm like big consumer psychology person. Some people when they shop, personally shop, they get a rush of adrenaline or feel like their heart rate elevates, right? Like it's a feeling that you get if it's something that you love whatever that disease is, I have it. And that drives a lot of my buying decisions.
It would be interesting to understand if your digital twin trying on something incited the same feelings, which then push you to buy, I would guess that it doesn't. But if you look at the impacts of social media, good and bad getting a like getting someone to comment on your picture, how many views it got maybe.
There's a way to connect those 2 things and bring up the same feelings. And I'm sure that um, if you had a digital twin, there would be ways to engage with. Other people's digital twins, to me, that feels like it would be a really important. Element because of the emotional intangibles that drive decision making and like feelings the same way like you feel about a sports team when you go to the game or the same way you feel when you're actually at a concert.
Like I don't know that it would feel the same if you sent your digital twin and you stayed home and watched. But I don't, I don't know.
James Cook: Katie, I think what you're, pointing out is that when we take these technologies and say, Oh, the future is going to be all of this one technology, we're forgetting the whole human element and you're rightly pointing out folks go shopping in person for a reason. It's not a purely transactional experience, even though, that's what we focus on, but it's really about the emotional stuff.
That's such a good point. There, have you done, have you seen any of the virtual try on apps that are out there? They're pretty clunky, but I messed around with a bunch as a part of this research.
Katie Grissom: Very clunky not worked for me but potential the same way live shopping and streaming has really caught on in Asia. Like, There's potential there. I just can't quite put my finger on it yet because it's not. Authentic enough.
James Cook: Yeah. live stream shopping has been so successful in Asia. You see so many American firms trying to do it. QVC that's still probably the most popular one, old fashioned, like home shopping network and stuff like that. But a lot of it's on, TicTock,
Katie Grissom: yeah, and I will say, I have gotten into tick tock because I feel left behind. Because retailers talk about it all the time and, um. I have become a victim of buying things on TikTok. Totally accidentally. It feels so organic. It feels so authentic. I've been pretty pleased with a couple; I bought a steamer works better than any steamer I've ever had.
I don't know how it showed up for me, but I like that these different platforms like know me. I appreciate not getting ads for like lawnmowers. You know what I mean? Like I, I like that they're giving me ads for things that I would want. That feels like good value add to me.
James Cook: Yeah, it's so funny. Like the targeting on ads are so niche. No joke. I've gotten like on YouTube do you work in the commercial retail, commercial real estate industry? You should attend our conference. Like, Dear God, that's very specific. So, the yeah, the apps that I've tried out. For virtual try ons, they've been a bit clunky. there's a very popular glasses chain in Europe, and they're also in Canada called spec savers, and they have an app where you can take selfies of yourself virtually trying on glasses and then text those selfies to people, which I kind of like, that's usually how I decide what glasses I'm going to buy anyway, is I'll take a photo of myself and then send it to my wife and she says, okay, I like that one.
So that kind of is like cutting out the actual trying on process.
Katie Grissom: And I actually do think the glasses one works pretty well. I hate buying glasses if you don't know how they're gonna look on you. The one that I feel like is a huge miss, and I don't know how anyone's ever gonna solve it. And the only category of retail that's figured this out is department stores is shoes.
Like, how are we going to figure out how to buy shoes? It like glasses have been great changing your hair color. I love those apps. But it feels like there's so many layers for getting the fit, right. that maybe are a little bit harder than some of these more like, like there's no sizing in glasses, not really.
So, it's like your hair, like all those things. It's just interesting to think about how far technology has to go and then it has to be adopted.
James Cook: You'd have to have an accurate scan of your feet, and an accurate, that's the digital twin
Katie Grissom: Yeah. Yeah. You're a digital twin.
James Cook: to work, I just tried on a virtual try on app for sneakers and it was real bad, like I, I thought it barely even showed me what the sneakers would look like on my feet.
It just was so clunky, but anyway.
Katie Grissom: And how do you know if it's going to give you blisters? You just don't know. Your twin can't tell you that.
James Cook: No. Well, I mean, at a certain point, when we have an exact simulation of reality then, we'll be able to forecast whether we'll get blisters from
Katie Grissom: That's right. That's right. That's right.
James Cook: Okay. I think we have time for one more possible future. So now let's head over to a big box power center.
So, we're talking traditional big box retail. Retail as far as the eye can see walking through that portal. Now we come into an alternate version of that reality and retail isn't concentrated in specific zones. Instead, it's sprinkled throughout the built environment. Unlike many places today in the U S where zoning separates uses from each other.
Now it's encouraged. In fact, required that all kinds of different uses are in every place. So, this power center that we were in now in this alternate reality version the parking lots have been redeveloped into an apartment complex. Just a short walk from a little grocery store with, clothing stores and restaurants and little offices and medical and children's activity spaces, or daycare centers, all that stuff.
perhaps a big box retail chain now, instead of expanding by opening big box stores, they're opening small walk up locations that are easy to access and they're sprinkled throughout the community that enclosed mall, the fortress mall that used to just be retail and uh, some restaurants, you know, the took the roof off of it.
It's outdoor. There's maybe vegetation, fresh air, and a whole bunch of mixes, mix of uses within that formerly enclosed mall. So in this alternate reality, which, and we'll just call it like what a mixed use paradise or something like um, do you think. That all real estate should be mixed use?
Katie Grissom: I think a lot of it should be thought of as mixed use, but I think the way you're describing it is more organic than the way a lot of developers think about it. I don't think it all has to be Contrived under one roof. I think people want to live in mixed use environments. Your school is close to your home is close to where you get groceries is close to where your kid goes to daycare is close to the hospital, the soccer fields, whatever it is.
But I think. That includes a lot of different stakeholders, and it includes the city and zoning and all the planning as well. I also think that just scenario 1, there's a tale of 2 cities in the urban suburban, and then the more rural environments, but the 1 thing that I think. We cannot underestimate is how fickle consumers are and how hard it is to train them to go somewhere new, which is why I think so many new.
mixed use developments fail for the first couple cycles. But I do think that there should be more mixed use thought in, in how people are investing. And if you buy in mixed use environments, not necessarily mixed-use projects, you have a lot more demand drivers that are going to bring people to your project, your center, your multifamily building, whatever your hospital, whatever it is.
And I think that's a really important piece of consumer psychology, because as people are changing demographically, psychographically convenience. Is really like in my mind at the center of decision making, and I don't see that changing. And so, you have to imagine that things should be more mixed use, whatever that means for the local area.
On that note, it'd be interesting to hear your thoughts on, you mentioned power centers. This is something that we talk about all the time because they're kind of in vogue right now. And there's been a lot of dead weight shed from the forest. The yields are good, but like, how do you bifurcate what happens to them, what happens to the good ones versus the bad ones in this scenario?
Because I do think that the way we shop at Home Depot or a Michaels, or some of these tenants is going to change as technology improves and it becomes cheaper and easier to buy. To get what you want when you want it.
James Cook: yeah, stepping outside of this forecasted reality of mixed-use paradise, I think in the real world, there just continues to be a place for big box retail and, it's funny, we just recorded an episode talking about the Toronto market. Which is very constrained, and every shopping center is now a target for redevelopment with mixed use component.
So basically, they want to do what I'm talking about, take out the big boxes, put in apartments, put back retail, but put it in smaller size. And the problem is that what the shoppers want. Is the bigger boxes and now they don't have any place to go. And with a market like Toronto, where there are literal boundaries to how the government is set in place for you can't develop beyond this.
It's not like in other cities I don't know, like Houston, where you could just set it a little bit farther out of town. And there you go. So, I guess what I'm saying is that shoppers would have to be retrained on what their expectations are. And to your point, that's super difficult to do. And secondly, some of the power of the big box in the suburbs is that we're all people.
Car shoppers and we go, and we just want to knock it all out on a Saturday afternoon and you just want to go to a couple of centers and get everything and to be able to change that habit without making it cost a lot more without.
Making it less convenient. Like it'll take somebody, he'll figure it out, I think, but it's not going to be like tomorrow.
katie-grissom_3_10-03-2024_151007: Yeah, that's very helpful. I think we share the same view there, but I just was curious because you see a lot more than I do.
James Cook: What's interesting about North America is you have different cities with different levels of regulation and it's almost like they're different laboratories. So, you get to see what happens when. municipalities make different decisions.
And I've got to say probably I'm a very middle of the road person. So maybe the actual best decision is somewhere in between, I don't know. I think about like in Manhattan, you've got to go, you know, there's still some big box retail in New York and sometimes you have to go to what to Brooklyn for Ikea, you know, and stuff like that, but it's still there,
Katie Grissom: That's right.
James Cook: Okay, so we have visited three potential future retails. And I thank you, Katie, so much for joining me today and lending your insight. We're going to be posting. Not only this future vision of a retail report, but a whole bunch of others on our website over at JLL.com. Folks can check it out. It's going to be a yearlong research project. We've posted them on a different topic. You know, it’s going to be all the different property types and impacts on the built environment. So, check it out at JLL.com. I think it's under the research section. But thank you so much for joining me today.
I've just enjoyed bouncing this off you so much. This has been great.
Katie Grissom: Oh, me too. I can't wait to bend your ear about all of our other what's happening in the future conversations we're having on the same.
James Cook: Awesome. Cool. Thanks, Katie.
Katie Grissom: Thanks so much.
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This episode of trends and insights was produced by Bianca Montes.