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A transformative change has taken place in recent years. The concept of co-working evolving from an alternative to a traditional office lease for start-ups and freelancers is becoming an integral component of corporate real estate portfolios. Since flexibility tops the list of popular benefits of coworking amongst freelancers, small businesses, and large enterprises, the retail industry is rapidly changing to incorporate this business idea into business practice in 2018.
Co-working companies provide short-term leases at various square footages, allowing tenants to determine the most appropriate workplace strategy for their business without a long-term obligation, driving cost efficiency with newcomers and experienced retailers in today’s market.
It’s No Longer a Thing of the Past
Back in October of 2017, the still relatively new co-working company WeWork made a deal to buy Hudson’s Bay Fifth Avenue property Lord & Taylor flagship store for $850 million. This not only raised red flags as to what the future of both retail and office facilities held, but also it gave rise to if such as WeWork, Co-Optim, and NeueHouse pop up are changing nature of work is giving rise to a new kind of retail experience.
“Co-working spaces generate heightened connectivity amongst different businesses, presenting an opportunity for innovation to occur at the intersection of different disciplines and mirroring the balance between intellectual harmony and tension made famous at AT&T’s Bell Labs in the late 19th century.” – Cushman & Wakefield reports.
However, buying up store space has not been the only retail push. Partnerships are another angle that WeWork has been exploring, with WeWork and LinkedIn announcing a partnership with J. Crew that would include panel events, a new work-focus collection and campaign from J. Crew featuring WeWork members, and J. Crew pop-ups exclusively for WeWork members in February 2018, opening new possibilities for both office spaces and retailers in collaboration efforts.
With New Opportunities, There are Always Challenges
With any new idea or innovation, as great as it may be, there are always pitfalls and challenges businesses have to consider. Adding retail to co-working spaces brings certain problems, which Christopher Walton, Former VP of Target Store of the Future describes in the quote below.
“There are a couple big challenges I see. One, it is hard to coordinate retail partnerships at scale in such a way that the retail experiences will stay fresh and well executed across the country. Two, it will also be difficult for retailers to generate the return on the investment required from the partnerships or the product placement. It is similar, in my mind, to the phenomenon of retail at airports. Some money can be made at airport stores, but those stores don’t really blow the doors off for any retailer” – Christopher Walton reports.
Furthermore, most analysts are unsure whether the retail element is a practical measure economically, not just for WeWork, who owes $18 billion dollars in rent despite its success, but for the co-working industry as a whole, which could be in a big bubble that is about to burst for most businesses.
Moving forward, there may be opportunities for digital retail brands to beat co-working spaces at their own game by opening up co-working spaces of their own. With room for companies such as Apple and Amazon to try co-working in the future, co-working for those companies and other well-known could prove to be a huge advantage for them, igniting an entirely different perspective of the retail space as we progress into the future of retail experience. How exciting!
Jenny Schecher is a Client Services Director & Social Media Manager at The Millennium Alliance. Jenny is an avid contributor to our blog, Digital Diary, as well as all social media platforms. When she is not writing about digital transformation and technology, she is working with her team to make visions come to life at our events. (and eating all of NYC's best food.) Follow her on Instagram: @jennyschecs or find her on LinkedIn!
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