The US is currently witnessing migration in the retail sector as consumers are moving from one place to another which is relatable to their income and values. There has been a surge in city-to-city flights, a cost-of-living crisis, and a political dilemma that led to this situation. The retailers, who have been there for a long time in the Tier 1 cities, have to travel with their consumers to reach out to the Tier 2 cities. The people and digital travelers will skip first-tier cities to settle in the second-tier cities which will change the way of life and culture in third-tier towns.

Here are the four crucial markets that can drive new audiences and growth in retail needed in 2024 and beyond.

Inland Retailing

There is an increase in the retail of inland spaces due to eco-migration, new patterns in working conditions, and rising recognition of community value. With the consumers migrating to regions that align with their value, commuting of five-day working, and a growing cost of cities, the brands and retailers have to change according to and reach out to the customers from this market. Retail in suburbs (which generally targets children) is evolving to inland retailing (millennials having children later or not).

Investing in mega marts is one way to grab the attention of consumers. The afternoon fun is getting into shape in these cities. Therefore, the retailers can go with bright, fun, big-sized concepts that can be experimental and explored for the consumers. Localizing the offers and merchandise according to the target audience can help too. The retail spaces have to be wonderful and playful with creative aspects like pop-ups, outdoor stations, and food courts.

It is pivotal to support local communities and economies by socially connecting to people from different places through the centers of the cities. Here, conducting community events with a balance of leisure and shopping is viable. The occupancy of both Gen Z and millennials will require a new set of innovative ideas.

Brands such as AMI Paris, Louis Vuitton, Jacquemus, Fendi, Hermes and Max Mara have already established their branded footprint on pop-ups, outdoor leisure activities and food courts. Retailers such as Walmart, Park Central Mall and Buc-ee are investing in providing a multitude of services and products through their stores in the inland cities.

Rise in Sunbelts

As there is a huge demand for leisure travel and luxury brands' growing number of investments in remodeling summer resorts, these sunbelts are becoming the most underrated region. About 55% of the US population will be settled down in sunbelts by 2030. This urges the brands and retailers to introduce and get into the market soon as this market will be influencing a crucial part of the US economy. They can invest in unhelped demographics and markets to get relevant with the consumers there. Primark stated that it will be focusing on developing a notable presence in the southern part of the US, establishing a favorable site in the hearts of Hispanic consumers.

These regions have comparable lower business taxes and cheaper rents which can be a huge advantage in the operational cost of a brand. Additionally, the shopping centers there did not get more hits during the pandemic like the other regions. According to Simon Property Group, the shopping center’s occupancy rate in Q3 2023 was 95,2%, posing a higher rate compared to 2022.

Instead of going to a primary destination in tourism such as Beverly Hills, or Fifth Avenue, the luxury brands can invest in these locations. They can work on widening the talents of the local region and enhance recruitment processes there which can act as a highlight. Veronica Beard from the US has been expanding its store presence by opening stores in cities like Miami, Charlotte, and Nashville.

Brands can work in outdoor and/or open-air environments to develop centers and events. Some of the places include Charleston’s King Street and Nashville’s Broadway. Zimmermann opened a new outlet in Sawgrass, Florida. Macy's announced that it will be opening 30 small stores in the strip plazas instead of shopping malls in the span of two years in Georgia and Texas.

As the sunbelts will witness record-breaking high temperatures, the brands, and retailers have to be ready than ever to mitigate the possible risks and ensure safety. This should include a functional store design and services that will be adaptable and protective to the heat. They can close the store in day time while being available on later nights. Target is known for changing its opening time according to the climate and staff members’ convenience.

Budding Megaregions

The imbalances in society and wealth are increasing leading these regions to work on building equity over the regional economic backlashes and provide the companies with rigid community commitments. The companies can use this strength to work on attracting different talents, cultures, and investment opportunities by working through the cluster of economies. There will be a growth in value-based migration here.

Retailers and brands have to think more locally by working on hyperlocal retailing. Consumers are becoming more mindful of purchasing based on ethical values, community, and responsibility. The population of older citizens is in considerable numbers. So, they have to offer dedicated services and support for them. Walmart focuses on fostering the local neighborhoods by giving creative immersive experiences such as outdoor bike trails, fitness centers, art museum hotels, pools, and more. H&M has launched a hyperlocal store in Williamsburg, Brooklyn, featuring products curated from local businesses.

These locations have young minds who are interested in tech jobs away from their homes in major cities. The retailers can provide opportunities for them to build a local talent group through cross-industry collaborations - be it advanced technology, AI, and more.

Tier-3 Cities

Many consumers are migrating towards third-tier towns to cope with their income and escapist value from the city rush. These small metro cities bear less than a million people with an untouched level of opportunity. The urban areas are becoming hollower on the inside with the consumers, retailers, and workers migrating towards other cities. This will lead to an increased prosperity in these regions. Retailers have to think about providing and serving these consumers with a focused menu of leisure, wellness, and kind values.

As the regions have a lower risk of impacts in market failure, brands can use them to experiment with many exploring concepts. People in these spaces have been traveling more to get to a store. The retail centers here are low and, in turn, get more foot traffic with the consumers from nearby towns visiting the place. These regions demand affordable and lively products with kind services. Amazon introduced Amazon Hub Delivery which supports delivery to small businesses and customers in rural towns with last-mile options.

The stores have to be multi-purpose and combine fun, leisure, shopping, and entertainment. These tertiary regions have a huge interest in sports and outdoor activities. With that, the retailers can set up spaces on sports courts and playgrounds. They can also plan for dining + retail ideas. Trail Depot in Wyoming has set up an outdoor sitting location with a cafe. It also hosts events every week, Try it Tuesday, where the customers can have a demo of the equipment.

Cover Image: Denver, Miami, Minneapolis, and Portland, courtesy Colorado.com, National Geographic, Conde Nast Traveller, and JetPunk website.