As retail takes a beating and mall traffic continues to decrease, a handful of operators are looking to private markets to spur innovation.
As in-store retail activity slows, many of the companies with high exposure to this area are taking a hit. We used CB Insights data to look at where some of the top retail owners — typically mall operators — have been investing to see how they’re trying to combat this trend.
Of the 15 top US retail real estate groups, very few are active in private markets. Only 6 have made an investment or acquisition since 2010.
Simon Venture Group is the most active mostly due to its established venture arm which invests in new distribution channels (Le Tote), products (Helix Sleep), platforms (Appear Here), and new ways to interact with customers in stores (Ziploop). There have not been many co-investments between retail investors, except for same-day delivery startup Deliv, which saw investments from four different property managers.
Click on the image below to enlarge. Orange lines represent acquisitions. Green lines represent investments.
Several of the private market investments made by some of the other property owners are related to enhancing the retail shopping experience. For example:
- Dreamscape Immersive is developing new types of virtual reality experiences. Westfield Group invested in its Series A.
- WithMe is creating a new retail experience which uses a technology to connect a person’s digital footprint with his/her physical shopping experience. Macerich invested in its Series A.
- b8ta is a brick-and-mortar store designed for trying new tech products. Macerich also participated in its Series A.
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Some of these retail owners also use partnerships as a means of staying active in private markets. Westfield has partnered with R/GA for a startup accelerator to potentially run pilots on their properties. Macerich partnered with Popularise to engage local stakeholders about new malls and crowdsource improvements. (Note: We do not include partnerships in the BSG above.)
While some of these retail real estate property groups are looking to private markets for newer opportunities and innovation, others are consolidating (e.g. Regency Centers acquiring Equity One for about $5B) or buying distressed brands and assets (Aeropostale was bought by a consortium that included General Growth Properties and Simon Property Group for $243M).
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