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Retail Showroom Properties: Where Shopping Meets Experience

Published: 10-20-23 Category: Property Management

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The inside of a retail showroom property.

The advent of online shopping and the aftershocks of the COVID-19 pandemic left some experts believing that brick-and-mortar retail stores were done for as e-commerce grew in popularity.

Yet, the work-from-home movement created a surprising plot twist: Remote workers, who are now spending more time during the week at home, are actually spending more time shopping at physical retail locations, and brands are taking notice, optimizing their retail showroom properties for the best possible shopping experience.

Retail showroom properties are an excellent way to create an engaging and immersive experience for retail shoppers, one that can easily help turn new visitors into repeat customers.

While e-commerce now certainly has its place, it doesn't look like it's going to completely replace in-person shopping.

Here, we'll cover what commercial real estate investors should know about retail showroom properties. We'll dive into their benefits, characteristics, the different types, and more.

Let's get started.

Definition of Retail Showroom Properties

Retail Showroom Properties: Where Shopping Meets Experience

The definition of the term “showroom” for retail stores is broad, but a retail showroom has physical space specifically designed for showing off products.

Unlike a typical retail space, where products might be on shelves and countertops, showrooms might display the full product in use.

The point of a showroom in retail space for rent is to show customers what a specific product looks like when used. For example, it's common for furniture stores to have showrooms with furniture placed in living arrangements to show potential customers what everything looks like when it's all set up.

You can think of a retail showroom as selling the “idea” of a product. Seeing a display turns the product into an experience and is usually more effective for brand delivery and messaging. A showroom display can range from something as simple as a mannequin with some clothing to a complex scene with multiple products.

Types of Showroom Properties

Retail showrooms can vary significantly in their size and appearance, but they can be present in virtually any type of retail store.

Some of the most common types of businesses that use showroom properties include:

Auto dealerships;
Clothing stores;
Department stores;
Hardware stores;
Antique stores; and
Specialty stores.

Showroom retail properties are most useful for businesses that want to sell a particular brand identity. They help to sell customers on the experience of a product by showing them how it looks in use. In that sense, showrooms can be particularly useful for big-budget items with high price tags.

Retail Showroom Property Characteristics

Unlike traditional retail properties, retail showrooms often lack shelving and other product displays. They tend to focus on a single space and may have a relatively limited selection of products.

Retail showrooms might also not directly sell to customers and instead use a consultative process to order and ship products to customers.

The consultative sales process prioritizes dialogue with the customer to understand their problems and make unique sales suggestions. Over half (53%) of sales representatives believe that consultative selling makes the sales process more efficient and generates more revenue.

Below is a table summarizing the key differences between traditional retail properties and retail showrooms.

	Retail Showrooms	Traditional Retail Space
Product Selection	Limited	Large
Sales Process	Consultive	Direct
Layout	Open-room	Shelves and aisles
Customer Experience	Immersion	Convenience

Working With a Retail Broker

Regardless of whether you're renting or buying a retail showroom property, you should work with a retail broker.

Retail brokers are commercial real estate brokers that specialize in buying, selling, and leasing retail properties. Aside from general advice about buying commercial property, a retail broker can:

Search for suitable properties;
Negotiate sales or lease contracts;
Draft a commercial real estate letter of intent;
Explore financing options;
Analyze commercial real estate financials;
Define lease clauses and terms (e.g., co-tenancy clauses);
Provide environmental disclosure reports; and
Secure commercial tenants.

A real estate broker on your investment team can streamline the commercial real estate buying process.

Benefits of Retail Showrooms

Below are just some benefits of buying or renting a retail showroom for your business.

#1 – Immersive Shopping Experience

The single biggest advantage of a retail showroom is that it provides an immersive and engaging experience.

Showroom experiences make a product seem more tangible and make it easier for customers to imagine themselves using it. Customer surveys show that over half of consumers want a memorable experience at a retailer, and showrooms can provide that experience.

#2 – Better Brand Communication

Branding is abstract, and it can be hard for a business to sell its brand just from products sitting on the shelf.

Showroom displays better communicate your company's brand and message by providing a more hands-on experience and a larger context for your products.

#3 – Cost-Effective

Retail showrooms often have more limited inventory and product shelf space, making them smaller than traditional retail stores.

Smaller spaces are more affordable for buyers and require less management and upkeep. Also, the smaller product inventory means fewer people can staff the location, reducing labor costs.

What Are the 4 Concepts of Retailing?

The key to making showrooms as effective as possible for marketing and brand identity is remembering the four concepts of retailing:

#1 – Product

The first concept is the simplest: the product itself. Showrooms typically allow for better product viewing than traditional retailers.

For instance, imagine the difference between seeing a picture of an office desk on a box and seeing the full desk assembled into a mock scene. Clearly, the latter is a more effective method of informing potential customers.

#2 – Price

Two pricing methods for retailing are cost-plus and value-based pricing. Showrooms are an excellent tool for selling value-based pricing to customers.

Showroom displays appeal to customer emotion, potentially increasing the product's perceived value as a result.

#3 – Place

As with other types of commercial real estate, location is important for showrooms. You need a location close to your target demographic and the right zoning for commercial retail activity.

#4 – Promotion

Promotion is arguably the retail concept that showrooms excel at the most. Showrooms provide an intimate and immersive way to promote products to customers.

In-store showroom displays, in combination with in-person and online marketing, can promote your products in ways that traditional retailing simply cannot.

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