In this Aug. 23, 2017, photo, shoppers exit a Nordstrom store in San Jose, Calif. Department store operator Nordstrom said, it had rejected a takeover offer from members of the Nordstrom family, calling the price "inadequateNordstrom Buyout, San Jose, USA - 23 Aug 2017

In its most recent industry report, analysts at Telsey Advisory Group identified some key trends driving “transformational changes” in the retail market, which are mostly propelled by “a greater sense of urgency to flex to the desires of the consumer.”

These demands include product recommendations and easier transactions as well as more meaningful engagement online and in-stores. “Figuring out a speed model that anticipates and informs companies of desires is a huge focus in order to drive not only sales higher in any channel, but also to increase rates of profitability,” noted Dana Telsey, chief research officer of the firm. “Every consumer company, whether it be a product manufacturer, a real estate developer, or a retailer, are all looking to become closer to the customer.”

The TAG analysts said in their report that localization will also play a more important role. “Evaluating market share by market, rather than by an individual store, is going to become more the norm in the future,” they said in the report.

The analysts cited Nordstrom, which recently said of its 35 million customers served last year, “approximately one-third shop multiple ways,” the TAG report stated. “The Nordstrom Local concept in the Los Angeles market opened up choice counts by around seven-times for inventory and the customer determines where they want to pick up the product and how they want to receive it.”

For its part, Macy’s is finding success with Backstage, which has a localized product assortment. TAG analysts said the localized approach results in an increase in sales of five percentage points for units opened more than one year. “Macy’s is testing a ‘hold and flow’ strategy, whereby a small sample of fashion merchandise is allocated to stores in order to better gauge demand so that inventory can be pushed to the appropriate stores,” Telsey said in the report. “This helps to reduce markdowns and increase inventory turns.”

With retail real estate, consumer demands are changing the mix of brands and types of stores. “The focus is on transforming traditional enclosed malls to community engagement centers with more active uses including restaurants, fitness, entertainment, service, residential, hotel and office,” Telsey said. “Non-retail uses are becoming an accepted allocation of space in order to diversify and drive traffic.”

Buy online, pick up in store, which is also known as “click and collect” is a top driver of store traffic, the TAG team said. For Macy’s the “radiated sales of buy online, pick up in store approximates 25 percent and the key is that the convenience of digital combined with a brick-and-mortar network provides ease and removes friction,” the analysts said.