In the wake of news that Toys “R” Us would be closing its doors for good, observers have been quick to point fingers attributing blame. Jim Cramer identified Amazon.com Inc. and Walmart as the chief culprits, while U.S. Rep. Bill Pascrell, in a USA Today op-ed, pinned the bankruptcy on “greedy Wall Street profiteers.” While such a characterization overlooks the fact Toys “R” Us was struggling prior to its 2005 buyout, it also ignores the fact it is the same “profiteers” — investors in private capital — who will reimagine how the retail space left vacant by the bankruptcy can be reinvented to accommodate the evolving consumer.

To be sure, the slow evolution of brick-and-mortar retail has been occurring for decades. Those who know their history probably recognize the so-called “retail apocalypse” of today is not unlike the department-store displacement of the 1980s and 1990s. Indeed, the bankruptcies of Federated Department Stores, Woodword & Lothrop, and Garfinckel’s, Raleigh’s & Co., among many others, generated as much handwringing at the time and helped familiarize the wider public with the leveraged buyout (LBO) model.

But today, as was true then, observers are fixated on the past. Real estate investors, on the other hand — particularly those in the noncore, value-added segments — are far less concerned about what may have killed Geoffrey (the ageless Toys “R” Us giraffe mascot) than they are with the retail rebirth that will occur at the former locations. Based on transformational trends already in motion, opportunities will likely be found in one of three emerging categories: necessity-based retailers, off-price retail and experiential specialty stores.

NECESSITY

Necessity-based retailers, as the name implies, offer essential goods and services that are more difficult or even impossible to provide through online venues. Although hair salons or pharmacies might qualify, they would have trouble fitting into existing Toys “R” Us footprints. That leaves grocery stores as potential candidates, particularly as store sizes have grown to accommodate expanding organic and produce departments and dine-in options, awkwardly dubbed “grocerants.”

The retail world certainly took notice when Amazon acquired Whole Foods Market. If anything, though, the deal should comfort investors about the strategic importance of brick-and-mortar for necessity-driven products. During Amazon’s third-quarter earnings call, CFO Brian Olsavsky suggested the infrastructure gained through the acquisition will provide another way for the company to engage with consumers’ physical lives. It is not unlike Amazon’s pop-up stores that have been rolled out to allow customers to test out its devices, and it also follows Apple’s playbook to merge offline and online merchandising strategies.

As it relates to the broader grocery space, however, the “experience” factor being emphasized across the segment also helps shield the more innovative concepts from e-commerce, which only accounts for 2 percent of total grocery sales. Consumers still prefer to hand-select their fruits and vegetables, even if this means visiting a grocery store several times a week. The foot traffic — further amplified by the introduction of “buy online, pick up in store” services — is also attractive to in-line tenants. Historically, grocery stores have been resilient through economic downturns.

OFF-PRICE

Another noticeable shift has its roots in the department-store displacement of the 1980s, as off-price retailers such as T. J. Maxx, Marshalls and Ross Stores are thriving. The TJX Cos., which operates the T. J. Maxx and Marshalls concepts as well as other off-price brands, has seen its store count grow rapidly since the financial crisis. At a time when most were closing stores, T. J. Maxx and Marshalls over the past five years have added nearly 350 locations. HomeGoods, also owned by TJX, added more than 250 stores during that period, and in 2017, the company introduced HomeSense, a complementary home-decor brand that offers large-scale furniture, lighting and art.

Others offering the “treasure hunt” experience have seen similar growth. Nordstrom’s off-price offshoot, Nordstrom Rack, outnumbers the retailer’s full-price locations by a count of more than two-to-one. The luxury retailer, however, continues to open full-line stores as well, and in April held a high-profile grand opening in Manhattan. Macy’s, which introduced its off-price concept in 2015, is taking a similar approach by integrating its Backstage brand within existing full-line locations to create a store within a store. It may seem like everyone’s grandmother shops off-price, but the concept is just as appealing to millennials, who have proven to be less attached to specific brands and control approximately $200 billion in annual buying power.

EXPERIENTIAL

The “experiential” component of hunting for deals has added oxygen to the off-price category, but other segments have gone after this trend more directly. “Experiences” for consumers can take various forms, from cooking classes to yoga to wine or craft-beer tastings. Experiential and specialty stores, as a result, are becoming essential components of the more-successful retail centers.

Lululemon Athletica, for instance, built its brand around playing an active role in the yoga community. Urban Outfitters has amplified this thesis through its hyper-localized UO Spaces concept. Its Brooklyn location, Space Ninety 8, combines art, shopping and high-profile events in a shared five-story setting “curated for the community.”

Private equity’s sudden interest in bowling also speaks to this trend. Atairos Group in June 2017 acquired Bowlmor AMF for more than $1 billion, while L Catterton backed Punch Bowl Social, a chain of restaurants featuring bowling, karaoke and arcades. It is not lost on anyone in real estate that 2016 was the first year when Americans spent more eating out than they did on groceries.

Across all three of these categories — necessity, off-price and experiential — the customer experience is the antidote to the ongoing maturation of the digital consumer. The customer journey today begins with research that arms consumers with knowledge about the products they are seeking and the prices they are willing to pay. Brands that cannot win on price or the necessity of what they are selling simply must incorporate “experience” into their value proposition. This was just as true for Circuit City Stores in 2008 as it is for Toys “R” Us today. Social media, providing a platform to broadcast experiences, only makes this trend more pronounced.

While it is provocative to proclaim a “retail apocalypse,” a more accurate characterization is that retail is reaching an evolutionary watershed that, although hitting critical mass, does not foreshadow a wasteland of dead brands. The rise of lifestyle centers, which mix retail and housing with a focus on pedestrian-friendly alternatives, speaks to a far more optimistic future.

Of course, material risks will always present themselves as industries such as retail real estate undergo such significant change. Indeed, all real estate is not created equal, a fact that is only more pronounced in the retail segment. Over-retailing in the United States has left certain spaces at the risk of obsolescence. Class C malls, for instance, have been beset by vacancies, crime and are generally in disrepair. This can make it hard to justify the investments necessary to rehabilitate these properties. Other factors, such as foot traffic, demographics and competition, will only widen the gap between strong and weak locations.

That being said, while the fall of Toys “R” Us may grieve the more nostalgic consumers, real estate investors recognize a longer-term opportunity. In fact, the owner of the KB Toys brand has outlined plans to open about 1,000 pop-up stores ahead of the holidays. This underscores not only the potential for rebirth, but also the experience factor that will be so critical as brands reimagine how they will navigate the retail landscape in the future.

Derek Proctor is an assistant vice president of Meketa Investment Group.