Retailers Weigh in on 2015 Performance, Expectations, Technology and Growth
NORTH PLAINFIELD, N.J., Jan. 21, 2016 – Levin Management today released the results of its annual January Retail Sentiment Survey of store managers within its 95-property, 13 million-square-foot portfolio. The poll, despite being conducted at the outset of the current stock market volatility, shows a generally positive outlook for 2016.
In fact, an impressive 68.1 percent of the survey respondents said they are optimistic about the coming year. “We really are at a transitional time for retail, with factors like positive job growth, low gas pricing and the housing market uptick working in the industry’s favor,” noted Levin Management President Matthew K. Harding. “We also are witnessing a growing synergy between in-store and online purchasing, and its benefits for bricks-and-mortar.”
At the same time, a significant number (20.5 percent) of Levin survey participants expressed indecision in gauging what 2016 will bring. “The unseasonably warm fall and early winter, and what has become a longer – and therefore more diluted – holiday shopping season impacted sales for some retailers,” he added. “As such, it makes sense that our tenants are expressing some remaining uncertainty.”
2015 Sales Outcomes
The U.S. Department of Commerce announced in January that 2015 retail sales were up only 2.1 from 2014 (for context, 2014 sales were up 3.9 percent over 2013). And the National Retail Federation reported moderate 2015 holiday season sales growth of 3.0 percent, down from its forecasted growth of 3.7 percent. Still, the Levin survey showed positive – albeit modest – momentum in both year-over-year and holiday sales.
Nearly 53.0 percent of survey respondents reported their 2015 sales were at the same level or higher than 2014. This percentage is up from 51.7 percent and 49.4 percent reporting same/higher sales in Levin’s January 2015 and 2014 polls, respectively.
The Levin findings also indicate the 2015 holiday shopping season was good for the majority of Levin survey participants, with 58.0 percent reporting 2015 holiday sales at the same level or higher than 2014. And 57.0 percent reported that shopper traffic was at the same or higher level than during the 2014 holiday season. While these figures are slightly lower than last year’s poll (63.6 percent reported same/higher sales; 60.0 percent reported same/higher traffic), it is still above the prior year (50.6 percent reported same/higher sales; 48.2 reported same/higher traffic).
This and other industry reports, like RetailNext’s Retail Performance Pulse, reflect the strength of bricks-and-mortar retail during the holidays. In fact, the International Council of Shopping Centers’ Holiday Consumer Purchasing Trends Study revealed that 91 percent of consumers shopped in physical stores during the 2015 season. ICSC also reported that 32 percent of shoppers made purchases online and picked them it up in physical stores; 76 percent bought additional items in the same or an adjacent store.
Looking Forward: Technology and Growth
“Increasing demand for this type of technology-driven, omni-channel retailing will play a big role in 2016,” Harding said. “Bricks-and-mortar and online are converging. And it appears our tenants are gearing up accordingly.”
More than half (50.9 percent) of respondents said they will add or enhance their marketing efforts involving technology – such as mobile apps, social media, email and text messaging – in 2016.
Approximately half indicated their company has changed its business model in response to the growth of ecommerce. The most popular adaptations include enhanced in-store services and incentives, added in-store pickup and returns option for purchases made online, and generally increased collaboration between online and bricks-and-mortar operations. Among the retailers that have made business model changes, 40.6 percent reported they have seen a positive impact on sales.
What’s next? “It remains to be seen whether the current shake-up in the stock market will have a long-term impact,” Harding said. “We all hope to see a fairly rapid correction. Should that take place, the retail industry is likely to maintain growth momentum well into 2016.”
In some cases, this will include new stores. More than one quarter (28.4 percent) of the Levin survey respondents indicated plans for their company to open additional locations this year. “We anticipate that smaller footprints will be the norm as retailers continue to right-size and make shifts to incorporate e-commerce into their operations,” Harding noted.
Levin also asked retailers if they have seen any shifts in the hiring climate as the unemployment rate continues to trend downward. The survey results indicate about 44.0 percent of respondents are noticing some changes, most prominently in the areas of applications by fewer qualified job candidates and increased demand for higher starting salaries.
“U.S. unemployment inched down to 5.0 percent last month, and if this trending continues it will likely have a growing impact on retail hiring,” Harding said. “As such, this is an area we will be focusing on more closely in upcoming surveys.”
Levin’s next Retail Sentiment Surveys will be conducted in June, reporting mid-year progress and exploring technology issues, and in October, gauging expectations and plans for the 2016 holiday season. In business for six decades, Levin is one of the nation’s leading retail real estate services firms, with a strong focus in the northeastern United States and an owner’s approach to the business. Levin provides leasing, property management, accounting, construction management and marketing services for properties ranging from neighborhood, community, lifestyle and power centers, to enclosed malls, street retail, downtown stores and mixed-use projects in New Jersey, New York, Pennsylvania, Massachusetts, Virginia and North Carolina. The company specializes in repositioning, retenanting and renovating retail properties – areas that have become particularly vital for today’s institutional and individual property owners.Download Survey (PDF)